‘Like weather, one’s fortune may change by the evening.’ Lu Mengzheng may have been speaking during the Song Dynasty, but his words apply equally well in 2003. Over the last year, just when China was thriving as the world’s most dynamic large economy, along came Sars to throw it into turmoil.
Just as quickly, it seems, economic activity has almost returned to normal. Now China’s GDP is expected to grow by 8 percent this year – the same rate as before Sars broke out. Although the full effect of the crisis may not yet have been felt, China’s economy is still predicted to grow far more quickly than most.
While much of this growth is down to foreign direct investment – last year China was the world’s number one FDI destination – there is evidence that Chinese companies are starting to look outside for economic opportunities. According to a report by consultancy Roland Berger, almost three quarters of mainland manufacturing firms surveyed have foreign expansion plans underway.
With these changing circumstances as a backdrop, IR magazine is holding its IR Asia summit at the Shanghai Marriott Hongqiao, November 18-20. The summit will include the second annual IR for Greater China conference, November 18-19, a half-day conference on IR in Asia on the 20th, and the IR Magazine Asia Awards that evening.
Carl Walter, managing director and COO for China for JPMorgan, which will be hosting an ADR workshop on November 20, will be giving the keynote presentation at the China conference. He details some of the challenges facing the region: ‘China’s economic growth and foreign investors’ interests require Chinese regulators and market participants to enhance transparency, protect minority shareholders interests, and implement international standards. Chinese markets will never play their full role in developing companies and the economy if the major structural challenges are not firmly addressed.’
Vanita Sehgal, director of Citigate Dewe Rogerson, will be discussing best practice in investor and analyst meetings, and explains how the past few months have affected Chinese IR: ‘During the Sars outbreak, Chinese companies started using videoconferencing and conference calls instead of going on roadshows. Interestingly, many have continued to use electronic communications after realizing the time and cost savings they could achieve.’
Sehgal adds that despite technological advancements, the IR scene in China has much room for improvement: ‘The concept of IR is still quite new to Chinese companies, but they are starting to understand its importance. Indeed they have to given the growing foreign investor interest in China and the CSRC [China Securities Regulatory Commission] taking corporate governance and minority shareholder protection more seriously.’
This is something that Chris Liu would agree with. As senior vice president for Greater China and general manager for Hong Kong at Ketchum, he will be discussing international IR at the China conference, and claims Chinese companies need to raise the level of their IR practice: ‘Chinese IR has certainly come a long way from when the state-owned enterprises were first being listed overseas. But while these pioneers have learned to grapple with best practice IR and come to appreciate its importance, the rest of the market has some way to go. Most senior management are far from seriously committing proper resources, manpower or budget to IR.’
Liu says what’s needed is ‘concrete commitment’ to IR: ‘Many firms already have dedicated IR personnel (albeit under different titles or organization setups) but most haven’t seriously considered how to establish proper systems to ensure consistency, transparency, directors’ accountability and other proactive IR practices.’
As Greater China’s companies start to expand outside of their borders, and as the rest of the world takes further interest, IR in the region is sure to increase in visibility and importance. With IR magazine’s conferences aiming to help raise the standard and awareness of IR, and with the Chinese economy looking strong despite the setbacks, the predictions are for good fortune all round (not just in cookies).
