|
Mr. Parrett and Asia Pacific CEO and Regional Managing Partner Manoj Singh took lead roles and spoke about issues of strategic importance to businesses in China and to our organization. Topics included:
|
|
Bill Parrett, Deloitte CEO and China Business Summit Co-chair:
At Deloitte, we have publicly emphasized our commitment to developing our clients’ businesses in China. I have spoken before about the importance of local understanding and building a robust and reliable business infrastructure, based on accountability and corporate governance, to ensure that China achieves its business promise. Deloitte's involvement in the China Business Summit further demonstrated the strength of our commitment to supporting China’s transformation in the global economy.
|
PROGRAM SESSIONS
September 12, 2004
> Economic Outlook: Moving toward a market economy
|
At this opening session of the summit, Chinese Vice-Premier Zeng Peiyan outlined an ambitious long-term vision for China, with the aim of quadrupling output within two decades, and said that government measures to rein in rampant fixed-asset investment are working. Deloitte Global CEO Bill Parrett made the following key points:
It is undisputed that China’s economic growth will continue. This growth will see an increased middle-class which now makes up one fifth of the population and half of China’s urban population and increased private sector development. This will affect MNCs in the domestic market in an increased demand for goods and services and a more educated and skilled workforce.
The growing private sector role in China’s economy will emerge as a catalyst for a level playing field. In other words, private enterprises will demand the same treatment as state owned enterprises and other domestic businesses. The entrepreneurship of the private sector will fuel China’s innovation. However for this development to occur, reform in the banking sector and capital markets as well as improvements in transparency and compliance must continue.
Competition is also a significant issue in China for both domestic and multi-national businesses, as low cost manufacturing is no longer “the” competitive advantage. The key considerations to deal with this changing competitive environment are intellectual property rights, attracting and retaining qualified people and brand building.
Other participants: Jose Maria Figueres, CEO, World Economic Forum; Ma Kai, Chairman of the Chinese National Development and Reform Commission; Kristin Forbes, Member of the Council of Economic Advisors, Office of the President of the USA; Jeffrey E. Garten, Dean of the Yale School of Management and Qin Xiao, Chairman of China Merchants Holdings, Hong Kong SAR.
|
|
> Corporate Governance: From scandal to sustainability
|
While corporate governance is improving in China, more needs to done. "But that’s natural in both a developing country and a mature economy," began session moderator and Deloitte Global CEO Bill Parrett, who went on to focus on the following key points:
China’s corporate government reforms have undoubtedly progressed but more reform is needed, in particularly further enhancing the regulatory framework and improved transparency. Improvements have included the alignment of governance codes with principles developed by the OECD, the defining of both the independence and responsibilities of corporate boards and the development of supervisory agencies to oversee critical sectors such as the Peoples Bank of China, Chinese Securities Regulatory Commission and the Chinese Insurance Regulatory Commission.
However, significant challenges remain — enhancing legal protection for investors and creditors, improving investor control, in particular balancing shareholder needs, and the access to quality information. Improving corporate governance is necessary for the long-term viability of enterprises as well as serving the interests of shareholders and stakeholders. These improvements include promoting compliance within the regulatory framework that fulfills the spirit and not just the letter of the law, improving transparency and empowering the gatekeepers for companies and regulators.
The State Owned Asset and Supervisory Commission is one agency that is clearly demonstrating its commitment to ongoing governance reform. Just this week it announced reforms to regulations that define the way assets are valued and reported, imposing stricter responsibility on managers and others in the capital market.
Other speakers focused on improving boards, which are often homogenous and not strong enough — Miao Gengshu, President of China Minmetals Corporation and also a summit co-chair said that "... boards are weakened in decision-making, and disclosure of information needs to be enhanced."
Other participants: Fan Fuchun, Vice-Chairman of China Securities Regulation Commission; Karin Finkelston, Senior Country Manager, International Finance Corporation; Paul Gerwirtz, Potter Stewart Professor of Constitutional Law and Director of the China Law Center, Yale Law School in the USA; Jang Hasung, Professor at the Korean University's College of Business Administration; James E. Morehouse, Vice-President, A.T.Kearney, and Joanna Rees Gallanter, Founder and Managing Partner, Venture Strategy Partners (both USA)
|
|
> Fuelling Growth: Where will the resources come from?
|
China's energy and resource needs are challenging global and regional supplies and are demanding new approaches to secure future needs. This session considered what is driving the demand and to what extent it will increase or abate. It questioned what the pressure points are in China's supplies, and how these should be managed, plus what needs to be done to reduce greenhouse gas emissions and ensure sustainability. Manoj Singh, Deloitte's CEO and Regional Managing Partner for Asia Pacific spoke about the following:
Industrialization and urbanization is fueling demand for energy and resources in China. This demand will be significant, with China needing almost twice its existing capacity within the next 20 years. Some of the increased capacity to meet demand will come from increased hydro-generation with grid connectivity and nuclear power. Yet despite this, there will still shortfalls that must be met through other sources.
The key issues requiring consideration are first energy security and this means building energy efficiency. In China coal plant efficiency is in the high 20 percent compared to the low forty percent mark for the rest of the developed world. Building and expanding supply diversity is key to meeting China and Asia’s resource needs. So too is creating an environment that attracts the needed investment. This can be achieved by focusing on the following:
· Continued long-term planning for alternative power, such as hydro and nuclear
· Improving financial transparency and lowering the cost of capital to assist with power plant construction
· The further development of efficient technology
· Improved resource allocation through cross-border co-operation relating to power interconnection, oil pipelines and joint stock piling
Improvement is needed in the development of China’s financial markets to attract the capital to modernize and expand its power generation and transmission capabilities. Areas requiring particular attention include: 1) Effective regulation; 2) A supporting legal framework; 3) Greater transparency and enhanced governance; and 4) Market-based pricing that reflects the value and cost of delivery.
Solving China’s energy needs is not simple and will require trillions of dollars of investment. The problem needs to be addressed across the energy continuum, from the oil well to the wall plug.
Other participants: Clinton Dines, President of BHP Billiton China; David Y. H. Kim, Chairman and Chief Executive Officer of Daesung Group and Miao Gengshu, President of China Minmetals Corporation.
Manoj Singh also spoke about Asia's natural resource needs at the World Economic Forum's Asia Strategic Insight Roundtable in June - learn more |
|
September 13, 2004
> Great Companies, Great Leaders: The challenge for China and the world
|
Few would deny that great companies are built by great leaders, but there is far less agreement on what "great" means. In this session, participants debated what makes a company great, and whether it is different in China than in the rest of the world. Session participants included Li Rongrong, Chairman of China’s State-owned Assets Supervision and Administration Commission, who said that China is accelerating the restructuring of state-owned enterprises. Bill Parrett, Deloitte Global CEO and summit co-chair shared the following insights:
China has the opportunity to define great leaders and great companies and influence this development across the world. Each region — Asia, Europe and the Americas view governance, the role of government and companies differently. In China, the State-Owned Assets Supervision and Administration Commission has set an aggressive plan for defining greatness. Its businesses are focusing on change, their people and developing great leaders.
Great leaders are not restricted to geographies, they can be found around the world. Greatness does not vary from country to country or region to region, it is fundamentally the same. While great companies may look the same whether it be in the U.S., Europe or China, this does not mean that great leaders do everything the same way. Great companies focus beyond the bottom line. Profitability may be a product of greatness, but should not be the sole focus. Greatness within companies comes from:
· Balancing the needs of shareholders and stakeholders — the needs of customers and employees
· Sustaining research and development
· Being innovative
· Having the right governance mechanisms in place
While it is not possible to focus on all stakeholders at once, great companies and great leaders never forget their many stakeholders. Communication is another important element of greatness — both internal and external communications. This remains the case whether it be for state-owned enterprises, domestic or international companies. A further common characteristic is that this communication must articulate the vision and the dream. Greatness also comes about through successful execution, and knowing the strategy and attributes of the businesses and doing the right thing at the right time.
If company leaders focus on all these aspects, then the results are great companies that are sustainable market leaders. Despite this, a soon-to-be released Deloitte study found that boards of directors and executives do not have the processes and mechanisms to record their progress against these non-financial indicators. This is despite the fact that most executives are increasingly under pressure to do so. The findings of this report will be available in late 2004.
Other participants: Christopher J. Graves, Managing Director, Far Eastern Economic Review (Hong Kong); Zhou Yucheng, Chairman of the Board of Directors, China Worldbest Group; Zong Qinghou, Chairman, Hangzhou Wahaha Group, China.
|
|
|
Deloitte involvement at other World Economic Forum events in 2004:
|
|