Serving San Francisco, East Bay, and Silicon Valley
By Elizabeth Holt Andrews
On February 23, 2017, FWSF, together with the Cal-Asia Business Council and the Asia Society, jointly sponsored a distinguished speaker panel on the topic of “Doing Business in China.” Hosted by KPMG in their recently remodeled offices in SoMa, the evening began with an outstanding spread of Chinese food and networking time.
The speaker panel of China experts was moderated by Dr. Bruce Pickering, formerly of the World Affairs Council and currently Vice President of Global Programs at the Asia Society, where he oversees cross-Center program initiatives throughout the organization’s global network. The panel members included an impressive array of experts on Chinese business including Teresa Kong, Portfolio Manager at Matthews Asia, who manages the firm’s Asia Strategic Income and Asia Credit Opportunities Strategies; Penny Chen, a Chinese Certified Tax Agent and Hong Kong Certified Tax Advisor at KPMG, who has a decade of experience advising clients on China tax and business regulations; and John Kamm, founder and chairman of the Dui Hua Foundation.
Unsurprisingly, the evening’s talk turned quickly to the changes to the global business landscape being wrought by the Trump administration. The experts commented on the diplomatic crisis precipitated prior to the inauguration when President-Elect Trump took a call with the President of Taiwan, an apparent attempt to reverse a decades-long trend of American deference to the One China policy. Events de-escalated shortly thereafter when President Trump spoke with China’s President Xi and committed to honoring “our One China policy”—although as Mr. Kamm pointed out, that commitment was not quite the same as prior American administrations who have historically honored “the One China policy.” The experts predicted that the Trump administration was likely to continue pushing the envelope on One China, and cautioned the audience to pay close attention to which representatives the new administration sends on diplomatic missions to Taiwan and how senior those officials are.
The talk then moved to China’s increasing efforts to flex its global muscle on the worldwide stage and the direct effect it could have on business. Ms. Kong emphasized that, while American soft power has historically been built on a platform of the United States’s military and political power, China’s basis for influence has a different source: the economic power brought about by sheer weight of numbers and the conservative saving habits of the Chinese people. She opined that China’s flexing of its economic muscle worldwide is likely to look and feel very different from the American exertion of military and diplomatic power in past decades.
The experts next discussed the shifting landscape of global business, who formerly viewed China as a source of raw materials and a base for manufacturing. Recent trends, however, indicate that China is now viewed as a crucial market in its own right; for example, on Ali Baba’s biggest shopping day of 2016, the company made $50 billion in revenue on a single day. Moreover, as Ms. Chen pointed out, the disparity in corporate tax rates between America and China (40% versus 25% respectively) is currently driving many high-level decisions about how global businesses are structured. However, if the Trump administration follows through on its promise to reduce the American corporate tax rate to 15% or 20%, this decision would be likely to dramatically increase Chinese investors’ already-high incentives to invest heavily in American business.
The fascinating evening closed with a brief discussion of human rights in China, with Mr. Kamm noting that despite the continuing lack of government transparency and a relentless repression of dissent, the Chinese had made some enormous strides in human rights in past decades. He cited, for example, statistics indicating that in 1984, 24,000 people received the death penalty in China, whereas in 2016 only 2,400 were executed—representing a ten-fold decrease.
FWSF thanks the Asia Society, the Cal-Asia Business Council, and KPMG for joining with it in sponsoring this informative speaker panel.