This page contains a Flash digital edition of a book.
Doing business with… China

Jersey Finance has sent regular delegations to China since 2005 to develop an understanding of Chinese culture and sound out the needs of potential clients

Hong Kong

annual rate of 11.9 per cent in the first quarter of the year. “They’re doing far better than us,”

says Hiren Patel, a Jersey-based lawyer at VerrasLaw who grew up in Hong Kong and now counts many Chinese entrepreneurs among his clients. “They’ve still got money, for starters. The government isn’t having to bail out the banks – their only fiscal issue is US pressure to devalue the currency.” People may dispute the idea of the yuan

replacing the dollar as the world’s reserve currency – and the wisdom of risking a disastrous property bubble with such epic government intervention – but China seems bent on confounding expectations. It’s likely to overtake Japan as the world’s second biggest economy this year. Of course, UK companies have been keen

to get involved, none more spectacularly than Tesco. The retailer is planning to invest £2bn in China over the next five years, creating more floor space than it has in over eight decades in the UK. Given it already claims £1 in every seven spent here, you sense Terry Leahy’s outfit knows an opportunity when it sees one.

China has also been active beyond its

borders, snapping up foreign companies and resources – from Lonovo buying IBM’s PC wing in 2004, to the government striking up deals for natural resources in places like Africa, Russia, Kazakhstan, Venezuela and Brazil. The country, it seems, is on the march. “We’re entering a new phase,” says Patel.

“China has leverage right now with its massive sovereign wealth, so it’s going out to acquire the businesses it needs to go global quickly.”

Eastward bound Yet Beijing is also starting to protect what it has. Some Western companies have found this uncomfortable, pointing to a collusion between state-owned utility companies, the government and Chinese suppliers. The country’s push for ‘indigenous innovation’ may just be giving an unfair advantage to its domestic players. Last year, four Rio Tinto employees were frogmarched out of the company’s HQ for ‘stealing state secrets’ – just after the mining giant spurned a deal with the Chinese government in favour of a joint venture with

BHP Billiton. Politics and commerce sit close in China, and that can be hard to swallow – just like the country’s approach to free speech. But while Google responded defiantly to its recent censorship struggle, rerouting its traffic via Hong Kong to avoid the censors, Rio Tinto simply signed a $2.9bn deal with Chinalco to develop an iron ore mine in Guinea. Business clearly always comes first. Patel is keen to downplay the protectionist implications, arguing that the Chinese government is simply taking steps to ensure its growth is not exploited. “The Chinese are essentially saying: ‘If you made your money here, you need to invest it here’,” he says. “I think that’s a good thing for Chinese people.” Other Jersey companies back Patel’s

positive view. Vistra Trust opened a Hong Kong office last year with 10 people, headed up by John Ashwood. “It’s actually becoming easier for Western companies to operate there,” says Ashwood. “The law is becoming clearer, and people are beginning to understand what Westerners need – clarity and defined processes, rather than nods and winks and passing packages under the table.”

June/July 2010 19

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72
Produced with Yudu -