G8 countries’ cost of customs duties rises to $103bn – even ahead of ‘trade wars’...

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The cost of customs duties in G8 countries rose 4% last year from $99 billion to $103 billion, even ahead of the global ‘trade wars’, shows a new study by UHY, the international accounting and consultancy network.

The G8 countries’ import duties now amount to 1.24% of their approximately $8.3 trillion in annual imports.

UHY studied 20 countries around the world, calculating the value of their imports and the cost of duties on those goods and services (see chart below).

There is potential for the cost of tariffs to rise even further in the coming years due to the effects of global trade wars. In 2018, the United States introduced tariffs on a range of imported goods including steel, aluminium, washing machines, solar panels, and 818 categories of goods from China.

Several US trading partners have since responded by imposing retaliatory tariffs on imports from the United States. This has raised fears of a trend towards protectionism, which would increase costs for businesses and consumers worldwide.

UHY’s research shows that the biggest rise in the revenue from duties among major economies was seen in China, which registered a 26% increase from $37.8 billion in 2017 to $47.7 billion in 2018. China is one of the countries that levied retaliatory tariffs on US imports in mid-2018. However, the two countries agreed to postpone planned mutual increases in tariffs from 10% to 25% following talks in December.

US duties cost increased by 6.7% from $62.3 billion in 2017 to $66.5 billion in 2018. On several occasions, President Donald Trump has raised the prospect of the ‘Trump Tariffs’ policy being extended further. This could affect US car manufacturers who build vehicles in Mexico, as well as European carmakers.

Rick David, Chairman of UHY, comments: “In an increasingly globalised economy, a trade war could affect both businesses and consumers.”

“If trade disputes cannot be resolved by negotiation and result in substantially increased tariffs, there could be an impact not only on the cost of goods, but also economic growth and employment.”

Clive Gawthorpe, Partner at UHY Hacker Young in the UK, comments: “The UK is in a very precarious position when it comes to trade deals and tariffs, as it prepares to leave the European Union, the world’s largest trading bloc.”

“Some politicians had suggested that the UK would have dozens of trade deals already in place by the time it leaves the EU, but that seems to have been challenging to deliver in reality.”

“A no-deal exit from the EU could prompt the Government to waive customs duties on some imported goods, to prevent businesses and consumers from being exposed to a steep rise in costs.”

UHY says that Israel is one country that is seeking to decrease the impact of customs duties, following a 14% increase in the cost of duties from $2.5 billion in 2017 to $2.9 billion in 2018.

Kobi Shtainmetz, Partner at UHY Shtainmetz Aminoach & Co in Israel, says: “Israel is looking to buck the global trend towards increased barriers to trade that has emerged in recent years. The Israeli Finance Ministry plans to abolish customs duties entirely on a range of household items, at a cost of around $1 billion per year.”

“That is in addition to expanding trade deals, such as an exemption on customs duties for vegetable imports from Turkey.” 

Thomas Wahlen, Partner at UHY Wahlen & Partner in Germany, says: “There is a lot of uncertainty in the EU about potential future tariffs with the UK.”

The biggest rise in the cost of duties among major economies was seen in China, which registered a 26% increase from $37.8 billion in 2017 to $47.7 billion in 2018

 

Notes for Editors

UHY global press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.comwww.uhy.com

 

Nick Mattison or Peter Kurilecz

Mattison Public Relations

+44 20 7645 3636, +44 7860 657 540 or email peter.kurilecz@mattison.co.uk

 

About UHY

Established in 1986 and based in London, UK, UHY is a leading network of independent audit, accounting, tax and consulting firms with offices in over 300 major business centres across 100 countries.

Our staff members, over 8,200 strong, are proud to be part of the 16th largest international accounting and consultancy network. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to www.uhy.com.

UHY is a member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit www.forumoffirms.org

UHY strengthens presence in Asia-Pacific...

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We welcome, Malik Hamid Jamal Chartered Accountant, our new member firm in Afghanistan, to the global accountancy network UHY, extending our coverage within the Asia-Pacific region. The firm is in the process of adopting the UHY branding and will soon be known as UHY Malik Hamid Jamal Chartered Accountant.

Malik Hamid Jamal Chartered Accountant, with a team of 58 staff including five partners, is based the capital city of Kabul and was established in 1967. The partners bring wide-ranging experience in audit, accounting, tax, and management consultancy combined with the necessary technologies, methodologies and specialist resources to a portfolio of domestic and international clients primarily represented in the construction, education, not-for-profit and transport sectors.                      

Managing partner, Malik Hamid Jamal of Malik Hamid Jamal Chartered Accountant says: “We are based in an economy with a huge potential for future growth. The UHY network’s collaboration, combined with the reputable UHY brand, will give our firm a competitive edge in Afghanistan and the wider region. Our local capabilities and knowledge of UHY’s 8,200 colleagues around the world, not only strengthens our own market position, locally and internationally, but also will be of great value to our current and potential clients and their operations.

Rick David, chairman of UHY comments: “We are delighted to welcome Malik Hamid Jamal Chartered Accountant to the UHY network. The mineral rich Afghanistan, strategically located as a trade route between Central and South Asia, continues to pursue its ambitious economic reforms. Malik Hamid Jamal’s membership extends our footprint in the Asia-Pacific region and strengthens UHY’s regional market expertise and capabilities to serve our international clients who have a business presence in this country and the wider region.”

 

Liaison office for Malik Hamid Jamal Chartered Accountant             

Contact: Managing partner, Malik Hamid Jamal on +93 782 886 313

Email: mhjamal@smmcokabul.com Website: www.smmcokabul.com

 

Notes for Editors

UHY global press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.comwww.uhy.com

UHY strengthens presence in Middle East...

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New member firm in Iran joins the UHY network

We welcome, Hadi Hesab Tehran, our new member firm in Iran, to the global accountancy network UHY, extending our coverage within the Middle Eastern region.

Hadi Hesab Tehran is based in the capital city of Tehran. Established in 2003, a team of 40, including five partners, provide audit and advisory, tax, insolvency and recovery, corporate finance and management consultancy services to a diverse portfolio of clients from principally operating in the following sectors: industry, finance, shipping, steel and mining and telecommunications.

Managing partner, Hamid Reza Keyhani of Hadi Hesab Tehran comments: “Our country, considered an energy superpower, is a frontier market with a strong performing stock exchange.  Our firm has joined the UHY network for many reasons and is committed to provide the necessary resources to help our clients operate more efficiently in a global market place. The global presence of the network combined with the expertise and knowledge of UHY’s 8,100 colleagues around the world will support our clients’ requirements and not only strengthens our own commitment and capabilities, locally and regionally, but will also enhance those of our clients and their operations.”

Rick David, chairman of UHY comments: “We are delighted to welcome Hadi Hesab Tehran to the UHY network. Iran, the second largest economy in the Middle East and North Africa (MENA) region after Saudi Arabia, coupled with a noticeable state presence in manufacturing and financial services, reinforces our regional footprint and strengthens UHY’s international market expertise. We very much support the capabilities Hadi Hesab Tehran bring to serve our clients’ international needs and opportunities.”

 

Liaison office for Hadi Hesab Tehran

Contact: Hamid Reza Keyhani, on T: +98 21 88443634, M: +98 912 17 27501,

Email:  keyhani@hadihesab.com, Website:www.uhy-ir.com

Notes for Editors

UHY global press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.comwww.uhy.com

Chinese companies filed 32% of all global blockchain patents last year as investment in tech grows...

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32% of all global patents for blockchain technology were filed by Chinese businesses last year, with 99 patents from a total of 314 filed with the World Intellectual Property Organisation (WIPO) in 2017, shows a new study by UHY, the international accounting and consultancy network.

The study shows that US businesses are close behind with 92 global patents (29%), followed by Australian businesses with 40 patents (13%). UK businesses filed 34 patents related to blockchain (11%) with WIPO in 2017 (see table below).

UHY says that Chinese businesses have invested heavily in blockchain technology in recent years, with the Chinese central bank supporting the development of a blockchain-based trade finance platform to help SMEs access finance. Bank of China also announced in August 2018 that investment in technology, including blockchain, would be 1% of the bank’s annual operating income.

UHY adds that the biggest filer of global blockchain patents last year was nChain, a blockchain-focused research firm based in London and Vancouver, which filed 48 patents for blockchain technology at WIPO in 2017.

In the United States, the largest filer of global blockchain patents was credit card provider Mastercard, which filed patents for developments including a system for offline blockchain exchanges.

UHY explains that while European businesses have only filed a limited number of patents at the global level through WIPO, many have been more active at a local level. For example, while German businesses have filed no patents for blockchain technologies with WIPO in the last year, there have been six filed with the DPMA, the German Patent and Trademark Office.

Chinese businesses are ahead in patenting new blockchain technology, but US is close behind

Chinese businesses also lead the world in developing Artificial Intelligence technology

The study also shows that Chinese businesses lead the way in the development of Artificial Intelligence (AI) technology, filing 473 from a total of 649 AI patents (31%) with WIPO last year.

China is ahead of its global competitors by some distance in the race to build portfolios of intellectual property in AI. Its closest competitor is the United States, which filed 65 AI patents with WIPO last year (10% of the total). Only two global patents for AI technology were filed in the UK in 2017 (see table below).

UHY says that Chinese businesses like Baidu – often described as the ‘Google of China’ – and technology and social media conglomerate Tencent are among the world’s leading developers of AI technology. Baidu filed the most AI patents at WIPO in 2017, with 183.

In October 2018, Baidu launched an AI-powered translation tool which can translate spoken English into Chinese or German almost instantly. It also recently launched an AI-themed park in Beijing, which features self-driving buses and ‘smart walkways’ which track users’ exercise performance through facial recognition.

The United States’ largest filer of AI patents with WIPO in 2017 was Berkeley-based startup Bonsai AI with seven. Microsoft announced its acquisition of the business in June 2018.

Global competition over AI technology has heated up in recent years, with many national governments putting in place programmes to support businesses and universities in developing AI clusters and bringing technology to market.

For example, Canada has introduced the CAD125 million Pan-Canadian Artificial Intelligence Strategy, which aims to increase the number of AI researchers in Canada, and develop AI clusters in Toronto, Montreal and Edmonton. In the US, the Trump administration announced in its 2019 Budget Request that artificial intelligence and autonomous and unmanned systems were Administration R&D priorities.

New AI technology developments dominated by Chinese companies

Rick David, Chairman of UHY, comments: “Blockchain and Artificial Intelligence could unlock significant economic growth over the coming decades, and businesses across the world are investing in making sure they benefit from that.”

“Where countries are lagging behind in areas such as these, governments should consider tax incentives to encourage increased research and development.”

“Developing Artificial Intelligence technology is also going to be critical in determining which businesses will emerge as leaders from the next industrial revolution. The businesses that are positioned best in the long term are those that benefit from private enterprise and government both investing to bring Artificial Intelligence technology to mass markets.”

Kurt Lee, partner at UHY member firm ZhongHua Certified Public Accountants LLP in Shanghai, China says: “Development of blockchain and AI technologies are an important part of the China’s economic plans for the next two decades, as they could significantly enhance productivity. Both businesses and the government have made substantial investments in laying the groundwork for blockchain to play a central role in financial services in China.”

Koko Yamamoto, Partner at UHY member firm UHY McGovern Hurley LLP in Toronto, Canada says: “Canada now has one of the highest concentrations of AI researchers anywhere, and Canadian universities like Toronto, Waterloo and Alberta have some of the world’s most advanced AI programmes. That rich environment has also translated into major investments in Canadian AI development by businesses including General Motors and Thomson Reuters.”

 

Notes for Editors

UHY global press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.comwww.uhy.com

 

Nick Mattison or Peter Kurilecz

Mattison Public Relations

+44 20 7645 3636, +44 7860 657 540 or email peter.kurilecz@mattison.co.uk

 

About UHY

Established in 1986 and based in London, UK, UHY is a leading network of independent audit, accounting, tax and consulting firms with offices in over 320 major business centres across more than 95 countries.

Our staff members, over 8,100 strong, are proud to be part of the 16th largest international accounting and consultancy network. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to www.uhy.com.

UHY is a member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit www.forumoffirms.org

Sun, sea and citizenship...

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The sandy beaches and sunny climates of Mediterranean Europe are well known for attracting foreign investment, often in the form of tourist dollars spent in shady tavernas. But now the hotspots of Spain, Portugal, Greece, Cyprus and Malta are becoming renowned for luring a more upmarket clientele.

In May this year, Greece announced an expansion of its hugely popular golden visa programme, widening the types of investments available to applicants. Golden visa schemes allow wealthy foreign nationals to fast-track residency – and often citizenship – in return for investment. In Greece, residency can be bought for an investment of EUR 250,000 (around USD 295,000) in real estate. The new rules will allow would-be residents to invest their money in more diverse ways.

The Greek scheme is now the biggest in Europe, and – perhaps not coincidentally – also among the cheapest. Between the scheme’s inception in 2013 and August 2018 Greece issued 8,367 golden visas to main applicants, bringing a much needed investment of EUR 1.5 billion (over USD 1.76 billion) to a stagnating economy.

PAYING FOR A PASSPORT

A boat ride across the Mediterranean sea, Malta’s inviting climate and relaxed way of life also attract individuals looking for citizenship-by-investment, or CIP. Pierre Galea Musù, partner at Maltese member firm UHY Pace, Galea Musù & Co in Ta’ Xbiex, is unequivocal about the scheme’s success: “Is it working? It certainly is!”

Pierre explains that Malta actually runs two popular schemes, one of which is a residency scheme in which individuals guarantee their own health cover and access to housing and agree to pay a minimum tax rate of EUR 15,000 (USD 17,650). The other – the Individual Investor Programme (IIP) – is about citizenship. It requires a EUR 675,000 (USD 794,300) donation to the national development fund and a EUR 350,000 (over USD 411,800) property purchase.

“I am not a believer in the theory that the Maltese economy is buzzing at full steam ahead because of the IIP scheme,” says Pierre. “But there is obviously an indirect side effect as high-net-worth individuals who come here and purchase high-end property, dine at the best restaurants, berth luxury yachts here, all act as a catalyst to the economy, accelerating its velocity. So yes, IIP is a contributor to economic wellbeing, albeit indirectly.”

Malta is clearly an attractive option for those who need a parking spot for the yacht; indeed, the very concept of golden visas started in 1984 on the poor but similarly sun-dappled Caribbean island of St Kitts and Nevis. But sunshine is not the only reason a wealthy individual might covet a second or even third passport. While the Maltese climate, culture and history are important, Pierre agrees that “some come because of the European Union (EU) – a Maltese passport as an EU member is very attractive to people from other continents.”

FREEDOM TO ROAM

At least 24 countries around the world now run CIP schemes, including some – like the UK, New Zealand, Canada and the Netherlands – not blessed with a Mediterranean climate. The US CIP scheme, called EB-5, is the most popular in the world, and is estimated to deliver USD 1 billion to the economy every quarter.

In the Netherlands, individuals must invest EUR 1.25 million (USD 1.47 million) in a Dutch-based company or qualifying fund to receive a temporary, though extendable, residence permit. After five years, the investor can apply for permanent residence or Dutch citizenship through naturalisation.

The Dutch scheme is aimed squarely at economic regeneration, and a points system applies that promotes investments in innovation and job creation, favouring individuals who can bring specific knowledge, networks, clients and active involvement to the Dutch economy.

So with 23 other schemes to choose from, why choose the Netherlands? Maarten van der Steen, tax advisor at UHY member firm Govers Accountants/Consultants in Eindhoven, the Netherlands, believes the country’s appeal is multifaceted.

Maarten says: “The Netherlands is known for its tax facilities for foreign investors. There are several tax incentives for innovative start-ups and for R&D activities. Also, geographically there is access to Europe, and in terms of infrastructure the Netherlands is an attractive option.”

Like the US, the EU is a huge draw for individuals who can afford to pay between EUR 250,000 (around USD 294,000) and EUR 5 million (USD 5.9 million) for a passport. Tax breaks and lifestyle play a part, and Western education is especially coveted. Mobility is also important: a US or EU passport allows visa-free travel to upwards of 160 countries.

A CHINA SYNDROME?

Applicants for golden visa schemes tend to come from Russia, India, the Middle East and – most of all – China. Chinese nationals are the biggest applicant group in all major CIP schemes, and have spent a combined USD 24 billion on golden visas across the globe. Unlike applicants from other countries, who tend to be very wealthy, Chinese investors also come from the middle classes, with individuals regularly selling property or businesses to buy a golden visa.

And yet China has enjoyed decades of economic growth, lifting millions of Chinese out of poverty. Cities are booming. So why do some members of the Chinese middle class want to move away?

Of course, only a tiny minority of the huge Chinese middle class want to buy overseas residency or citizenship, and among those that do the reasons are complex. An Associated Press analysis in 2017 found that some beneficiaries of China’s economic boom still feel insecure about the future, with one applicant for the US EB-5 scheme commenting that “someone in the middle class can become poor in one second.” Other Chinese applicants may want to escape China’s rigid and competitive school system, rocketing property prices and urban smog.

STABILITY IN AN INSECURE WORLD

For super-wealthy and middle-class applicants alike, golden visas can be a safety net, a way of replacing insecurity with stability. Looking from the outside, Canada appears one of the most stable bets around, and until recently operated one of the most popular investor immigrant programmes of all. The federal scheme closed in 2014 – a victim of its own success – but the province of Quebec runs a regional scheme which will accept up to 1,900 applicants in 2018/19.

who are required to invest CAD 1.2 million (around USD 929,400) with a Quebec crown corporation for a period of five years at no interest, and be worth at least CAD 2 million (USD 1.55 million). Interestingly, applicants are favoured if they have experience of running a business and, unlike some other golden visa programmes, they must intend to settle in the province.

Ken Shemie, partner at UHY Victor, Montreal, Canada, says: “The benefits of the programme are not only to attract educated and affluent immigrants to reside in the province, but also to put their money to work helping small businesses in Quebec.”

When Canada closed its federal programme, it did so because it believed the scheme undervalued Canadian citizenship and created little economic benefit, but Ken believes the Quebec scheme is having the opposite effect. “A well-managed programme offers large revenue potential to the government and private sector,” he says. “During the period from 2001 through 2016, for example, the Quebec IIP program generated more than CAD 700 million (over USD 542 million) from immigrant investors, and this sum was allocated to nearly 5,000 Quebec businesses. That has to have helped the economy.”

A POTENTIAL BACKLASH?

Still, the Canadian federal government is not the only authority having second thoughts about golden visa schemes. In the US, axing the EB-5 scheme has been discussed in Washington, with senator Dianne Feinstein saying: “It is wrong to have a special pathway to citizenship for the wealthy while millions wait in line for visas.”

In Europe, fears have centred on who might be exploiting these back doors to EU citizenship, and where their money might originate. Questions have been asked in the European Parliament about whether member states can always accurately identify the origins of these substantial investments. In October 2018, Malta and Cyprus were named on an Organisation for Economic Co-operation and Development (OECD) blacklist of nations whose golden visa schemes are deemed to pose a high risk of tax evasion.

Cyprus is, like Malta, a popular destination for wealthy individuals looking for an EU passport, not least because of its extremely favourable tax regime for both companies and individuals. Its golden visa scheme has not only come under fire from the OECD, but also from some members of the European Parliament.

Antonis Kassapis, director of Cyprus member firm UHY Antonis Kassapis Limited, says: “Applicants are mainly from China, India, Russia and the Middle East, and what draws them to Cyprus is the very favourable tax regime, the fact that Cyprus is in the EU and the excellent lifestyle. The Cyprus government is well aware of EU concerns and aims to have a scheme that is both attractive to investors and acceptable to the EU.”

To that end, Cypriot authorities recently introduced more stringent controls on the programme and capped it at 700 passports per year.

Across the Mediterranean, Pierre believes Malta’s CIP has been singled out for unfair criticism. “The criticism of the system, pushed at EU Commission level, was aimed at demonising it. In reality, the process of verification and due diligence is very rigorous and highly professional. Getting a residency permit or a passport is no mean feat. It is a lengthy process, it is rigorous and the authorities are unflinching. The rate of refusal is not negligible.”

The countries that operate golden visa schemes insist they are secure and tightly controlled. What is not in doubt is their success, especially for small nations with more limited economic options. In Cyprus, Antonis is convinced of the scheme’s worth: “It brings capital into the economy. It brings employment. It helps many sectors of the economy, including the construction and land development sector, the services sector, tourism and banking.” For an increasing number of countries around the world, benefits like these are the most important considerations of all.

Notes for Editors

UHY press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.comwww.uhy.com

Luxury at any price...

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Ask five people to define the concept of brand in a business context and you may hear five different answers.

Is it simply a product manufactured by a company under a particular name, as one definition has it? Is it a logo, symbol or design feature? Is it, as somebody suggests, ‘the emotional and psychological relationship’ a business has with its customers?

In reality, it is all those things and more. Most brand experts liken it to a business’s personality. It is what a company is called, what it looks like, how it positions itself, what its values are, and even who it associates with (its partners and customers), all rolled into one. All businesses, big and small, need to be aware of their brand image and work to promote it.

Interbrand is widely recognised as one of the world’s leading brand consultancies. Speaking at the UHY 2018 EMEA regional meeting in Barcelona, Jorge Camman, director of innovation and verbal identity at Interbrand Iberia, explained why brand has never been more important.

“In a rapidly changing world, globalisation, standardisation, technology and deregulation have created more players, more products and more options. It is confusing, and people have less time to manage it all.”

For that reason, consumers look to brands to simplify their lives. If they know that a brand represents qualities they admire or aspire to, they can make quicker, easier purchasing decisions. On the flipside, brands can easily be associated with negative events. Toxic brands also simplify the lives of their customers, by removing themselves as an option for consideration.

AUTHENTIC, RELEVANT, DIFFERENT

How do businesses create brands their customers recognise and want to associate with? “Inside the business, there has to be clarity, commitment, protection and responsiveness,” says Jorge. “Outside, the brand has to meet many criteria. I would say it must be authentic, relevant, different and consistent. Above all it has to be present (visible), and understandable.”

It is easy to see how big global names leverage that kind of brand identity to drive sales. Do you want sneakers, or Nike sneakers? Do you want a burger, or a Big Mac? But brand is not the preserve of huge global names. Small businesses can have incredibly strong brands, and that is often most true at the top end of the market.

There is a historic perception that luxury brands weather economic storms better than non-luxury brands, because they attempt to satisfy desires rather than simply solve problems. In a rapidly globalising, hyper-consumerist age, the best luxury brands provide timeless authenticity in a volatile world. They are beacons of stability and consistency, cutting through the confusion of endless choice. Their approach provides lessons that all businesses can learn.

BRAND IS THE RESPONSIBILITY OF EVERYONE

Hotel d’Angleterre is a luxury hotel in Copenhagen, Denmark, and the only hotel in the country with the five star superior classification. It is also a client of Danish UHY member firm inforevision. As a small player in a market dominated by large luxury chains like Marriott and Radisson, Hotel d’Angleterre leverages brand to stay ahead of competitors.

“Hotel d’Angleterre works with branding in all imaginable areas,” says William Dixon, the hotel’s financial director. “For example, we offer training classes in ‘Luxury Behaviour’ for all staff. Both the interior and exterior of the hotel underline the fact that the brand only uses upscale products in all areas of the hotel. Of course branding is a great part of the communication across all platforms – what we are communicating, to whom and on which channels. Together all these points create a very strong brand – probably the strongest luxury brand in Denmark.”

To Hotel d’Angleterre, brand is not a logo, colour scheme, website design or staff uniform (though all these things are part of it). Brand is about experience and communication. Guests are submerged in the brand from the moment they contact the hotel to make a booking, to the moment they check out at the end of their stay. Creating a strong and positive perception is not a function of the marketing department: it is a core function of the entire business.

William says: “First and foremost it is important to us that our guests get a world-class experience during their stay with us, that we meet their expectations – or even better, that they feel they got great value for money. Prestige is nothing we deliberately pursue, but in our opinion comes naturally with the luxurious product we offer to our guests.”

Guests of Hotel d’Angleterre want more than a nice hotel room. They want a great experience, with personal service that feels unique. They want something they cannot readily find anywhere else, something William summarises as, “the legacy, the long history, the exquisite location and the staff’s deep passion for hospitality and service.”

THE EVOLUTION OF BRAND

This chimes with the evolving definition of a luxury brand, which strives to build a perception beyond the utility of the product or service on offer. Malinda Sanna, founder and CEO of brand consultancy Spark Ideas, puts it like this. “True luxury today is experiential; it is having the inside track that not everyone knows about. It is highly personal and intuitive. It never copies, it leads. It surprises and takes risks. And it makes you see the brand as the only solution to your desire in a sea of sameness.”

The House of Gübelin is a Swiss, family-run fine jewellery, gemstone and watch institution with a 160-year heritage; the business is a client of UHY member firm Balmer-Etienne AG. The carefully nurtured luxury brand, Gübelin Jewellery, speaks softly of craftsmanship, expertise and gemmology as much as unique jewellery and design philosophy. Boutiques in Switzerland and a private salon in Hong Kong provide an extraordinary luxury experience and excellent services, creating precious moments for their guests. They nurture a reputation for virtuosity that feeds into a strong and resilient brand image.

Raphael Gübelin, President, explains how this is achieved: “The House of Gübelin possesses a sensibility for luxury based on our Deeply Inspired philosophy. With a unique combination of beauty and knowledge, we provide a deeper sense of luxury. The creations by Gübelin Jewellery are based on the inner world of gemstones, so there is an authentic inspiration – the soul of the gemstone.”

Sharing this passion and inspiration is at the heart of the House of Gübelin. For example, the Gübelin Academy has been founded to share its knowledge about gemstones with connoisseurs and professionals. And in order to increase transparency and traceability to the whole gemstone industry, the Provenance Proof initiative has been created, which provides technologies such as the Emerald Paternity Test and the Provenance Proof Blockchain, offering more information about a gem’s history.

Today’s consumers, and particularly millennials, demand this kind of interaction, and that is increasingly true even when they are in the market for less exclusive goods and services. Forward thinking businesses in all sectors – aided by technology – try to build personal relationships and emphasise authentic company values. They offer consistency, difference and relevance. Luxury branding norms trickle down to the mainstream.

In truth, there is very little difference between mass market smartphones, but the Apple brand speaks of craftsmanship and difference in a way some of its competitors struggle to match. Airbnb rents rooms or apartments of all kinds – from the luxurious to the basic – but builds its brand around the idea of an authentic travel experience. These companies are not selling exclusivity, but they are meeting millennial expectations of what brands should be.

The trickle-down effect is everywhere. Personalised marketing speaks directly to individual customers. Authentic experiences and artisan products are not necessarily luxuries, but are branded in a way that cuts through Malinda Sanna’s ‘sea of sameness’. According to research by customer intelligence agency Vision Critical, by 2020 customer experience will overtake price and product as the key brand differentiator.

In other words, it is increasingly true that it does not matter whether your product or service is considered a luxury or not. Consumers care less about price and more about the experience – personal, real, different – your brand offers. That’s a little bit of luxury brand wisdom every business can employ.

UHY AND BRAND

UHY member firms around the world can help companies put the systems and processes in place that help to create positive brands, from advising on intellectual property to addressing the accounting challenges of brand valuation and other intangible assets such as people and reputation. But it is also true that the UHY brand itself is increasingly recognised around the world as representing value for money, peace of mind and a proactive advisory culture (see our Cogs & Wheels feature on page 11 to find out more). Member firms understand the need to offer clients the best experience.

Increasingly, UHY firms – which are independent accounting and advisory businesses operating as members of the global UHY network – are themselves using the UHY brand to substantially increase awareness, enquiries and engagement. Whether this is through considered use of digital communication platforms, bringing together previously disparate parts of the business to help clarify the offer for clients, or even using communication channels like WhatsApp and face-to-face workshops to increase engagement with clients and colleagues, the brand and what it stands for empowers UHY member firms to continuously create and offer better customer experiences.

Most importantly, clients themselves regularly comment on the personal service they receive from UHY member firms around the globe, regardless of their size or spend. By getting to know client businesses in detail, UHY member firms are able to offer a service that goes far beyond core accountancy functions. Instinctively, UHY member firms fulfil the main criteria for positive branding in 2019, by offering clients a professional services experience they will not easily find elsewhere.

Notes for Editors

UHY press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.comwww.uhy.com

Eastern promise...

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When the Shenzhen Stock Exchange (SZSE) investment roadshow recently rolled into Warsaw, Poland, it did not make the same media splash as a visit from the Rolling Stones, but it was a significant moment nonetheless.

The increasingly global outlook of Chinese business over the last 15 years is well documented, but SZSE’s proactive attitude to linking Chinese finance and European innovation still felt like a watershed moment. Here was a very public statement of intent by a major Chinese equity market.

Roman Seredyński, managing partner at Polish member firm UHY ECA Group, has been working with Shenzhen Securities Information Co (SSI), a wholly-owned subsidiary of SZSE, to help build relationships in the country.

He says that the firm was approached because of close connections between the wider UHY network and SSI, as well as UHY ECA’s own respected and well connected position in the Polish market. The firm is now working to promote V-Next, SSI’s online platform for matching investors and appropriate businesses.

Roman explains: “V-Next applies a non-public information disclosure procedure and deal matching mechanism to help buyers, sellers and intermediaries find potential counterparts or clients. But the main idea is to connect innovative enterprises with Chinese capital markets, offering funding and investment matching services and in particular helping enterprises find investors from China.

“We have been asked to help innovative Polish enterprises build a connection with suitable investors, and we are in the middle of creating an appropriate strategy to make that happen.”

UHY ECA’s involvement with SZSE has been no accident, with the initial introduction made by China experts at UHY Hacker Young in London, UK. The UHY network boasts an abundance of experience in Chinese business, and includes a China top-25 member firm, Zhonghua CPAs, in its ranks. Around the world, China desks and experts in UHY member firms help foreign businesses overcome the cultural and commercial challenges of doing business in China, and Chinese firms hoping to take the opposite path.

SZSE’s outreach is good news for innovative Polish businesses, who can not only gain access to Chinese capital but also, potentially, the vast Chinese consumer market. It is testament also to the increasing confidence of Chinese investors. With that in mind, we asked China experts from around the UHY network for an up-to-date view on the opportunities and challenges of doing business with the world’s second largest economy.

INSIDE OUT

While the SZSE initiative looks to connect Chinese investors with European companies, more Chinese firms are looking outward than ever before. Kelvin Lee, partner at UHY Lee Seng Chan & Co in Singapore, says the city state is a popular stepping stone for Chinese firms taking their first steps into Southeast Asia and beyond.

“Around 75% of the Singapore population is of Chinese origin and mainland Chinese firms feel comfortable doing businesses here,” he says.

There is much talk of the cultural and business challenges Chinese firms face when moving outside home borders, but Kelvin adds that many have learnt to neatly side step these issues.

“Interestingly, these days they are not so concerned about differing protocols and corporate culture per se, because what Chinese companies normally do is employ key functional managers with local exposure – for example, HR and admin managers, finance managers and so on.”

Chinese firms looking to expand abroad can draw on the huge Chinese diaspora to fill key positions in target markets. With 50 million ethnic Chinese people living outside China, and many others having spent time studying at foreign universities, finding Chinese speakers with specific local knowledge is not necessarily difficult.

Still, despite the growing influence of globalisation, fundamental differences of company structure and management style remain, particularly between Chinese and Western firms. UHY ECA’s Roman says: “The Chinese style of organising and of managing operations is based on traditional hierarchical models, as well as a command-and-control based approach to management. In Europe a more autonomous work culture is prevalent.”

This could cause difficulties for unprepared companies going in either direction (foreign companies looking to China or Chinese investment, or Chinese firms expanding into the West), and there are also clear differences in business culture and etiquette that companies – and their advisors – need to be aware of.

For instance, Melanie Chen, managing director and head of the China desk for UHY Advisors, Inc., New York, says: “Chinese business people might typically expect immediate responses to questions, and also weekend and late night phone calls. This can surprise foreign counterparts. They will also bargain, bargain and bargain some more on fees.”

If that can be a shock to foreign executives, the opposite is also true. Chinese businesses looking to Europe, America or Australasia can be shocked to find a culture of fixed prices (charging fees based on actual charges incurred) and ringfenced working hours. Compromise and understanding may be required on both sides.

And that is, most likely, what will happen. Ella Zhu, a partner at Chinese member firm Zhonghua CPAs, Shanghai, suggests that, while cultural challenges remain, their significance is declining in a modern, globalised world. “Nowadays, the world is one world, and therefore cultural challenges are not such a big issue,” she says.

CHANGING OPPORTUNITIES

Certainly, statistics suggest that cultural differences are not being allowed to get in the way of business. Foreign direct investment (FDI) in China continues to surge ahead, growing by 5.5% in the first seven months of the year.

High-tech companies are leading the charge, says Elissa Shen, senior partner at Zhonghua CPAs. “There is a preferential tax rate of 15% – compared to the normal corporate rate of 25% – for companies investing in certain industries, like high and new technology, software, integrated circuits, public infrastructure, environmental protection and energy conservation, and also investing in certain underdeveloped areas of the country.”

China’s tax policy is geared towards attracting investment in important industries, but the rates apply to domestic and foreign investors equally. While the opportunities for foreign businesses in China are considerable, they are not the same as they were just a few years ago. Back then foreign businesses may have looked to China for cheap labour and preferential tax policies, but Kelvin Lee says: “The world is changing and China is no exception. Regulations in China generally are getting more in line with international practice.”

Zhonghua’s Ella Zhu agrees: “I do not think it is easier for foreign companies to do business in China today than it was five or ten years ago, because currently, foreign enterprises cannot enjoy preferential tax policies simply for being foreign. In addition, labour costs in China are becoming more and more expensive.”

GOOD GUIDANCE IN CHALLENGING TIMES

In the other direction, business is also brisk. According to the China Global Investment Tracker, the value of China’s overseas investment and construction combined is approaching USD 1.9 trillion.

But again, change is afoot. Chinese authorities recently introduced curbs on outward investment, concerned by rising numbers of debt-fuelled acquisitions abroad. That action has been matched in some countries – most notably the US – by rising suspicion of Chinese ambition, fuelled by a protectionist president. A growing number of sales are being blocked by regulators.

“As a consequence, investment involving multi-billion dollar acquisitions by Chinese state-owned companies or large Chinese public companies in the US has dwindled in 2018,” says Melanie Chen.

“However, small acquisitions by private Chinese companies under the radar of the US and China media are still active. UHY LLP’s China Group, based in New York, US, was involved in five cross-border acquisitions between China and the US in the first three quarters of 2018.”

Still, the timing of the SZSE outreach may be instructive. Many private Chinese investors are turning to Europe instead. But Roman Seredyński says there is some suspicion here too. “European countries in general actively seek out Chinese investment, but their magnitude – and certain patterns of investment – have also raised concerns. Some countries have already been rather unwilling to accept Chinese enterprises because they are perceived as unclear in their governance, as being unfairly subsidised by the government and as serving the interests of the Chinese state rather than being commercially driven.”

The key, says Laurence Sacker, managing partner at UHY Hacker Young, London, UK, is for companies on all sides to be thoroughly informed and well prepared. He identifies corporate governance, and diverse regulations and legal requirements, as challenges Chinese firms face when moving into Britain and Europe. “It is also true that the economic environment is significantly different between China and the UK,” he says.

Laurence adds that UHY Hacker Young in London is “able to guide Chinese businesses and individuals through the maze of requirements and best practice to help them achieve success.”

Indeed, in a business environment that is a little more cynical, and a little less welcoming, than it was five years ago, expert and locally relevant advice is more crucial than ever. Good guidance from respected providers is the best way to cut through suspicion and provide reassurance to regulators.

“It is very important to keep up with this turbulent tax and legal environment,” says Roman. “This is the main reason why the help of experienced consulting companies is invaluable, to avoid difficulties in understanding the complexities of local legal regulations and all their potential consequences.”

Laurence points to the importance of the UHY international network in this regard. “UHY member firms provide vital assistance with cross-border transactions, giving commercial and tax advice as well as ongoing advisory services. We can always involve other offices around the international network if required to make the process smoother and our advice more robust.”

SZSE’s approach to Polish firms is one example of the new opportunities that exist between China and the rest of the world. But in many ways the landscape has changed markedly in the last couple of years. Cultural differences may be losing significance in a globalised world, but stiffer regulation and more stringent oversight mean that companies and investors on all sides need to be fully prepared and wholly compliant.

Notes for Editors

UHY press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.comwww.uhy.com

Can AI make us better?...

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At the 2018 Google I/O conference Sundar Pichai, CEO of Google Inc., stated: “We are at an important inflection point in computing,” adding that while it was an exciting time to be driving new technology, “it has made us more reflective about our responsibilities.”

He went on to reflect on a trend that is shaping how hi-tech’s big players are approaching the development of new technologies, where innovation for the benefit of society is key. Just as Google is keen to stress how artificial intelligence (AI) has the potential to positively impact healthcare, so its competitors are also showing a benevolent face: IBM launched its Science for Social Good programme in 2017, while Microsoft’s ‘AI for good’ declares its commitment to positively impact the environment, education and healthcare.

Whether or not the tech giants’ motives are truly benevolent, many believe that AI can be harnessed for the common good. The first AI for Global Good Summit was held in 2017, bringing together United Nations (UN) agencies, government officials, industry leaders and AI experts to discuss how AI solutions could address global challenges; at the 2018 Summit AI and digital technologies were identified as vital in achieving the UN’s Strategic Development Goals (SDGs).

Can AI really help to make the world a better place? And if so, how?

FROM SMALL SEEDS

Beth Schulte, principal at UHY Advisors MO in St Louis, United States, has worked extensively in the technology space, as well as being a mentor for one of the most highly ranked accelerator programmes in the US. “While big players like Google have a lot of money to invest, the ideas and innovation driving tech often come from young innovators,” she says. “Building on grassroots ideas with a strong team, they go on to be acquired by an organisation with the resources to expand it.”

Beth continues: “Many of the large corporations have an innovation arm, but they might also look to acquire small entities or start-ups and build on their technology. For this reason, whenever I start working with an entrepreneur in the tech space, I always ask what their exit strategy is.”

DeepMind is a prime example of an AI start-up that has flourished under a tech giant. Founded in London, UK, in 2010, it was acquired by Google in 2014 and is now a world-leader in AI research and its positive application. DeepMind Health was launched in 2016 and has worked in partnership with two London hospitals: Moorfields Eye Hospital, where AI is being used to help clinicians improve the diagnosis and treatment of sight-threatening eye conditions; and the Royal Free Hospital, where the AI-based Streams mobile app is being used to detect patients’ risk of acute kidney injury. Both applications have yielded positive results, enabling quicker diagnoses and treatment, and saving time for clinicians and nurses.

POWER AND RESPONSIBILITY

DeepMind’s healthcare solutions show that AI undoubtedly has the potential to transform patient care and treatment. However, early testing of the Streams app and Google’s recent announcement that its DeepMind subsidiary is being moved into the main arm of the organisation, have raised concerns about the sharing and use of patient data. AI can process vast quantities of data quickly and accurately, but it also needs vast quantities of data in order to ‘learn’. Particularly in light of the Cambridge Analytica scandal, where personally identifiable data was harvested from Facebook and sold for political gain, there is heightened concern about how personal data is held and used.

“With great power comes great responsibility,” says Stuart Hurst, cloud accounting specialist at UHY Hacker Young in Manchester, UK, and chair of UHY Hacker Young’s cloud accounting group. Stuart is an advocate of AI and machine learning, describing its application in professional services as game-changing due its capacity to provide insights into client data at speed. “The power of data is incredible and we have access to more of it than ever before,” he says. “Whether it relates to business, healthcare, weather events or famine, that data can be analysed and applied. But we have to be responsible; we have to be savvy about what we do with it.”

HYPERCONNECTED HEALTH

In an increasingly connected world, issues around personal data have arguably become more problematic. However, this hyperconnectivity is also helping to drive, develop and deliver AI-based solutions aimed at improving access to healthcare.

Despite its healthcare system being universal, India has one of the largest subnational disparities in access to quality healthcare in the world. Bangalore hosts one of the largest tech clusters in the world, with numerous homegrown start-ups innovating to find ways to make healthcare more readily available in areas with a high patient to doctor ratio, or where medical facilities are not easily accessible. Mfine, for example, has developed an AI-powered platform to connect patients with medical professionals via a ‘Cloud Clinic’. Partnering with 30 local hospitals, it facilitated over 25,000 consultations in six months. Meanwhile, SigTuple is developing a platform which uses machine learning to collect, digitise and analyse medical data from specimens including blood samples and x-rays, with the aim of deploying it in areas where a lack of resources and trained individuals raise barriers to accessing care.

So far, so promising – but challenges remain. Dhwani Gala is a partner at UHY member firm Chandabhoy & Jassoobhoy in Mumbai, India, which offers ‘one-stop shop’ support to start-ups and small enterprises seeking business and financial advisory and services. “As a country, we definitely have the ability to improve healthcare – our tech experts and scientists are among the best in the world,” she says. “The great challenge in India is going to be ensuring that the improvements offered by AI really can reach remote towns and villages and the poorer sections of our society.”

Connectivity and technologies that use it have the potential to help address healthcare inequalities in India and elsewhere. But while mobile coverage now reaches 95% of the global population and the adoption of both fixed and mobile broadband is on the rise even in the least developed countries, the UN’s International Telecommunications Union (ITU) iterates that “higher growth will be needed to bridge the divide.”

INVESTING IN THE FUTURE

Hyperconnectivity has also enabled new ways of working that have allowed start-ups to flourish and has, together with technology, democratised innovation to some extent. But investment and support is key if the young entrepreneurs looking to innovate for social good are to succeed. Whether backed by governments, industry or academia, investment in specialised hubs and accelerators is growing globally.

In Singapore, supporting tech start-ups is a key part of government strategy, aimed in part at improving healthcare management in an ageing population with the fourth highest medical inflation costs in the world. Innovations being developed by the deep tech start-ups funded by government-owned company SGInnovate include a stethoscope that will allow doctors to ‘see’ into a body and use data to look for and analyse problems, and a handheld device capable of capturing ultrasound images from patients in more remote areas, which can then be used to make treatment recommendations.

Crispin Lee, director of business development at UHY Lee Seng Chan & Co, Singapore, has noticed an increase in the number of start-ups seeking business support from the firm. “Singapore has a very probusiness climate, backed by government incentives and support,” he says. “As well as promoting Singapore as one of the best start-up hubs in the world, they are actively focusing on the tech space, including AI.

“As a firm, we support the ideal of using AI for the benefit of all. Apart from being a professional services firm, we also have a social responsibility and want to ensure that technology is used in the right way,” says Crispin. “And we will certainly do our best to support those start-ups working towards solutions that benefit society.”

SUPPORTING SUCCESS

Of course, the start-ups that are driving innovation need support beyond seed investment and early-stage mentoring if they are to succeed. In the light of potential interest from ‘big players’ such as Google, support from a trusted advisor is key.

Rob Starr, corporate finance director at UHY Hacker Young in London, UK, helps support start-ups to raise finance. “Less experienced management teams may have the technical skills for their business, but may need much more support. Alongside things like proof of concept, the ability to demonstrate market potential, and a sustainable and adaptable business model, would-be investors need to know how big the potential exit is likely to be and next steps following the current investment round,” he says.

“I would always recommend using an advisor,” Rob continues. “We can help bring a level of credibility, even where experienced entrepreneurs are involved. As well as utilising our market knowledge and international network, we can help facilitate conversations and negotiations.”

Beth Schulte agrees: “Professional services firms like UHY can help start-ups in many ways, from setting up their entity correctly and ensuring access to tax credits for research and development, to guiding them on their business journey. We can help them tell their story, act as a chief financial officer if they don’t have one, and even help try to increase the value of their company. Alongside financial consulting, we can offer tailored, strategic support.”

Stuart Hurst at UHY Hacker Young in Manchester, UK, sees that the flexibility that enables start-ups to lead AI innovation is also reflected in their approach to the services they use. “Start-ups are looking for a different kind of service,” he says. “They tend to be flexible and can be quick to change, and cloud technology suits them well – the client can use cloud solutions to gain greater insights into their business.”

However, the need for a personal, human relationship remains. “While the technology means you can access the information at your fingertips, clients still want face-to-face meetings,” says Stuart. “That personal relationship is still incredibly important.”

WORKING IN PARTNERSHIP

Used in healthcare or professional services, AI offers many advantages, but the human element remains fundamental. In the words of Fei-Fei Li, director of Stanford University’s Artificial Intelligence Lab and chief scientist for AI research at Google, “Despite its name, there is nothing ‘artificial’ about this technology – it is made by humans […] it must be guided by human concerns.”

While AI may not be a panacea to global challenges, its application is playing a valuable role designed to benefit humanity. It is perhaps not a question of whether AI can make us better, but rather how we use it.

Notes for Editors

UHY press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.comwww.uhy.com

UHY strengthens presence in Asia-Pacific...

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New member firm in Nepal joins the UHY network

We welcome, Suvod Associates, our new member firm in Nepal, to the global accountancy network UHY, extending our coverage within the Asia-Pacific region. The firm is in the process of adopting the UHY branding and will be known as UHY Suvod Associates, Chartered Accountants.

Suvod Associates’ head office is based in Kathmandu with a branch office in Itahari. Established in 1993, a team of 42, including two partners, provide audit and assurance, tax and management consultancy services to a diverse portfolio of clients including both domestic and international clients from predominantly the following sectors: aviation, telecommunications, hospitality, governmental organisations and trading companies.

Managing partner, Suvod Kumar Karn of Suvod Associates comments: “Our country is transitioning towards an economy focussed around manufacturing and services, bringing opportunities to Nepal for reconstruction, investment and growth. Our firm has joined the UHY network for many reasons and is committed to provide the necessary resources to help our clients operate more efficiently, grow their business, and achieve new levels of success in today’s increasingly competitive market place. The global presence of the network combined with the expertise and knowledge of UHY’s 8,100 colleagues around the world not only strengthens our own commitment and capabilities, locally and regionally, but will also enhance these of our clients and their operations.”

Rick David, chairman of UHY comments: “We are delighted to welcome Suvod Associates to the UHY network. Nepal, a growing economy surrounded by two of the world’s most significant economies, India and China, reinforces our footprint in the Asia-Pacific region and strengthens UHY’s regional and international market expertise. We very much support the firm’s ambitions to expand their coverage in the wider territory and more importantly, Suvod Associates, bring more capabilities to their clients’ international needs and opportunities.”

 

Liaison office for Suvod Associates

Contact: Akash Suman, on +977 1 524 2214 

Email: akash@suvodassociates.com.np website: www.suvodassociates.com.np

 

Notes for Editors

UHY global press contact: Dominique Maeremans on +44 20 7767 2621

Email: d.maeremans@uhy.comwww.uhy.com