Nov. 28 - As the dust starts to settle on a visibly shocked Mumbai, I am reminded yet again of the trials and responsibilities operating in emerging markets brings. Dezan Shira & Associates dispenses legal and tax advice to multinationals investing in China, India and Vietnam – emerging markets all – and the additional responsibilities this brings to the practice is a call that has to be answered. Such countries, as they develop require an expertise and infrastructure that simply cannot be managed from the safety of a lawyer’s armchair in New York, San Francisco, LA, London or Frankfurt. Advising on law, tax or business in emerging countries from China to India, Brazil to Russia or any combination of Asia, Africa, the Middle Eastern or Latin America is not for the faint hearted, and those who stay safely at home do not possess either the desire themselves to commit to such places, nor the infrastructure to support clients when things go wrong.
Our clients in Mumbai were there for a variety of reasons, but all had hired my firm for advice, and introductions. My local office, staffed with Indian lawyers and accountants, were dealing with a number of cases, from Chinese clients wanting to establish distribution networks, to an American client wanting a permanent office from which to bid for, and execute interior design work on the many airport projects that India is developing.
It could all have been arranged from the comfort of an ivory tower in New York, but we had invested in our own offices there, and when the first bombs went off, our responsibilities for client safety were triggered. Eight clients were housed in the Taj Hotel, others were close by. As I got calls from my staff at midnight in China, letting me know what had just occurred, we put into place an action plan to contact all clients and staff in Mumbai. Personnel were raised from their beds, telephone numbers and contact details retrieved, and phone calls made. Two hours later, all our clients and staff had been located bar one.
Several were holed up in a restaurant close by to the bombings and shooting, others were safe in hotels away from the immediate area. We were able to get word to relatives and employees that they were safe. We contacted the U.S. office of the missing person, and also the U.S. consulate in Mumbai to advise them of our concerns.
Come close of business yesterday, some 24 hours after the attacks, all personnel had been located – the missing individual had been among those held hostage – and our staff was helping all find alternative accommodation, putting them in touch with employers and families, and even arranging food, translations and petty cash. We couldn’t have done it remotely, watching what was going on via CNN from an office half a world away. I fly in next week to personally overview the damage caused to our own offices, deal with whatever needs to be done, and to ensure that staff morale and clients are all OK.
But it’s not just been Mumbai that has been an example of what a real on-the-ground-presence in an emerging market means when advising clients.
China too, has had its troubles. Now relatively peaceful, lawyers and consultants fly in from all over to accompany their clients on trips or provide them with sage advice. One lawyer I once heard talk told an audience they’d been “involved with China for over 20 years.” What that actually meant was they had spent six months in 1992 in their firm’s Hong Kong office, and had subsequently made two trips to the mainland since, while being based in New York. While clients may be easily fooled, it doesn’t really cut the mustard.
When SARS hit, we were on the spot and among the first practices – via China Briefing – to issues alerts to clients resident in China and give advice and contact details – in Chinese and English – about what was going on and what to do about it. Bird Flu was the same.
In India, floods have meant stranded clients in Gujarat, and in Xinjiang, emergency hospital treatment for a client suffering a heart attack in Urumqi. Road accidents, broken bones, bouts of flu requiring medicine, the occasional theft of a passport and loss of wallets are routine, while at the other end the provision or tour guides or recommendations for hotels or restaurants are just second nature.
Advising on emerging markets is a responsibility. It’s not just taking clients out to fancy restaurants, attending a conference in China twice a year and then spending 340 days sitting in an office back home, non-committal, without infrastructure, and not getting your hands dirty.
But getting hands dirty is what emerging markets are all about. Things go wrong, plans go awry, and problems crop up. This happens almost by definition. When it does, an armchair advisor can’t help. Emerging markets require an on the ground presence. When dealing with lawyers, accountants or other business advisors in such places, it’s a good idea to ask your advisor where they pay their taxes. Because if they isn’t on the ground in an emerging market, they can never truly provide the service that dealing in such markets really needs.
The on-the-ground legal and tax firms and consulting practices that truly have a presence in the countries that their clients operate in are worth their weight in gold. Foreign investors looking at emerging markets would do well to find out which ones are truly committed, and which ones are the armchair advisors.
For a larger picture of the developments in Mumbai over the past week, please visit our sister website 2point6billion.com.
for Dezan Shira & Associates, the foreign direct investment legal and tax practice responsible for China Briefing 
I have been over a hundred times in china since 1994, created companies, merged companies, liquidated companies etc…. and i can only say i fully agree with the contents of this article.
One NEEDS a good local advisor
Chris I think you showed a great deal of fortitude in dealing with the Mumbai issue (I’ve been following your 2point6billion blog with a mixture of horror and fascination) and remember the lead a few years back (I think you were based in Shanghai then) you took over SARS and questioning the government figures. That took balls and initiative. There are too many good-time johnnies in China, especially now, and much nonsense about their true capabilities. Commitment to emerging markets means investing in your own offices and living the deal. Well noted your comment about paying tax also. Insightful and keep up the great work. There are some great China hands out there, but also a lot of pretenders.
How the hell can you use what happened in Mumbai as an excuse to drum up business? There is something wrong with you.
100% with you on this one. Advisors with a real presence on the ground are a true asset. There are far too many pretenders out there sitting on their butts passing comment and distributing advice from offices overseas, then subcontracting it without getting their hands dirty. They like the income but are not prepared to live the lifestyle.
In 2003, when I was on my way to Shanghai, I was nervous - I was headed to a new place and knew no one.
At the airport in Shenzhen, I spotted the only other foreign person who happened to be nicely tailored and busy with is cell phone.
It was the middle of SARS and everyone was nervous about travel, and the disease…
When we landed, there was some nervousness as one person on the plane had a high fever, but in the end, they let us all as that person’s fever was in tolerable rate.
Chris Devonshire Ellis was that other foreign person. And after we landed on Shanghai, he shepparded me to the local watering hole and instructed me on the ways of doing business in China.
SARS had shut down China, but it had a long way to go before it could shut down Dezan Shira.
Subsequently, I was hired at a Dezan Shira subsidiary…and am in touch with the principles of the company til this day.
It shows the company’s abilility to weather any storm and I am proud to be affiliated with them.
anthony
Hi Anthony; I remember it well ! We partnered up with one of our pharmaceutical clients to have a look at the Government stats and what was being said about SARS (and to a lesser degree bird flu) it was immediately apparent the fatality stats were being suppressed, and they didn’t know what they were doing. It was only until Madame Wu Yi got in there and began sorting out the Ministry of Health with the WHO things improved. We issued I think 15 bulletins about SARS during that period, I travelled around the country seeing how things really were. At the end of the day, to give proper service, you have to live in the country your advising about. That’s especially true of emerging markets where things can change so fast, and often without warning. You can’t crisis manage from thousands of miles away. - Chris
Jerome – we have offices in Mumbai, staff and clients there right now I have to deal with. So I think I am able to comment on the issue. My position is that without having invested in India, we wouldn’t have been able to be so effective in providing assistance. It’s a situation I have seen time and time again in emerging markets, including China. Real client responsibility lies in being present and having infrastructure in the country in which you purport to be selling advice about. We do, and so do others. But many do not, and get fat on giving advice from armchairs far away, without committing anything. It’s responsibility I am talking about here, not “drumming up business”. – Chris
Thank you to all those who have phoned, emailed or commented elsewhere for their support. The Dezan Shira & Associates administration offices for China inbound investment at Raheja Center Point in Mumbai have thankfully escaped damage, however the practice offices, dealing with Indian investment will remain closed for the next week while damage - that fortunately is largely superficial - is repaired. We’ll try and get some photos up probably on the 2point6billion site when the area around the Taj, which is still being sanitized is open again to traffic and pedestrians. Clients that were in Mumbai have now returned home, while legal / tax staff will remain on leave for another ten days. 2008 has been quite a year, if we look back at Emerging markets, and China especially - staff in Beijing and Shanghai being evacuated when the Sichuan earthquake hit, China’s clamping down on pre-Olympics business visa issuance, and now the global financial crisis. 2009 may be more depressed in terms of investment flows but I think it would be a relief if it was also somewhat less exciting.
Hi Chris, Belatedly, I just had a chance to complete the great story commemorating 15 years of the practice. I loved it! I really appreciate that you took the time to do this and share so many great stories. As I said when we met a few weeks ago at the Capital Club, I believe that you and your team deserve much credit for what you have done here.
Cheers,
Frank
A free pdf copy of the book can be found here:
http://www.china-briefing.com/news/2008/09/18/the-story-of-a-china-practice-now-available-via-free-download.html
Chris I couldn’t agree more about your comments on support being key in emerging markets. Its vital in countries where things run a little differently, and your executives are a long way away from their home country. I’m relieved your Mumbai office is Ok and please give my best wishes to Rahul, Aaron and Kinjal there. They’ve been great support to us in the past and do your team proud.
I do not understand what you are aiming at with this article, it is somewhere between promoting yourself and your business and describing what happened in Mumbai. However it does shows that nowadays no place is isolated as firms like yours and many others will be able to inform what is going on through their websites and blogs. This makes it easier for people to find out what is going on. Good to hear you are there for your clients and not just thinking about how to save yourselves from harms way.