They need to form an aircraft carrier fleet together, and Chinese companies need to go out to China | institutions | enterprises
Six years ago, in a small Chinese restaurant in India, lawyer Liu Yixing approached the owner and said he wanted to give a legal lecture here. The boss readily agreed and sent a message on his social media, bringing in 73 people. Unexpectedly, in the next week, 21 Chinese companies going abroad will approach Liu Yixing to commission business, including state-owned banks and communication companies.
The opportunities brought by Chinese companies going abroad reminded him that after the reform and opening up, a group of multinational companies entered China one after another. With a large amount of commercial demand, foreign banks, law firms, accounting firms and other professional service institutions followed suit, becoming one of the earliest industries for foreign investment to enter China.
Now, Chinese companies are constantly going global, and they also need professional service institutions from China to accompany them, providing market-oriented, professional, and international service support to help them grow and strengthen. At this point, Shanghai has taken a step forward.
The needs of the times
When investing in foreign countries, one should not only see business opportunities, but also know oneself and the other, and have sufficient knowledge of local information and risks. In an ideal state, companies can easily and quickly obtain assistance from professional service institutions such as domestic financial institutions, law firms, accounting firms, consulting firms, etc. The premise is that these institutions have strong international service capabilities.
Li Feng, Vice Dean of Shanghai Higher School of Finance, gave an example of foreign-funded banks, which have a significant portion of their business in China, which is to assist domestic enterprises in financing. Because Chinese banks find it difficult to fully consider the global business layout of foreign-funded enterprises, it is also difficult to credit loans based on the qualifications of their foreign parent companies. Similarly, for Chinese companies to go global, it is also more ideal to seek financing from domestic banks.
"The service industry is to follow the enterprises. We should follow the Chinese enterprises wherever they go." Liu Yixing said.
However, the reality is that there are not enough professional service institutions in China that can truly go global and provide international service capabilities. Even institutions located in the international metropolis of Shanghai still have a significant gap with world-class institutions.
Liu Yixing sighed that China is already the world's second-largest economy, with many Chinese companies in the Fortune Global 500. However, among the top 100 global law firms, only a few are Chinese law firms. "It can be said that the Chinese legal industry and the Chinese economy are completely mismatched, and both the market and the times require Chinese law firms to go global."
Similar to the legal industry, the internationalization of the accounting industry is also urgent. Industry insiders introduce that currently, high-quality domestic enterprises and international businesses are almost monopolized by the four major companies, PwC, Ernst&Young, Deloitte, and KPMG, making it difficult for domestic companies to compete with them. Yang Zhiguo, CEO of Lixin Certified Public Accountants, admitted that there is indeed a gap between China and the "Big Four", which is particularly evident in international projects. But this has become a "chicken and egg" problem - "Without international experience, companies can't trust you, no companies can come to you to do it, you have no experience, no methods, no team..."
As an international financial center, Shanghai has attracted a large number of global financial institutions, but there are not many Shanghai based financial institutions that have established branches overseas, and their internationalization awareness and international competitiveness are not strong. Most Chinese institutions mainly rely on their Hong Kong or Singapore subsidiaries to carry out overseas business.
Finance, law, accounting, consulting, logistics... If the companies going to sea are aircraft carriers, then these service institutions are destroyers and frigates surrounding them. Nowadays, more and more Chinese companies going global are waiting for the formation of their own fleets.
The pace of catching up
Throughout history, many companies have regarded Shanghai as a bridgehead for entering the international market and a springboard for going global, just like foreign companies entering China at that time. It can be said that Shanghai has the responsibility and ability to lead professional service institutions to enhance their international service capabilities.
In this context, Shanghai recently released several measures to enhance its comprehensive service capabilities and help enterprises go global at a high level. It proposes to take industry leaders and technological innovation enterprises as the main body, and provide international and high-quality professional services as support to serve the new demands of global industrial division of labor and cooperation, build a virtuous ecosystem of "going global", help enterprises go global at a high level, further enhance the resilience and safety level of industrial and supply chains, and better serve the high-quality development of the city's open economy. Strive to further enhance the cross-border service capabilities of professional service institutions in this city by 2025, optimize the structure and industrial layout of outbound investment, and elevate the scale of knowledge intensive service trade to a new level.
In fact, many Shanghai service agencies have already taken the pace of catching up, after all, compared to challenges, opportunities may be greater. Five years ago, Liu Yixing founded Shanghai Randy Law Firm, and from the beginning, he labeled the firm as "international". Five years of development have exceeded Liu Yixing's imagination. With the in-depth layout in countries along the "the Belt and Road", the 22 square meter office they first rented on the North Bund has become a building now. "This speed of development is not because of our versatility, but because of the strength of China's economy, let us share the dividend of the the Belt and Road initiative."
Indonesia, Vietnam, Thailand, the Philippines... Randy is sending lawyers to various overseas branches through the "100 Lawyers Expedition" campaign, in order to form a better overseas law firm linkage mechanism. "Our generation of lawyers should have a sense of patriotism and strive to create an international institution led by Chinese people," said Liu Yixing.
"Shanghai's implementation of this measure is focused on the idea." Yang Zhiguo recalled that many years ago in South Africa, he saw many Chinese companies conducting business there, and he felt that Chinese law firms had great potential to go global. But in the past, when it comes to international projects, there have been more expatriate teams and project teams. "Lixin had previously joined the BDO International Alliance to expand its international business, and it would be even better if it could establish offices overseas in the future. However, internationalization is not just about setting a point, but also requires a whole set of things such as brand, talent, technology, IT, risk control, and training. In recent years, Lixin has recruited a large number of talents from the" Big Four ", formed teams, and successfully completed many international projects. At the same time, these introduced talents have comprehensively driven the improvement of Lixin's international project standards, technology, quality, and methodology.".
Li Feng suggested that the key to financial support for enterprises to go global is for finance to also go global. In this regard, the core of Shanghai's efforts should be to move from the opening of commodity and factor liquidity to the opening of rules and institutions, take the "the Belt and Road" initiative and RCEP as the breakthrough, especially make good use of the policy advantages of the new port area, and make breakthroughs in cross-border payment and overseas financing.
