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Hong Kong Management Consulting Service for China Hong Kong Management Consulting Service for China – –

the Prospective World’s Factorythe Prospective World’s Factory

Speaker: Mr. K K Yeung, JPFCMA, FCCA, FCIS, FCPA (Practising)

Chairman, Management Consultancies Associationof Hong Kong

Venue: FEACO European Annual Conference 2006, Congress Park Hotel Flamenco, Budapest, Hungary

Date: 9th November, 2006

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China and Hong Kong RelationsChina and Hong Kong Relations

Year1997 – British handed over sovereignty over HK to China

GDP 1980 2005

(100 Million) (6th 5 year) (11th 5 Year)

China (1) : Euro 452 Euro 18,232

HK (2) : Euro 143 Euro 1,382

FDI – Hong Kong (3)

Year 2002 2003 2004 2005 2006 *

Amount (US$ billion) 9.7 13.6 34.0 35.9 20.66* Quarter 1 to Quarter 2 preliminary figures

Source: (1) National Bureau of Statistics of China(2) Hong Kong Census and Statistics Department(3) Hong Kong Census and Statistics Department

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China and Hong Kong RelationsChina and Hong Kong RelationsChina’s Road Map to World Industrial Power

Deng Xiao Ping ( 鄧小平 era) (Late 1970s -1992) Late 1970s: 4 Modernization & Socialist Market Economy1979: JV Laws introduced 1986: WOFE Laws introduced

Jiang Ze Min ( 江澤民 era) (1993-2003)1990s: State Enterprise Reform2001: WTO Accession

Hu Jin Tao ( 胡錦濤 era) (2003- till now)2004: Green GDP2005-2006: Macroeconomic control measures2005: 人才強國2005: Self-developed technology

Source : K K Yeung Management Consultants Limited

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Hong Kong as Catalyst to China’s GrowthHong Kong as Catalyst to China’s Growth

HK Trade: (HK$ million) 2003 2004 2005Imports from China: 785,625 918,275 1,049,335Domestic exports to China: 36,757 37,898 44,643Re-exports to China: 705,787 850,645 967,923

HK Investment into China: Rank No. 1 in 2005

HK employment in China: 237,500 residents in 2005

HK enterprises’ employees in China: over 11 million

HK factories in PRD*: Over 60,000

HK Port container throughput: 22,602,000 TEUs in 2005

* Pearl River Delta

Source : K K Yeung Management Consultants Limited

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Hong Kong – High-tech ExportsHong Kong – High-tech Exports

27

21

30

35

41

4643

4750

52

6365

7981

0

20

40

60

80

100

1998 1999 2000 2001 2002 2003 2004

Re-exports

Total exports

Hong Kong’s Merchandise Exports of High-tech Products

Remarks: Classification of high-tech products according to standards promulgated by the OECD and Eurostat

Source: Census and Statistics Department, Hong Kong SAR Government

US

$ bi

llio

n

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China FactorChina Factor – – World factory’s demand for technologyWorld factory’s demand for technologyComputers (e.g. PCs and notebooks)

Computer parts

Computer input./output units (incl. Printers & scanners)

Digital storage units (incl. Floppy/hard/optical disk drives)

TV sets (incl. Plasma & LCD TV

Video record/reproducing apparatus (incl. DVD players)

Digital still image/video cameras (e.g. digital camera)

Sound recording apparatus (incl. MP3 players)

Transmission apparatus (incl. Mobile phones)

Telephonic or telegraphic switching apparatus

Motors & generators (incl. Micro motors)

Liquid crystal devices (not consulting articles)

1st

1st

1st

2nd

2nd

1st

3rd

2nd

2nd

2nd

2nd

2nd

China as the world’s largest exporters (selected item rankings)

Source: China Statistics Yearbook on High Technology Industry 2005

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China FactorChina Factor – – Mainland as a source of technologyMainland as a source of technology

573

653 679 702760

714

22

32

41

53

68

89

0

300

600

900

1999 2000 2001 2002 2003 2004

000

pers

ons

0

25

50

75

100

RM

B b

illion

Scientistis & engineers R&D expenditure

No. of patents owned by major industries

Computer & office

equipment16%

Medical equipments/meters

9%

Pharamaceutical

products20%

Aircraft & spacecraft

2%

Electronic & telecom equipment

53%

Technological Manufacturing Activities on the Mainland

Source: China Statistics Yearbook on High Technology Industry 2005

(Total = 4,535 patents in 2004)

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Management Consulting Movement in ChinaManagement Consulting Movement in China

Pre-11th 5 Yr Plan- FDI related consultancy

- Inward technology transfer- Plant installation related- Invest China- Training

Post-11th 5 Yr Plan- Outward investment related consultancies- Outward technology transfer- China invest- More training

Source : K K Yeung Management Consultants Limited

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China’s Training NeedsChina’s Training Needs

• Reshape industry structure

• Upgrade workforce to stay competitive

• Shortage of talent

• Serious staff turnover• Hunt for foreign

talents• Training as an

alternative

Source: MCAHK/HKTDC Joint Study of 15th June, 2006

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China’s Training MarketChina’s Training MarketMarket Segment Price Reference

Open Class Training Courses Euro 100-150 per person per day

Customised Training Courses

High-end

Middle-end

Low-end

Euro 3,000-5,000 per day

Euro 1,500-2,500 per day

Euro 1,000 per day

Trainers

High-end

Middle-end

Low-end

Euro 3,000 (or more) per day

Euro 1,500-2,999 per day

Euro 1,499 (or less) per day

Source: MCAHK/HKTDC Joint Study of 15th June, 2006

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Targets by Industry SectorTargets by Industry Sector

• Manufacturing companies

• Trading companies

• Financial services companies

• Government

Source: MCAHK/HKTDC Joint Study of 15th June, 2006

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Hot OffersHot Offers

• Leadership, strategic management

• Interpersonal skills (communications, teamwork, etc.)

• Negotiation skills

• Presentation skills

• Problem solving / decision makingSource: MCAHK/HKTDC Joint Study of 15th June, 2006

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Target China CitiesTarget China Cities

In Trade Development Council’s survey, Shenzhen, Guangzhou and Shanghai are the most popular places to which Hong Kong companies export their training services. Shanghai and Beijing are seen as having better prospects over the next 1-3 years.

Source: MCAHK/HKTDC Joint Study of 15th June, 2006

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Privileged Market Access Under CEPAPrivileged Market Access Under CEPAForeign companies provide training courses to users on the mainland mostly in the form of customised programs for individual companies via setting up management consultancy companies on the mainland. Foreign companies are not yet allowed to set up wholly-owned consultancy companies on the mainland. However, CEPA enables Hong Kong companies to set up wholly owned consultancy companies on the mainland.

Personnel intermediary agencies may offer open class training courses. Nevertheless, only minority foreign joint venture personnel intermediary agencies are allowed presently. In contrast, CEPA enables Hong Kong companies to set up majority-owned joint venture personnel intermediaries.

Source: MCAHK/HKTDC Joint Study of 15th June, 2006

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China Training :Case Study 1China Training :Case Study 1

Client: A leading worldwide container shipping company from France. The

client has 60 people in ShenzhenParticipants: Original training needs identified for 2 groups of people, namely:

1. Basic Level- For Sales Team- For Customer Service

2. For Supervisory/Executives- For Supervisors/Managers

Recently, the consultants conducted a Leadership Skill training for their South China staff in Xiamen and also a Quality Selection & Interview Skills program in Shenzhen and Xiamen.

Source: Dew-Point International Ltd.

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China Training : Case Study 2China Training : Case Study 2

Client: A worldwide shipping organisation with more than 100,00

0 employees and offices in over 125 countries, global headquarters in Denmark

Recently, the consultants conducted a Sales Image workshop (2-Day Program) for their staff in different regions as below:• 1 Class in Shenzhen• 1 Class in Shanghai• 1 Class in Hong Kong

Source: Dew-Point International Ltd.

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China Training : Case Study 3China Training : Case Study 3

Client: A Banking Group in Shenzhen, headquarter based in Shanghai

Training Programs included:• Customer service skills for tellers• Coaching skills for supervisors

Source: Dew-Point International Ltd.

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China Training : Case Study 4 -China Training : Case Study 4 -Business Improvement Program (BIP) SeminarBusiness Improvement Program (BIP) Seminar

Client: A Hong Kong toy company with 3,000 staff factory in Dongguan

(South China)Objectives: To confirm the company’s aim and mission To develop and increase competitiveness Participants: 11 senior and middle managers in Hong Kong / ChinaContents: Various management topics Case studies SWOT analysis Business plan

Source: K K Yeung Management Consultants Ltd.

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China Training Case Study 5 – China Training Case Study 5 – Seminar on ChinaSeminar on China

Client: An international textile company listed on the Amsterdam Stock Exchange with

over 8,000 staff worldwide Objectives: To provide an overview of the investment environment in China To share experience on the latest MNC’s strategies in ChinaParticipants: Total 11 participants including the President & CEO, CFO and Managers from v

arious subsidiary companies Contents: Introduction Creating a prominent presence in China Case studies Country presentation Workshop – SWOT Analysis Workshop – Development plan in China Conclusion

Source: K K Yeung Management Consultants Ltd.

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Management Consultancies Association of Hong KongManagement Consultancies Association of Hong KongWrite UpWrite Up

One distinctive feature of Hong Kong’s services sector is the importance of business to business services. Management consultancy is one such important service, but its extent and scope was not clearly understood by potential users. Therefore, the Hong Kong Coalition of Service Industries (HKCSI), the service policy think tank of the Hong Kong General Chamber of Commerce (HKGCC), commissioned the University of Hong Kong to undertake a study of the current and future place of management consultancy in relation to Hong Kong’s competitiveness, together with an analysis of how the sector might be promoted. The study was funded by the Services Support Fund of the HKSAR Government in October 1997 and completed in early 1999.

 The academic team was led by Professor Michael J Enright and Dr Edmund R Thompson, who came to a very clear conclusion – “The Next Revolution in Hong Kong’s Economy will not be a Technological Revolution, but a Managerial Revolution”. Management consulting adds value to Hong Kong through its own sales and expenditures, through the revenues and profits brought back to Hong Kong from “exports”, through the increased competitiveness of its local client base, and through its ability to transfer global best practice management tools and techniques to the local business environment.

 In view of the importance of the management consultancy sector, a key recommendation from the survey was to advocate collective action to promote the management consultancy sector through the creation of an association to speak for the industry. As the representative for the industry, the association would carry greater weight in interacting with government, educational institutions and other organisations at home and abroad.

 The Management Consultancies Association of Hong Kong (MCAHK) was therefore formed in April 1999 with the assistance of the HKGCC and support from the HKSAR Government. The purposes of the association were to provide a central body for inquiries – particularly overseas parties who wished to use the services of Hong Kong based consultants, to provide a networking and educational arena for local consultants, to be a conduit for information, and to act as a representative for issues pertaining to management consultants.

Source: Management Consultancies Association of Hong Kong

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Professional GuidelinesProfessional Guidelines• Confidentiality

– A member shall treat client information as confidential and will not take advantage of privileged information gathered during the professional work undertaken

• Professional Competence– A member shall only accept work for which he/she is competent and (where applicable) professionally qualified

• Assignment Clarity– A member shall ensure that, before accepting an assignment, the objectives, scope, deliverables, workplace and fee arrangements

are mutually understood and agreed.• Independence

– A member must be able to conduct each assignment objectively. He/she should not be biased by any stakeholder about any aspect of the client’s thinking which could alter the impartiality of the member’s advice.

• Conflicts of Interest– A member shall not represent himself as an independent evaluator and at the same time accept commissions or other benefits

from others in connection with a recommendation to a client regarding services or products without the client’s knowledge and consent.

• Proprietary Materials– We recognize our responsibility to the profession to share with our colleagues the methods and techniques we utilise in serving

clients. We will not knowingly, without their permission, use proprietary data, procedures, materials, or techniques that other management consultants have developed but not released for public use.

• Client Relations– We will not make offers of employment to employees of clients without prior consultation. If we are approached by employees

of clients regarding employment in our firm or in that of another client, we will make certain that we have our clients’ consent before entering into any negotiations with employees. When consultants change employers, they have a responsibility to fulfill or adequately transfer the clients’ contacts and assignment details prior to termination.

• Professional Reputation– We will respect the professional reputation and practice of other management consultants. This does not remove the moral

obligation to expose unethical conduct of fellow members of the profession to the proper authorities.– We will strive to broaden public understanding and enhance public regard and confidence in the management consulting

profession, so that management consultants can perform their proper function in society effectively. We will conduct ourselves so as to reflect credit on the profession and to inspire the confidence, respect, and trust of clients and the public.

Source: Management Consultancies Association of Hong Kong

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Thank YouThank You