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China Poses the Greatest Impact on Business Owners Around the World

2007-02-06 17:40 803

HONG KONG, Feb. 6 /Xinhua-PRNewswire/ -- According to the findings published today from the Experian(R) Grant Thornton International Business Report (IBR) 2007, economic expansion in mainland China has had the greatest impact of the four BRIC economies (Brazil, Russia, India and China), on business owners around the globe with a positive balance* of +12% (see Table 1), over the past two years. Both Russia and India share second place in the survey at +8%, followed by Brazil at +5%. The positive impact of mainland China on business owners has doubled in the past year, rising from +6% in last year's survey.

Table 1: Impact of the economic expansion in BRIC economies on

business owners around the world over the last two

years

Economies % balance*

Mainland China +12%

India +8%

Russia +8%

Brazil +5%

Source: Experian Grant Thornton International Business Report (IBR) 2007

"Mainland China's economic size and rapidly expanding share of world trade and investment gives it a growing influence in regional and world economic affairs. Its ability to produce goods at low cost has had major consequences for international competition and trade," commented Dr Tapan Datta, Experian's global economist.

The economic boom in mainland China has significantly increased business in recent years in the global economy, but the biggest impact is in the Asia Pacific region. Among all 32 surveyed countries/regions, Hong Kong, with a balance of +69%, is the main beneficiary, followed by Singapore (+35%) and the Philippines (+31%).

"It is interesting to note that the positive effect of mainland China's economic boom is also growing substantially for businesses in many other parts of the world. When comparing the responses to the same question asked in last years' survey, we notice that many more businesses are catching up in capitalising on opportunities in this fast emerging economy," said Desmond Yuen, partner and head of China services at Grant Thornton.

Table 2: Impact of the economic expansion in mainland China on

business owners around the world

-- responses in 2007 & 2006

Surveyed countries

/regions 2007 2006

Ranking# Balance* Ranking# Balance*

Hong Kong 1 +69% 1 +53%

Singapore 2 +35% 5 +15%

Philippines 3 +31% 7 +13%

Germany 4 +29% 9 +12%

Taiwan 5 +24% 21 -4%

Malaysia 6 +23% 2 +22%

United States 7 +22% 3 +19%

Netherlands 8 +21% 7 +13%

Spain 9 +17% 23 -6%

Japan 10 +14% 21 -4%

Russia 12 +9% 19 -2%

United Kingdom 12 +9% 15 +1%

India 15 +7% 5 +15%

Canada 20 +3% 14 +7%

Australia 20 +3% 3 +19%

Brazil 27 -4% Not Not

surveyed surveyed

Poland 30 -8% 27 -9%

Turkey 31 -17% 28 -16%

Thailand 32 -39% 30 -39%

Global average -- +12% -- +6%

Source: Experian Grant Thornton International Business Report (IBR) 2007 & 2006

The boom is, however, perceived to have had adverse effects in several countries, notably Thailand, where a negative balance of -39% of respondents say that they have seen a significant decrease in business, followed by Turkey (-17%) and Poland (-8%).

On the other hand, the economic expansion in the other three BRIC economies, namely Brazil, Russia and India has had a modest effect on businesses in mainland China. A balance of +10% of Chinese businesses have increased business as a result of the expansion in Russia, while +5% and +7% have increased business due to the expansion in Brazil and India respectively.

"Nonetheless, a large majority (71%) of mainland Chinese businesses see globalisation as presenting an opportunity for their company, in common with perceptions of businesses in other countries in the region. This no doubt reflects the huge export boost they have already enjoyed and the further potential which globalisation offers," explained Dr Tapan Datta.

In the survey, relatively few of the 32 economies perceive finance as a major constraint on their ability to grow. However, in three out of four BRIC countries, businesses perceive access to finance as a major constraint on their ability to grow (see Table 3). Mainland China cites cost of finance, shortage of working capital and shortage of long term finance as the major constraints on expansion, which is well over the global average.

Table 3: Financial constraints on business expansion

Cost of Finance Shortage of Shortage of

long term working capital

finance

Brazil 36% 32% 34%

Mainland China 35% 41% 38%

India 23% 20% 23%

Russia 40% 42% 40%

Global average 23% 23% 21%

Source: Experian Grant Thornton International Business Report (IBR) 2007

% of respondents rating the constraint 4 or 5 on a scale of 1 to 5 where 1 is a minor constraint and 5 a major constraint

"Mainland China's spectacular progress in the past 25 years has produced a new global economic superpower. Strong growth in exports and investment inflows continue to underpin robust output growth. Nevertheless, the key constraint of accessibility of finance could be a hindrance for expansion and development of many businesses in mainland China and should not be overlooked," concluded Desmond Yuen.

*The figure is the percentage balance of the respondents who are positively impacted less those are negatively impacted. The highest possible figure countries are able to record is +100% and the lowest is -100%.

Notes to editors

About the Experian Grant Thornton International Business Report (IBR)

Entering its 5th year, the Experian Grant Thornton International Business Report (IBR) was carried out among 7,200 owners of medium to large privately held businesses from 32 countries/territories during late 2006. Among them, 300, 250 and 150 medium to large privately held businesses were surveyed in mainland China, Hong Kong and Taiwan respectively. IBR began in 2002 and builds on the European Business Survey (EBS) which Grant Thornton ran from 1993 to 2001. In 2007, the survey's name was changed from the International Business Owners Survey (IBOS) to the International Business Report (IBR). The research was conducted by Experian Business Strategies Limited and Harris Interactive. For more information, please visit http://www.internationalbusinessreport.com

About Grant Thornton

Grant Thornton is one of the leading accounting, tax, and business advisory firms dedicated to serving the needs of entrepreneurial and owner managed companies. In Hong Kong and mainland China, Grant Thornton has offices in Hong Kong, Beijing, Shanghai, Guangzhou and Shenzhen, employing in excess of 650 people. Grant Thornton in Hong Kong is a member of Grant Thornton International - one of the world's leading organisations of independently owned and managed accounting and consulting firms providing assurance, tax and specialist advice to independent businesses and their owners. Firms operate in 110 countries in 520 offices with more than 22,600 employees. For more information, please visit http://www.gthk.com.hk

About Experian

Experian provides an unrivalled understanding of consumers, markets and economies in the UK and around the world, past, present and future. The business is a market leader in consumer profiling and market segmentation, economic forecasting and public policy research, supporting businesses, policy makers and investors in making tactical and strategic decisions. Experian's economic forecasting arm, Business Strategies, has operations in sixteen countries: UK, France, Netherlands, Spain, Norway, Sweden, Finland and Hong Kong - China, Germany, Czech Republic, Ireland, Greece, USA, Japan, Australia and New Zealand. For more information about Experian go to http://www.experian.com.hk/ebs/

Source: Grant Thornton
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