Global SKY IS THE LIMIT - CHANGING HORIZONS FOR CHINA'S MARKETS - Dr. Langenmayr und Partner mbB
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global
ISSUE 7
SKY IS THE LIMIT
CHANGING HORIZONS
FOR CHINA’S MARKETS
RICHER SEAMS?
MINING GETS SMARTER
MINDFUL MACHINES
HARNESSING AI FOR ALL The network
for doing
GOLDEN HANDSHAKES business
LURE OF FAST TRACK VISAS
2 UHY GLOBAL January 2019 WORD OF WELCOME
IN THIS ISSUE WORD OF
WELCOME
3
DIGGING DEEP
14
EASTERN I am delighted to welcome Our regular Cogs & Wheels
Mining in recovery PROMISE readers to issue 7 of UHY Global, feature considers some of the
our international business ways UHY member firms work
4
Doing business with
Chinese companies magazine for organisations with together to build this client-
a global outlook. As the new focused culture across the
CAN AI MAKE incoming chairman of UHY, it is a network; while our Perspectives
US BETTER? particularly exciting time for me roundtable brings together
Can it be harnessed to share with you some of our some of our China experts who
to benefit all? views and experiences through discuss the cultural challenges
17
these pages. I hope you find and opportunities in working
some food for thought and I wish with Chinese companies
you all the best for a prosperous at home and abroad, an
GLOBAL NEWS
and rewarding year ahead. area of significant potential
Headlines for
growth for internationally
8
international As the saying goes, ‘there is no minded businesses.
business place quite like home’, which
for me is the United States. Keeping it in the family
18
SUN, SEA AND
CITIZENSHIP
And yes, mine is a country showcases two UHY clients,
Do ‘golden
experiencing unprecedented both multiple generation family
KEEPING IT change, both domestically and businesses, and both enjoying a
visas’ work?
IN THE FAMILY on the international stage. But long-established relationship with
House of Gübelin/ as a network present in over 95 their UHY member firm advisors.
Hannay Reels other countries, UHY member Respect, trust, friendship and
firms and their clients remind success define these stories. My
me every day that although aim as international chairman
business is never certain and is to ensure these values are
11 change is constant, the truth
is that wherever in the world
embedded in the UHY brand for
every client, everywhere. Our
20
COGS & WHEELS you operate there will always feature on brand for business
Winning cultures be challenge and opportunity. also highlights the importance
LEARNING of consistency and customer
This is a theme running through experience, learning from the
FROM LUXURY
much of UHY Global. From example set by the resilient luxury
Brand lessons
mining – an industry very much goods and services sector.
for business
in recovery – to technology-
12
driven entrepreneurship which If you enjoy UHY Global and
looks set to make its mark would like to read more on the
on healthcare, professional topics we have featured, or on
PERSONAL
services and many other sectors, our UHY member firms, then
PROFILE
opportunity is all around. I find why not browse our expanded
23
UHY’s new
this inspiring and take enormous digital edition, at uhy.com/
chairman
pride in the attitude and energy publications. Please feel free to
SERVING CLIENTS, shown by our member firms, contact me directly at rdavid@
SERVING who work tirelessly to ensure uhy-us.com if our network can
COMMUNITIES our clients can safely and be of further assistance to you.
Global stories from successfully navigate change
our remarkable and achieve their goals. Richard David
people Chairman
UHY International
ALL AROUND THE WORLD UHY GLOBAL January 2019 3
DIGGING DEEP
W hen commodities prices identified USD 2.2 billion in operating cash technology – from drones and unmanned
crashed in 2009, it sent cost improvements across 2016 and 2017, vehicles to blockchain and artificial
while in 2017 Anglo American increased intelligence – will have to be carefully
a shockwave through the its production by 9%, while at the same and sensitively managed. Miners will also
minerals extraction industry, time reducing the cost per unit by 26%. have to negotiate increasingly stringent
with many mining operations environmental regulations, particularly
put on hold or even closed JUNIORS ON THE UP concerning water use and pollution. The
for good. So how is this most Exploration activity tends to lag behind
carbon footprints of extraction companies
will come under ever more intense scrutiny.
global of industries faring the general industry cycle, with companies
today, around the world? waiting to make sure any upturn is The picture is more positive in some areas
real and sustainable before committing than others. Improved recycling methods
In 2015 Koko Yamamoto, partner at UHY significant exploration funds. But that will slow the demand for some metals,
McGovern Hurley LLP, UHY’s member firm situation too has improved. In March while others – battery metals like lithium
in Toronto, Canada, told UHY Global: 2018, S&P Global Market Intelligence and cobalt are obvious examples – will
“A lot of companies here in Canada estimated that the global budget for forge ahead. In the next decade mining
are just funding minimum day to day non-ferrous metals exploration would may also explore the final frontier, with
operations... some of them have had increase by 20% in the year. Canada, asteroid space mining predicted to
to actually stop production and many Australia and the US are leading the way. become a viable long-term alternative
projects have been placed on care and
to depleting ore reserves on earth.
maintenance because they are just not Mark Ferguson, associate research
economically feasible at this time.” director for metals and mining at S&P,
says: “We know that the juniors (early
As chair of UHY’s global mining special stage exploration companies) have
interest group, Koko had seen industry endured the worst of the downturn since
cycles before, but this was different. 2012, accounting for most of the 40%
Reverberations from the crash of 2009 drop in the number of active explorers
were still being felt six years later. over the past five years. However,
Commodity prices were stubbornly the surviving juniors made a strong
UHY: A DEEP SEAM
refusing to rise above the cost of comeback in 2017 and have increased
OF KNOWLEDGE
extraction. Funding for exploration their aggregate exploration budget by
activities – a prerequisite for a healthy 23% year over year, including a 41% UHY member firms’ wide expertise
industry – was in seriously short supply. increase in gold only allocations.” in the mining sector is collected in
the network’s global mining special
A RISING TREND All of this means that, at the end of 2018, interest group. Our specialists are
the feeling in the global mining sector well versed in the particular issues
Fast forward three years and the position
might be described as cautiously optimistic. of this most global of industries.
is considerably improved. In 2017,
Experts predict that the current upswing Member firms can advise on
commodity prices rose as the global
has several more years to run. In addition, accounting and taxation matters,
economy expanded. Revenues of the top
the depths of the last industry recession and assist with audit requirements.
40 mining companies grew by 23%. In
forced major mining companies to become
2018, this upswing in the mining cycle Our global network means we
leaner and fitter, putting them in a better
continued. Infrastructure-driven growth can provide services to clients
position to weather any future downturn.
in Asia has resulted in spikes in demand with operations in multiple
for commodities like iron ore, copper and locations, an important advantage
coal. Gold prices have also been rising. THE FINAL FRONTIER
in a sector where merger and
That is important, because there are acquisition activity is increasing.
This global upturn has been coupled with certainly challenges ahead, beyond
a concerted effort on the part of many the typical peaks and troughs of the For more information,
mining companies to improve efficiency, industry cycle. ‘Smart mining’ is likely contact Koko Yamamoto
a useful by-product of years of austerity. to reduce costs even further over the kyamamoto@uhymh.com
For example, mining multinational Rio Tinto next decade, but the adoption of
4 UHY GLOBAL January 2019 FEATURE – CAN AI MAKE US BETTER? CAN AI MAKE US BETTER? FROM HOME ASSISTANTS LIKE ALEXA TO APPS LIKE UBER, ARTIFICIAL INTELLIGENCE IS ALREADY MAKING OUR LIVES MORE CONVENIENT. BUT BEYOND LIFESTYLE GAINS, CAN IT BE HARNESSED TO HELP OVERCOME BIGGER CHALLENGES FOR THE BENEFIT OF ALL?
FEATURE – CAN AI MAKE US BETTER? UHY GLOBAL January 2019 5
A t the 2018 Google I/O Beth continues: “Many of the large
conference Sundar Pichai, corporations have an innovation arm,
but they might also look to acquire
CEO of Google Inc., stated: small entities or start-ups and build
“We are at an important on their technology. For this reason,
Whether it relates to
inflection point in computing,” whenever I start working with an business, healthcare,
adding that while it was an entrepreneur in the tech space, I always
exciting time to be driving ask what their exit strategy is.” weather or famine,
new technology, “it has DeepMind is a prime example of an AI data can be applied.
made us more reflective start-up that has flourished under a tech
about our responsibilities.” giant. Founded in London, UK, in 2010,
But we have to be
He went on to reflect on a trend that
it was acquired by Google in 2014 and responsible and
is now a world-leader in AI research
is shaping how hi-tech’s big players are and its positive application. DeepMind savvy about what
approaching the development of new Health was launched in 2016 and has
technologies, where innovation for the worked in partnership with two London
we do with it.
benefit of society is key. Just as Google is hospitals: Moorfields Eye Hospital,
keen to stress how artificial intelligence where AI is being used to help clinicians
(AI) has the potential to positively improve the diagnosis and treatment of
impact healthcare, so its competitors sight-threatening eye conditions; and the
are also showing a benevolent face: Royal Free Hospital, where the AI-based
IBM launched its Science for Social insights into client data at speed. “The
Streams mobile app is being used to detect
Good programme in 2017, while power of data is incredible and we have
patients’ risk of acute kidney injury. Both
Microsoft’s ‘AI for good’ declares its access to more of it than ever before,”
applications have yielded positive results,
commitment to positively impact the he says. “Whether it relates to business,
enabling quicker diagnoses and treatment,
environment, education and healthcare. healthcare, weather events or famine,
and saving time for clinicians and nurses.
that data can be analysed and applied.
Whether or not the tech giants’ motives POWER AND RESPONSIBILITY But we have to be responsible; we have
are truly benevolent, many believe that AI to be savvy about what we do with it.”
DeepMind’s healthcare solutions show
can be harnessed for the common good.
that AI undoubtedly has the potential to
The first AI for Global Good Summit was
transform patient care and treatment.
held in 2017, bringing together United
However, early testing of the Streams app
Nations (UN) agencies, government
and Google’s recent announcement that
officials, industry leaders and AI experts
its DeepMind subsidiary is being moved
to discuss how AI solutions could
into the main arm of the organisation,
address global challenges; at the 2018
have raised concerns about the sharing
Summit AI and digital technologies were
and use of patient data. AI can process vast
identified as vital in achieving the UN’s
quantities of data quickly and accurately,
Strategic Development Goals (SDGs).
but it also needs vast quantities of data
Can AI really help to make the world in order to ‘learn’. Particularly in light of
a better place? And if so, how? the Cambridge Analytica scandal, where
personally identifiable data was harvested
FROM SMALL SEEDS from Facebook and sold for political
Beth Schulte, principal at UHY Advisors gain, there is heightened concern about
MO in St Louis, United States, has worked how personal data is held and used.
extensively in the technology space, as
“With great power comes great
well as being a mentor for one of the most
responsibility,” says Stuart Hurst, cloud
highly ranked accelerator programmes in
accounting specialist at UHY Hacker
the US. “While big players like Google have
Young in Manchester, UK, and chair of
a lot of money to invest, the ideas and
UHY Hacker Young’s cloud accounting
innovation driving tech often come from
group. Stuart is an advocate of AI
young innovators,” she says. “Building on
and machine learning, describing its
grassroots ideas with a strong team, they
application in professional services as
go on to be acquired by an organisation
game-changing due its capacity to provide
with the resources to expand it.”
6 UHY GLOBAL January 2019 FEATURE – CAN AI MAKE US BETTER?
HYPERCONNECTED HEALTH collect, digitise and analyse medical data and the adoption of both fixed and
In an increasingly connected world, issues from specimens including blood samples mobile broadband is on the rise even
around personal data have arguably and x-rays, with the aim of deploying it in in the least developed countries, the
become more problematic. However, this areas where a lack of resources and trained UN’s International Telecommunications
hyperconnectivity is also helping to drive, individuals raise barriers to accessing care. Union (ITU) iterates that “higher growth
develop and deliver AI-based solutions will be needed to bridge the divide.”
So far, so promising – but challenges
aimed at improving access to healthcare.
remain. Dhwani Gala is a partner at UHY INVESTING IN THE FUTURE
Despite its healthcare system being member firm Chandabhoy & Jassoobhoy Hyperconnectivity has also enabled new
universal, India has one of the largest in Mumbai, India, which offers ‘one- ways of working that have allowed start-
subnational disparities in access stop-shop’ support to start-ups and ups to flourish and has, together with
to quality healthcare in the world. small enterprises seeking business and technology, democratised innovation to
Bangalore hosts one of the largest tech financial advisory and services. “As a some extent. But investment and support
clusters in the world, with numerous country, we definitely have the ability to is key if the young entrepreneurs looking
homegrown start-ups innovating to improve healthcare – our tech experts to innovate for social good are to succeed.
find ways to make healthcare more and scientists are among the best in the Whether backed by governments, industry
readily available in areas with a high world,” she says. “The great challenge or academia, investment in specialised
patient to doctor ratio, or where medical in India is going to be ensuring that the hubs and accelerators is growing globally.
facilities are not easily accessible. improvements offered by AI really can
reach remote towns and villages and In Singapore, supporting tech start-ups
Mfine, for example, has developed an the poorer sections of our society.” is a key part of government strategy,
AI-powered platform to connect patients aimed in part at improving healthcare
with medical professionals via a ‘Cloud Connectivity and technologies that use management in an ageing population
Clinic’. Partnering with 30 local hospitals, it it have the potential to help address with the fourth highest medical inflation
facilitated over 25,000 consultations in six healthcare inequalities in India and costs in the world. Innovations being
months. Meanwhile, SigTuple is developing elsewhere. But while mobile coverage now developed by the deep tech start-ups
a platform which uses machine learning to reaches 95% of the global population funded by government-owned company
FEATURE – CAN AI MAKE US BETTER? UHY GLOBAL January 2019 7
says Crispin. “And we will certainly do our Stuart Hurst at UHY Hacker Young in
best to support those start-ups working Manchester, UK, sees that the flexibility
towards solutions that benefit society.” that enables start-ups to lead AI innovation
While technology is also reflected in their approach to the
SUPPORTING SUCCESS services they use. “Start-ups are looking for
means you can Of course, the start-ups that are driving a different kind of service,” he says. “They
access information innovation need support beyond seed tend to be flexible and can be quick to
investment and early-stage mentoring if change, and cloud technology suits them
at your fingertips, they are to succeed. In the light of potential well – the client can use cloud solutions to
clients still want interest from ‘big players’ such as Google, gain greater insights into their business.”
support from a trusted advisor is key.
face-to-face However, the need for a personal,
Rob Starr, corporate finance director at UHY human relationship remains. “While the
meetings. The personal
Hacker Young in London, UK, helps support technology means you can access the
relationship is still start-ups to raise finance. “Less experienced information at your fingertips, clients
management teams may have the technical still want face-to-face meetings,” says
incredibly important.
skills for their business, but may need much Stuart. “That personal relationship
more support. Alongside things like proof of is still incredibly important.”
concept, the ability to demonstrate market
potential, and a sustainable and adaptable
WORKING IN PARTNERSHIP
business model, would-be investors need
SGInnovate include a stethoscope that will Used in healthcare or professional services,
to know how big the potential exit is
allow doctors to ‘see’ into a body and use AI offers many advantages, but the
likely to be and next steps following the
data to look for and analyse problems, and human element remains fundamental.
current investment round,” he says.
a handheld device capable of capturing In the words of Fei-Fei Li, director of
ultrasound images from patients in more “I would always recommend using an Stanford University’s Artificial Intelligence
remote areas, which can then be used to advisor,” Rob continues. “We can help Lab and chief scientist for AI research
make treatment recommendations. Crispin bring a level of credibility, even where at Google, “Despite its name, there is
Lee, director of business development at experienced entrepreneurs are involved. nothing ‘artificial’ about this technology
UHY Lee Seng Chan & Co, Singapore, As well as utilising our market knowledge – it is made by humans […] it must
has noticed an increase in the number of and international network, we can help be guided by human concerns.”
start-ups seeking business support from facilitate conversations and negotiations.”
the firm. “Singapore has a very pro- While AI may not be a panacea to
business climate, backed by government Beth Schulte agrees: “Professional services global challenges, its application is
incentives and support,” he says. “As well firms like UHY can help start-ups in many playing a valuable role designed to
as promoting Singapore as one of the best ways, from setting up their entity correctly benefit humanity. It is perhaps not a
start-up hubs in the world, they are actively and ensuring access to tax credits for question of whether AI can make us
focusing on the tech space, including AI.” research and development, to guiding better, but rather how we use it.
them on their business journey. We can
“As a firm, we support the ideal of using help them tell their story, act as a chief For more information about UHY’s
AI for the benefit of all. Apart from being financial officer if they don’t have one, and capabilities, email the executive office,
a professional services firm, we also have even help try to increase the value of their info@uhy.com, or visit www.uhy.com
a social responsibility and want to ensure company. Alongside financial consulting,
that technology is used in the right way,” we can offer tailored, strategic support.”
8 UHY GLOBAL January 2019 FEATURE – SUN, SEA AND CITIZENSHIP SUN, SEA AND CITIZENSHIP MORE COUNTRIES THAN EVER OFFER RESIDENCY OR CITIZENSHIP IN RETURN FOR INVESTMENT, BUT DO THESE ‘GOLDEN VISAS’ MAKE SOUND ECONOMIC SENSE?
FEATURE – SUN, SEA AND CITIZENSHIP UHY GLOBAL January 2019 9
T he sandy beaches “I am not a believer in the theory that the Maarten says: “The Netherlands is known
Maltese economy is buzzing at full steam for its tax facilities for foreign investors.
and sunny climates of
ahead because of the IIP scheme,” says There are several tax incentives for
Mediterranean Europe are well Pierre. “But there is obviously an indirect innovative start-ups and for R&D activities.
known for attracting foreign side effect as high-net-worth individuals Also, geographically there is access to
investment, often in the form who come here and purchase high-end Europe, and in terms of infrastructure the
of tourist dollars spent in property, dine at the best restaurants, Netherlands is an attractive option.”
shady tavernas. But now the berth luxury yachts here, all act as a
Like the US, the EU is a huge draw for
hotspots of Spain, Portugal, catalyst to the economy, accelerating
its velocity. So yes, IIP is a contributor to individuals who can afford to pay between
Greece, Cyprus and Malta are economic wellbeing, albeit indirectly.” EUR 250,000 (around USD 294,000)
becoming renowned for luring and EUR 5 million (USD 5.9 million) for a
a more upmarket clientele. Malta is clearly an attractive option for passport. Tax breaks and lifestyle play a
those who need a parking spot for the part, and Western education is especially
In May this year, Greece announced an yacht; indeed, the very concept of golden coveted. Mobility is also important:
expansion of its hugely popular golden visas started in 1984 on the poor but a US or EU passport allows visa-free
visa programme, widening the types similarly sun-dappled Caribbean island travel to upwards of 160 countries.
of investments available to applicants. of St Kitts and Nevis. But sunshine is
Golden visa schemes allow wealthy foreign not the only reason a wealthy individual A CHINA SYNDROME?
nationals to fast-track residency – and might covet a second or even third Applicants for golden visa schemes tend
often citizenship – in return for investment. passport. While the Maltese climate, to come from Russia, India, the Middle
In Greece, residency can be bought for culture and history are important, Pierre East and – most of all – China. Chinese
an investment of EUR 250,000 (around agrees that “some come because of nationals are the biggest applicant group
USD 295,000) in real estate. The new the European Union (EU) – a Maltese in all major CIP schemes, and have spent
rules will allow would-be residents to passport as an EU member is very attractive a combined USD 24 billion on golden
invest their money in more diverse ways. to people from other continents.” visas across the globe. Unlike applicants
from other countries, who tend to be
The Greek scheme is now the biggest in FREEDOM TO ROAM very wealthy, Chinese investors also
Europe, and – perhaps not coincidentally At least 24 countries around the world come from the middle classes, with
– also among the cheapest. Between the now run CIP schemes, including some individuals regularly selling property
scheme’s inception in 2013 and August – like the UK, New Zealand, Canada or businesses to buy a golden visa.
2018 Greece issued 8,367 golden visas to and the Netherlands – not blessed with
main applicants, bringing a much needed a Mediterranean climate. The US CIP And yet China has enjoyed decades
investment of EUR 1.5 billion (over USD scheme, called EB-5, is the most popular in of economic growth, lifting millions of
1.76 billion) to a stagnating economy. the world, and is estimated to deliver USD Chinese out of poverty. Cities are booming.
1 billion to the economy every quarter. So why do some members of the Chinese
PAYING FOR A PASSPORT middle class want to move away?
A boat ride across the Mediterranean sea, In the Netherlands, individuals must invest
Malta’s inviting climate and relaxed way EUR 1.25 million (USD 1.47 million) in a Of course, only a tiny minority of the
of life also attract individuals looking for Dutch-based company or qualifying fund huge Chinese middle class want to buy
citizenship-by-investment, or CIP. Pierre to receive a temporary, though extendable, overseas residency or citizenship, and
Galea Musù, partner at Maltese member residence permit. After five years, the among those that do the reasons are
firm UHY Pace, Galea Musù & Co in Ta’ investor can apply for permanent residence complex. An Associated Press analysis in
Xbiex, is unequivocal about the scheme’s or Dutch citizenship through naturalisation. 2017 found that some beneficiaries of
success: “Is it working? It certainly is!” China’s economic boom still feel insecure
The Dutch scheme is aimed squarely at about the future, with one applicant for
Pierre explains that Malta actually runs economic regeneration, and a points the US EB-5 scheme commenting that
two popular schemes, one of which is system applies that promotes investments “someone in the middle class can become
a residency scheme in which individuals in innovation and job creation, favouring poor in one second.” Other Chinese
guarantee their own health cover and individuals who can bring specific applicants may want to escape China’s
access to housing and agree to pay a knowledge, networks, clients and active rigid and competitive school system,
minimum tax rate of EUR 15,000 (USD involvement to the Dutch economy. rocketing property prices and urban smog.
17,650). The other – the Individual
Investor Programme (IIP) – is about So with 23 other schemes to choose from,
citizenship. It requires a EUR 675,000 why choose the Netherlands? Maarten
(USD 794,300) donation to the national van der Steen, tax advisor at UHY member
development fund and a EUR 350,000 firm Govers Accountants/Consultants
(over USD 411,800) property purchase. in Eindhoven, the Netherlands, believes
the country’s appeal is multifaceted.
10 UHY GLOBAL January 2019 FEATURE – SUN, SEA AND CITIZENSHIP
STABILITY IN AN INSECURE WORLD “A well-managed programme offers large Limited, says: “Applicants are mainly
For super-wealthy and middle-class revenue potential to the government from China, India, Russia and the Middle
applicants alike, golden visas can be a and private sector,” he says. “During East, and what draws them to Cyprus is
safety net, a way of replacing insecurity the period from 2001 through 2016, the very favourable tax regime, the fact
with stability. Looking from the outside, for example, the Quebec IIP program that Cyprus is in the EU and the excellent
Canada appears one of the most stable generated more than CAD 700 million lifestyle. The Cyprus government is
bets around, and until recently operated (over USD 542 million) from immigrant well aware of EU concerns and aims to
one of the most popular investor investors, and this sum was allocated to have a scheme that is both attractive to
immigrant programmes of all. The federal nearly 5,000 Quebec businesses. That investors and acceptable to the EU.”
scheme closed in 2014 – a victim of its has to have helped the economy.”
To that end, Cypriot authorities
own success – but the province of Quebec
A POTENTIAL BACKLASH? recently introduced more stringent
runs a regional scheme which will accept
Still, the Canadian federal government controls on the programme and
up to 1,900 applicants in 2018/19.
is not the only authority having second capped it at 700 passports per year.
thoughts about golden visa schemes.
Across the Mediterranean, Pierre believes
In the US, axing the EB-5 scheme has
Malta’s CIP has been singled out for unfair
been discussed in Washington, with
criticism. “The criticism of the system,
senator Dianne Feinstein saying: “It
pushed at EU Commission level, was aimed
is wrong to have a special pathway
For super-wealthy to citizenship for the wealthy while
at demonising it. In reality, the process
of verification and due diligence is very
and middle-class millions wait in line for visas.”
rigorous and highly professional. Getting a
applicants, golden In Europe, fears have centred on who residency permit or a passport is no mean
might be exploiting these back doors to feat. It is a lengthy process, it is rigorous
visas can be a EU citizenship, and where their money and the authorities are unflinching.
might originate. Questions have been The rate of refusal is not negligible.”
safety net, asked in the European Parliament about
The countries that operate golden
replacing insecurity whether member states can always
visa schemes insist they are secure
accurately identify the origins of these
with stability. substantial investments. In October 2018,
and tightly controlled. What is not
in doubt is their success, especially
Malta and Cyprus were named on an
for small nations with more limited
Organisation for Economic Co-operation
economic options. In Cyprus, Antonis
and Development (OECD) blacklist of
is convinced of the scheme’s worth:
nations whose golden visa schemes are
deemed to pose a high risk of tax evasion. “It brings capital into the economy.
The scheme targets wealthier individuals, It brings employment. It helps many
who are required to invest CAD 1.2 Cyprus is, like Malta, a popular destination
sectors of the economy, including the
million (around USD 929,400) with for wealthy individuals looking for an
construction and land development sector,
a Quebec crown corporation for a EU passport, not least because of its
the services sector, tourism and banking.”
period of five years at no interest, and extremely favourable tax regime for both
be worth at least CAD 2 million (USD companies and individuals. Its golden For an increasing number of countries
1.55 million). Interestingly, applicants visa scheme has not only come under around the world, benefits like these are
are favoured if they have experience of fire from the OECD, but also from some the most important considerations of all.
running a business and, unlike some members of the European Parliament.
other golden visa programmes, they For more information about UHY’s
Antonis Kassapis, director of Cyprus capabilities, email the executive office,
must intend to settle in the province.
member firm UHY Antonis Kassapis info@uhy.com, or visit www.uhy.com
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.COGS AND WHEELS UHY GLOBAL January 2019 11
WINNING CULTURES
O ur Cogs and Wheels section highlights what defines a improvement in both technical and soft
successful international network and in this issue, we skills supports the UHY network’s mission
to deliver the very best professional service
examine the difference that a strong ‘can-do’ corporate culture levels there are. Regionally, training mirrors
with a visionary international focus makes to UHY’s success. local needs; for example, the ASEAN
It is a way of working that gives the network its extraordinary group provides personal development
global reach and allows it to compete favourably on its excellent training in a region where succession
customer service delivery against larger competitors. planning is a legal requirement.
PROFESSIONAL RECOGNITION
Since its beginnings 32 years ago, the meeting (AGM), a meeting of the major
network has encouraged member firms firms group and sub-regional meetings. The quality expectations UHY has of its
to work together as one global family member firms provide added security to
to build business relationships rooted in Every UHY network meeting is a focal point clients. Aligned to recognised international
strong interpersonal cooperation with a for the level of relationship-building that professional standards, in particular
long-term approach. Clients and member is at the heart of the network’s success those of the International Federation of
firms alike believe that these fundamental and gives UHY an enviable strength. Accountants (IFAC), Forum of Firms, each
principles explain why the UHY network member firm signs a quality charter which
SHARING EXPERTISE
is now a dynamic global force with 8,100 is part of the network’s culture of ‘being
professionals working in over 320 business Special interest groups (SIGs) in tax, audit, the best’. Through this commitment
centres in more than 95 countries. corporate finance, mining and automotive member firms have to meet exacting
bring together UHY experts from across standards which are reviewed every year.
As a client of UHY Fay & Co, Spain, the network to share their experiences
entrepreneur and renowned film and expertise so they can add value for THE FINAL PROMISE
producer José Luis Moreno, joint partner their clients and help them make informed A network that is still 32 years young
at Dreamlight International Productions commercial decisions in their sectors. has plenty of time to grow – UHY’s
SL says, “We like the fact that there is strong principles of working together,
a UHY community working together DEVELOPING TOMORROW’S LEADERS
serving clients and having fun are
across the world and feel reassured With an eye on the future and a as robust as they ever were, and
that our plans are in good hands.” determination to make sure that member they will continue to flourish.
firms are as well informed as possible, the
FACE-TO-FACE VALUE network is committed to developing the “I am so looking forward to reinforcing
A focus on being accessible, friendly next generation of leaders. For the last 17 UHY’s incredible culture. There are very few
and informed is important to the UHY years the business has run an international networks of our size that have maintained
culture. Great believers in the power management and leadership development such a high level of the very best customer
of bringing people together to share forum in Spain for top performers from service combined with friendship and
ideas, build relationships and transfer across the network. Supported by an active trust,” says Rick David, UHY chairman and
knowledge, UHY invites all member alumni programme for past graduates chief operating officer of UHY Advisors,
firms to an annual meeting every year as the forum helps delegates to develop Inc., US, “Strong and positive inter-firm
well as three regional meetings covering non-technical skills like negotiation, relationships are invaluable to the UHY
EMEA, Asia-Pacific and the Americas. strategy, culture and leadership. network. Global cooperation will always be
encouraged and recognised as a driver in
Delegate response is always unanimously A thriving UHY secondment programme delivering exceptional customer service.”
positive – business referrals are initiated, encourages movement between countries
friendships made, ideas exchanged, and disciplines, giving ambitious young For more information about UHY’s
technical knowhow is expanded on and people the opportunity to learn new capabilities, email the executive office,
expertise is shared both formally and skills in new cultures across the world. info@uhy.com, or visit www.uhy.com
informally. The business agenda includes
expert speakers, dedicated drop-in and A ‘one great business’ dynamic programme
breakout sessions, the annual general of development, innovation and continuousPERSONAL PROFILE
A STRONG VOICE FROM
THE MOTOR CITY L to R, The David family – Rick, son Alex, wife
Denise, daughter Danielle and her fiancé Ben
W hen Rick David, chief operating officer, UHY Advisors, Inc., On a personal level, Rick calls himself
US, took to the stage at the global UHY Annual Meeting in a lucky man. Married to Denise for 35
years, he describes his wife as, “my rock,
Detroit last October it was immediately evident that the network’s my coach, and my biggest fan. I look
newly elected chairman was charismatic and passionate about UHY. forward to the next 35 years together.”
His personal motto is to maintain a ‘relentless positive attitude’
and colleagues across the business confirm that his capacity to stay His children, Danielle and Alex, are both
graduates of Northwestern University. His
focused and enthusiastic about everything he does is impressive.
daughter lives and works in New York City
and is soon to get married. His son recently
This was an enthusiasm that could have is to excel by giving the ‘Next Level left his first post-college job to work for an
been tested when the City of Detroit of Service’ and Rick takes enormous exciting start-up enterprise based in Chicago.
declared bankruptcy in July 2013, but pleasure in supporting the organisation, “I am immensely proud of them both,” says
instead of turning his back on the city he its people and their culture and values.
was born in, Rick was determined to play his
part in supporting his beloved hometown. “This commitment to great service extends
Amongst other charitable work he threw to the way I work with my talented
himself into voluntary roles, giving advice colleagues. It’s important for me to nurture
about economic development, working with exceptional young colleagues and I have
civic-minded entities focused on recreating to admit that the bright stars of the future
a new Detroit and helping to support area- keep me on my toes,” he says. “I had a
based arts and other quality of life projects. wonderful mentor in my early days with
a different accountancy network – he
“Today we have a vibrant city again that taught me to always do and be my best,
is testament to the spirit of Detroit and even when nobody is looking. I try to pass
its people,” says Rick. “I am incredibly on a similar ethos to the young people I
proud of the progress our community has am privileged to support and advise.”
made and I am excited about its future.”
Determined that accountancy is first a
Pride and spirit are also at the root of people business and secondly a numbers
everything that Rick and the rest of profession, Rick believes it is the human
the team at UHY Advisors in the US side of his work that drives excellence. Rick and his daughter, joined multiple UHY
staff members at the UHY-sponsored America’s
achieve. At work their everyday mantra Thanksgiving Day Parade 2018 dressed as clowns.
His wife, Denise, is pictured in the middle.PERSONAL PROFILE UHY GLOBAL January 2019 13
Rick. “They are wonderful people, hard
workers and family oriented. I am so proud
of the young adults they have become. We
have a lot of fun together and Denise and
I are excited that our family is growing and
our future son-in-law is a fantastic man.”
Growing up in Detroit, Rick’s father ran a
grocery and butcher store and one of Rick’s
happiest childhood memories is of standing
on overturned milk crates to reach the till
buttons – “that was my greatest happiness
as a little boy,” he says. “Perhaps that
was the start of me wanting to deal with
dollars while interacting with people!”
Rick’s identical twin brother, Rob, joins
him to celebrate Thanksgiving Day
At home, Rick relaxes by sinking into his
favourite chair with thrillers by authors such
as Brad Meltzer, Vince Flynn or Brad Thor Contemplating what other careers he bank of worldwide expertise so they can
or a historical biography. “We can always might have embarked on, Rick says that law grow confidently on the global stage. I am
learn from past leaders and often their was an attractive alternative because, like thrilled and honoured to be part of the
experiences are humbling and motivational accountancy, its success rests on outstanding team who will help to steer this agenda.”
at the same time. I think I will always prefer client service and tailor-made solutions.
the experience of a ‘real’ book rather than
While in college Rick spent time working
reading off a tablet,” he says. “So much of
our life is acted out on screen these days.” as a production assistant for televised RICK’S
JOURNEY
sporting events. Sometimes he was in the
He also loves spending time with his announcers’ booth as a stage manager,
identical twin brother and best friend. other times he was on the field or in
“We have a great time together, typically the production trucks. “With live sports Auditor and partner at KPMG
attending local sporting events. I enjoy broadcasts you never know what to 1978-2008
rooting for my University of Michigan expect and you have to keep your wits
Chief financial officer
Wolverines but my brother Rob is a about you at all times – I suppose that was
at Butzel Long law firm
Michigan State University Spartans fan. great early training for what I do now!”
2008-2010
We obviously have different standards
when it comes to college sports!” Hoping to harness his ability to respond Chief operating officer
positively and with real impact to any new at UHY Advisors
situation Rick looks forward eagerly to 2010-present
his time as chairman of UHY. “Our Board
is comprised of outstanding business Board of Directors at UHY
executives, each of them proven leaders International
in their own areas. It is humbling to sit 2012-present
We have a vibrant at the head of the table to chair our Chairman at UHY International
city again that is meetings, helping to guide our discussions 2018-present
towards continued network success.”
testament to the As well as being a well
“Our network gives member firms the respected auditor and business
spirit of Detroit opportunity to share knowledge of new adviser, Rick has also been
developments and provide referrals with an accountancy profession
and its people. I offices across the world. Utilising these regulator and standard setter.
am incredibly proud links also allows us to develop the next
With more than 40 years
generation of leaders in accountancy.”
of the progress our experience in the industry, Rick
“As business becomes more globalised, has worked with clients from
community has made. our industry has to ‘think local, go global.’ multinational corporations to smaller
Even though we may be focused on serving entrepreneurial enterprises. He also
clients in the dynamic middle market, they sat on the Michigan State Board of
too must maintain a global focus. Being Accountancy and the Professional
part of a dynamic international network will Ethics Executive Committee of
help us to build relationships with clients the American Institute of Certified
and serve them by tapping into a wider Public Accountants (AICPA).14 UHY GLOBAL January 2019 PERSPECTIVES
EASTERN
PROMISE
BUSINESS WITH CHINA IS BOOMING – AND CHANGING
W hen the Shenzhen Stock Exchange (SZSE) investment UHY ECA’s involvement with SZSE has been
roadshow recently rolled into Warsaw, Poland, it did not no accident, with the initial introduction
made by China experts at UHY Hacker
make the same media splash as a visit from the Rolling Stones, Young in London, UK. The UHY network
but it was a significant moment nonetheless. boasts an abundance of experience in
Chinese business, and includes a China
The increasingly global outlook of Chinese The firm is now working to promote
top-25 member firm, Zhonghua CPAs,
business over the last 15 years is well V-Next, SSI’s online platform for matching
in its ranks. Around the world, China
documented, but SZSE’s proactive attitude investors and appropriate businesses.
desks and experts in UHY member firms
to linking Chinese finance and European
Roman explains: “V-Next applies a non- help foreign businesses overcome the
innovation still felt like a watershed
public information disclosure procedure cultural and commercial challenges of
moment. Here was a very public statement
and deal matching mechanism to help doing business in China, and Chinese
of intent by a major Chinese equity market.
buyers, sellers and intermediaries find firms hoping to take the opposite path.
Roman Seredyński, managing partner potential counterparts or clients. But
SZSE’s outreach is good news for
at Polish member firm UHY ECA Group, the main idea is to connect innovative
innovative Polish businesses, who can not
has been working with Shenzhen enterprises with Chinese capital markets,
only gain access to Chinese capital but
Securities Information Co (SSI), a wholly- offering funding and investment matching
also, potentially, the vast Chinese consumer
owned subsidiary of SZSE, to help services and in particular helping
market. It is testament also to the
build relationships in the country. enterprises find investors from China.
increasing confidence of Chinese investors.
He says that the firm was approached “We have been asked to help innovative With that in mind, we asked China experts
because of close connections between Polish enterprises build a connection from around the UHY network for an
the wider UHY network and SSI, as well with suitable investors, and we are in up-to-date view on the opportunities
as UHY ECA’s own respected and well the middle of creating an appropriate and challenges of doing business with
connected position in the Polish market. strategy to make that happen.” the world’s second largest economy.PERSPECTIVES UHY GLOBAL January 2019 15
INSIDE OUT If that can be a shock to foreign executives,
While the SZSE initiative looks to connect the opposite is also true. Chinese businesses
Chinese investors with European looking to Europe, America or Australasia
companies, more Chinese firms are can be shocked to find a culture of fixed
looking outward than ever before. prices (charging fees based on actual
Kelvin Lee, partner at UHY Lee Seng charges incurred) and ringfenced working
Chan & Co in Singapore, says the city hours. Compromise and understanding
state is a popular stepping stone for may be required on both sides.
Chinese firms taking their first steps
And that is, most likely, what will happen.
into Southeast Asia and beyond.
Ella Zhu, a partner at Chinese member
“Around 75% of the Singapore firm Zhonghua CPAs, Shanghai, suggests
population is of Chinese origin and that, while cultural challenges remain,
mainland Chinese firms feel comfortable their significance is declining in a modern,
Melanie Chen
doing businesses here,” he says. globalised world. “Nowadays, the world is
one world, and therefore cultural challenges
There is much talk of the cultural and are not such a big issue,” she says.
business challenges Chinese firms face “The Chinese style of organising and
when moving outside home borders, of managing operations is based on CHANGING OPPORTUNITIES
but Kelvin adds that many have learnt traditional hierarchical models, as well as Certainly, statistics suggest that cultural
to neatly side step these issues. a command-and-control based approach differences are not being allowed to get
to management. In Europe a more in the way of business. Foreign direct
“Interestingly, these days they are not autonomous work culture is prevalent.” investment (FDI) in China continues
so concerned about differing protocols to surge ahead, growing by 5.5% in
and corporate culture per se, because This could cause difficulties for unprepared the first seven months of the year.
what Chinese companies normally do is companies going in either direction
employ key functional managers with local (foreign companies looking to China or High-tech companies are leading the
exposure – for example, HR and admin Chinese investment, or Chinese firms charge, says Elissa Shen, senior partner at
managers, finance managers and so on.” expanding into the West), and there are Zhonghua CPAs. “There is a preferential
also clear differences in business culture tax rate of 15% – compared to the normal
Chinese firms looking to expand abroad and etiquette that companies – and corporate rate of 25% – for companies
can draw on the huge Chinese diaspora their advisors – need to be aware of. investing in certain industries, like
to fill key positions in target markets. With high and new technology, software,
50 million ethnic Chinese people living For instance, Melanie Chen, managing integrated circuits, public infrastructure,
outside China, and many others having director and head of the China desk environmental protection and energy
spent time studying at foreign universities, for UHY Advisors, Inc., New York, conservation, and also investing in certain
finding Chinese speakers with specific local says: “Chinese business people might underdeveloped areas of the country.”
knowledge is not necessarily difficult. typically expect immediate responses to
questions, and also weekend and late China’s tax policy is geared towards
Still, despite the growing influence of night phone calls. This can surprise foreign attracting investment in important
globalisation, fundamental differences of counterparts. They will also bargain, industries, but the rates apply to domestic
company structure and management style bargain and bargain some more on fees.” and foreign investors equally. While the
remain, particularly between Chinese and opportunities for foreign businesses in China
Western firms. UHY ECA’s Roman says: 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
These days they are not so concerned is changing and China is no exception.
Regulations in China generally are getting
about differing protocols and corporate more in line with international practice.”
culture, because Chinese companies Zhonghua’s Ella Zhu agrees: “I do not
normally employ key functional managers think it is easier for foreign companies to
do business in China today than it was
with local exposure –HR and admin five or ten years ago, because currently,
foreign enterprises cannot enjoy preferential
managers, finance managers and so on. tax policies simply for being foreign.
In addition, labour costs in China are
becoming more and more expensive.”16 UHY GLOBAL January 2019 GLOBAL
PERSPECTIVES
NEWS
GOOD GUIDANCE IN accept Chinese enterprises because
CHALLENGING TIMES they are perceived as unclear in their
In the other direction, business is also governance, as being unfairly subsidised
by the government and as serving the
brisk. According to the China Global
interests of the Chinese state rather
Good guidance from
Investment Tracker, the value of China’s
overseas investment and construction than being commercially driven.” respected providers
combined is approaching USD 1.9 trillion.
The key, says Laurence Sacker, managing is the best way
But again, change is afoot. Chinese partner at UHY Hacker Young, London,
authorities recently introduced curbs on UK, is for companies on all sides to be to cut through
thoroughly informed and well prepared.
outward investment, concerned by rising
He identifies corporate governance,
suspicion and
numbers of debt-fuelled acquisitions
abroad. That action has been matched and diverse regulations and legal provide reassurance
in some countries – most notably the requirements, as challenges Chinese
US – by rising suspicion of Chinese firms face when moving into Britain and to regulators.
ambition, fuelled by a protectionist Europe. “It is also true that the economic
president. A growing number of sales environment is significantly different
are being blocked by regulators. between China and the UK,” he says.
“As a consequence, investment involving Laurence adds that UHY Hacker Young
in London is “able to guide Chinese Laurence points to the importance of
multi-billion dollar acquisitions by
businesses and individuals through the the UHY international network in this
Chinese state-owned companies or large
maze of requirements and best practice regard. “UHY member firms provide
Chinese public companies in the US has
to help them achieve success.” vital assistance with cross-border
dwindled in 2018,” says Melanie Chen.
transactions, giving commercial and
“However, small acquisitions by private Indeed, in a business environment that tax advice as well as ongoing advisory
Chinese companies under the radar of is a little more cynical, and a little less services. We can always involve other
the US and China media are still active. welcoming, than it was five years ago, offices around the international network
UHY LLP’s China Group, based in New expert and locally relevant advice is if required to make the process smoother
York, US, was involved in five cross-border more crucial than ever. Good guidance and our advice more robust.”
acquisitions between China and the US from respected providers is the best
way to cut through suspicion and SZSE’s approach to Polish firms is one
in the first three quarters of 2018.”
provide reassurance to regulators. example of the new opportunities that
Still, the timing of the SZSE outreach exist between China and the rest of the
may be instructive. Many private Chinese “It is very important to keep up with this world. But in many ways the landscape
investors are turning to Europe instead. turbulent tax and legal environment,” has changed markedly in the last couple
But Roman Seredyński says there is some says Roman. “This is the main reason of years. Cultural differences may be
suspicion here too. “European countries why the help of experienced consulting losing significance in a globalised world,
in general actively seek out Chinese companies is invaluable, to avoid but stiffer regulation and more stringent
investment, but their magnitude – and difficulties in understanding the oversight mean that companies and
certain patterns of investment – have complexities of local legal regulations investors on all sides need to be fully
also raised concerns. Some countries and all their potential consequences.” prepared and wholly compliant.
have already been rather unwilling toGLOBAL NEWS UHY GLOBAL January 2019 17
UK TAX GOING
DIGITAL
The first stage of the UK government’s
Making Tax Digital for Business (MTDfB)
programme is due to be rolled out this year. MALAYSIA REINSTATES SST
From April 2019, all VAT-registered
organisations exceeding the VAT Following a transition period in which Seri Subromaniam Tholasy, director
registration threshold of GBP 85,000 will GST was set at 0%, a new Sales and general of the Royal Malaysian Customs
be required to keep digital records of all Services Tax (SST) regime became Department. “We expect only 80,000
transaction details using software that can effective in Malaysia on 1 September businesses to register with SST.”
link directly to HM Revenue & Customs 2018, imposing a levy of 5-10% on
the sale of goods and 6% on services. “The SST regime aims to be both
(HMRC) systems, and use that software to
Overall, SST is applicable to under 40% people-friendly, by lowering the cost of
return data directly to the HMRC within
of goods listed on the Consumer Price living, and business-friendly, by reducing
five weeks of their VAT quarter.
Index, as compared with 60% under GST. compliance and administrative costs,”
“HMRC estimate they lost GBP 3.5 billion says Patrick Chin, an executive director
in revenue through VAT return errors in the This means that just three years and tax specialist at UHY in Malaysia,
2015 tax year alone,” says Sean Glancy, after the introduction of Goods and Kuala Lumpur. “As well as eliminating
partner and tax specialist at UHY Hacker Services Tax (GST), the Malaysian the costs associated with claiming GST
Young, London, UK. “By modernising government has reinstated the system refunds, the relative simplicity of SST
the way that UK taxes are administered, of indirect taxation that it replaced. will mean businesses will no longer
MTDfB aims to reduce errors and revenue face the challenges associated with
Businesses are also subject to the new the technical complexities of GST.”
loss. UK VAT-registered businesses should
tax regime, although SST is applicable
review their current accounting systems to
to fewer goods and services than For further announcements and
ensure that they have the relevant digital
GST. “About 85% of businesses will guidance on the new SST regime, visit
connections with HMRC in place by April,
be out of the tax net,” says Datuk https://mysst.customs.gov.my.
but all businesses should start preparing for
MDTfB compliance now.”
It is expected that MTDfB will be rolled out
to businesses, self-employed individuals ALL CHANGE AT IFAC
and landlords from April 2020 onwards,
with a requirement to report summary The International Federation of and opportunity for our profession,”
information on profits, income and Accountants (IFAC) has announced said Dr Joo. “I look forward to focusing
expenditure to HMRC on a quarterly basis. Dr In-Ki Joo as its new president. on a future-ready profession which
He will serve a two-year term, harnesses the strength of its education
For further information, see VAT Notice
ending in November 2020. platforms and commitment to ethics.”
700/22: Making Tax Digital for VAT on the
UK government website: www.gov.uk. Dr Joo joined the IFAC board in 2012 IFAC represents around three
and was the organisation’s deputy million accountants in more than
president from 2016 to 2018. 130 countries around the world. By
promoting high-quality international
A professor emeritus of accounting at standards, IFAC aims to strengthen
Yonsei University Business School in the accountancy profession and
Seoul, South Korea, Dr Joo has served contribute to the development of
the profession academically for many strong international economies.
years. He has held top positions with
the Confederation of Asian and Pacific Alan Johnson replaces Dr Joo as
Accountants, the Korean Accounting deputy president of IFAC. He joined
Association, the Korean Academic the IFAC Board in 2015 and is also
Society of Business Administration, chair of the Association of Chartered
and the Korean Academy of Business Certified Accountants (ACCA)
Ethics, as well as being a Board Accountants for Business Global Forum.
member of the Korean Institute of He was previously a non-executive
Certified Public Accountants. director of food retailer Jerónimo
Martins and chief financial officer for
“I am honoured and energised to lead Unilever’s global foods business.
IFAC during this time of great changeYou can also read
