Beijing SME interview

Russell in the office

Name: Russell Brown

Position: Managing Partner

Company: LehmanBrown International Accountants

Location: Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Hong Kong and Macau

Company size (no. of employees): 200 – 250

Sector: Professional services

Core business: Accounting, tax and consulting

When did you come to China?

I moved to live in Beijing in 2001, but was in Hong Kong for seven, moving there in 1990. My first trip to the mainland was to Shenzhen, also in 1990.

Why did you come to China?

I saw that there was a gap in the market for an accounting firm offering an alternative to the ‘big four’ and local firms. The aim was to build an international firm with both Chinese and foreign characteristics, that could aid foreign companies doing business in and with China, and Chinese companies seeking to venture abroad.

Why did you choose Beijing as your primary location?

I liked Beijing as a city—its people, culture—and also had family and a lot of friends in Beijing. It is also where the government is based, making it a natural choice for location.

What is the biggest challenge for SMEs in China?

With the constant shift in policy and regulatory requirements for setting up and doing business in China, compliance is always an issue, so it’s key to work with the right partners for handling matters such as setting up your China entity, structuring it appropriately and making sure it’s both tax compliant and efficient, meeting the mandatory accounting and statutory audit requirements and adhering to HR/social security stipulations. China is very bureaucratic, and whilst the central leadership talk about reducing red tape, at local level this has unfortunately only increased in the past decade. Some jurisdictions are streamlining filings, but paper wise, there is a lot. The question to an SME therefore is, do you wish your China GM focusing on the business or on compliance?

There is also the challenge of sourcing and retaining good people in a very fluid labour market. It is therefore important when hiring to try and understand what the career objectives of the person are and also understand their personal situation better so as to be able to accommodate where possible.

What is the biggest challenge for SMEs in your particular sector?

The continually changing regulatory environment, and uneven playing field between local and foreign firms, in terms of application of regulations and related practices. The audit side of practices is highly restricted to foreign firms, something that I think needs to change, ultimately. There are also larger registered capital requirements for certain licences, so running costs for a foreign firm are generally higher than for local firms.

The market is not yet mature, so when an SME is reviewing proposals they need to ensure they are reviewing like with like. Some firms might charge a very low fee for a specific service but then not give any advise without charging on a time basis. Others might bundle. An SME therefore needs to understand what they are paying for and what they wish to achieve by using a service provider. Meanwhile, the provider should be able to advise an SME on what they need, not just take instruction, as SMEs sometimes do not always know what they want or what is good for them. Providers should be confident enough to advise the most beneficial solution.

Are you aware of EU-funded support projects for SMEs and have you ever used any?

I am aware of the outstanding EU SME centre which offers world class facilities to SMEs entering the China market. Some very exciting businesses have grown out of the incubator and through funding have thrived in the market. Because everything changes so quickly in China, it is important for SMEs to have access to knowledge and to share experiences as well, and so becoming involved in country chambers of commerce is important.

LehmanBrown is a China-focussed accounting, taxation and business advisory firm operating in Beijing, Shanghai, Hong Kong, Macau, Shenzhen, Guangzhou and Tianjin. The firm also manages an extensive affiliate network, providing services throughout China. All of its professionals speak English and assist both foreign companies coming into China and Chinese companies going out, hand holding the whole way and adapting service lines as companies grow.