China to become the next Global Financial Services Centre

Forget Wall Street and the City of London – the next global financial services centre will be in Shanghai and, whilst we can argue about how long it will take for the Chinese to get there (3 years, 10 years, 20 years?) progressive, entrepreneurial and leading financial services and other organisations will be working hard now to position themselves for this major shift in the flow and movement of global capital, investment, foreign exchange, technology and professionals.

China has the money, the motivation and the opportunity to rapidly accelerate the plans they already had in place to play a leading role in global finance and we should expect to see more news confirming China’s serious intentions to dominate the global financial scene, for example:

1. Shanghai’s State Council has been urged by the Central Government to develop a multi-functional financial centre by 2020 and, in order to attract financial professionals worldwide, Shanghai is loosening its residence policy with a view to simplifying the immigrant procedure for financial professionals to work in Shanghai. For the full statement, go to http://eng.wcetv.com/1/2009/03/27/43s12053.htm

2. China is in the process of signing “landmark agreements” with other financial services centres to (a) accelerate the flow of investments between China and other leading financial services centres (b) establish new regulatory frameworks to allow easier access for financial services firms and individuals wishing to conduct business in China, and (c) gradually set up a clearing system for business to be transacted in local currencies. The latest example is the agreement announced this weekend with Taiwan. Go to: http://www.reuters.com/article/worldNews/idUSTRE53P0DF20090426?feedType=RSS&feedName=worldNews for more details

3. China has made no secret of its desire to reduce the world’s dependence on the US dollar as the global reserve currency and replace it with a new currency which is not dependant on any one country, and there is no doubt that they would like to see the Chinese Yuan playing a greater role in global investment and trade. However, whilst the expansion of the yuan's international role is constrained by its limited convertibility, China can promote wider use of its currency by increasing bilateral currency swaps (ie yuan-denominated orders for Chinese imports, thereby avoid using the U.S. dollar in bilateral trade agreements). China's central bank has signed six swap deals since mid December, totalling 650 billion yuan (US$95 billion), with countries from Argentina to Indonesia and South Korea (Go to: http://www.forbes.com/2009/03/31/china-argentina-yuan-markets-currency-dollar.html for more details). China now promises not just more of the same, but bigger swaps with more countries which will not only thaw the current freeze on trade financing, but also reinforce the status of the yuan as an international trade currency.

4. As the largest foreign owner of US Treasury Bonds, and now the strongest economy in the world, China is leading a push by the BRIC countries to have the International Monetary Fund issue its first bonds as part of a strategy by developing nations to gain a bigger say at the IMF. Go to http://www.theaustralian.news.com.au/business/story/0,28124,25391494-643,00.html for more details

Any financial services player, in any country, offering almost any financial services product or service, should now have China at the top of their priority list for global business expansion because, quite apart from some of the global policy and strategic initiatives outlined above, Chinese officials, organisations and individuals are now scouring the world for examples of global best practice in financial services, particularly in the following areas:

* Wealth Management – investment, tax-planning and holistic financial planning advice
* Enabling Technology – reporting, transaction, compliance and back office
administration systems and software
* Research – securities, managed funds, products
* Marketing Communications – branding, design, content and delivery
* Professional Development Training – design, content, delivery

Think Global Consulting specialises in the financial services sector – please contact us now for more information and support at www.thinkglobal.com.au

Best wishes

David Thomas

Go to China!

Go to China!

Innovative, creative and entrepreneurial businesses in Australia will see the current economic slowdown as an opportunity to design, develop and execute a China marketing strategy. A once-in-a-lifetime opportunity to position your business to profit from the massive domestic consumption, infrastructure and professional services boom that will flow from the next stage of China’s remarkable 100-year transformation.

Here’s why you need to act now:

1. China’s relationship with Australia is at an all time high
With a Free Trade Agreement in negotiation, our unique mandarin-speaking Prime Minister, 35 years of diplomatic relations and with China now as our largest trading partner, there is no better time than the present to leverage the goodwill, trust and opportunity that exists on both side of the Sino-Australian relationship

2. China is stimulating their local economy by investing in infrastructure, transport, industry (particularly IT), housing and the environment
China’s commitment so far exceeds A$900bn and whilst they are building the first class hardware (e.g. roads, railways, airports, buildings, waterways, bridges, tunnels etc.) to support their rapidly industrialising economy, what they also need is the software (i.e. the professional services, training, education, technology, creativity, design and leadership) that makes the difference between "third world" and "world class". It’s in these areas that Australian businesses of all sizes can create the most opportunities.

3. China is encouraging domestic spending by offering a range of incentives, discounts, tax breaks, loans and other measures to increase the sale of domestic and foreign products and services
For example, sales of Australian wine in China grew by 28% last month and, at a time when car sales are going backwards in the developed world, the sales of passenger cars, buses and trucks in China surged 25% in February 2009. Watch out for a massive domestic consumption boom as the Chinese Government encourage their population to spend rather than save.

4. China has capital and is willing to invest to attract foreign companies to set up in China, particularly in the areas of innovation, technology and creativity
New technology parks and special economic zones are springing up all over China, particularly in second and third tier cities, presenting opportunities for entrepreneurial Australian companies to get access to low cost capital, skilled labour, new markets and cashed-up customers.

5. China is a Learning Nation
China is willing to invest in products, services and ideas which will enable their country to thrive, prosper and grow in the new global economy of the 21st Century. This provides opportunities for many Australian service providers –accountants, lawyers, architects, technology, software, trainers and other professionals - to make their mark in the world’s fastest growing economy.

This Century will see China become the largest economy in the world – don’t miss out on the opportunity to develop your China market entry strategy!

Best wishes

David Thomas