Dezan Shira & Associates Hits 20 Years in China
Interview with Chris Devonshire-Ellis
Jan. 9 – Dezan Shira & Associates celebrates its 20th birthday in China during 2012, making it one of the earliest foreign investment practices operating in China.
“I recall setting up in Shenzhen,” says the firm’s founder Chris Devonshire-Ellis. “It was during the very early days, and only a handful of professional services firms were in China at the time. Coudert Brothers and Freshfields were the big blue chip law firms, and I don’t think all of the Big Four had arrived in 1992 either. Most firms were in Beijing and a few in Shanghai, and the majority of these were Hong Kong-based practices. China hadn’t even liberalized their domestic legal and accounting industry at the time. Nearly all Chinese lawyers, accountants and auditors worked for the government; there was very little private enterprise in professional services back then.”
Why did Dezan Shira & Associates choose to start its life in Shenzhen?
“There were no other firms in the city, and I recognized the fact that the then-cheap SEZ tax rate (15 percent) would be a magnet for foreign investors. It wasn’t a fashionable choice, as most firms wanted to be in Beijing and Shanghai, but I’d put the business where the bulk of FDI was going – Guangdong Province. In hindsight it was a very shrewd move.”
Over the years, the firm has developed in leaps and bounds – not least because the practice developed, somewhat uniquely, a publishing house to handle their marketing. What started out as China Briefing – a four-page photocopied monthly print bulletin of some 500 copies – has now developed into Asia Briefing Media, with publications in five different languages covering six different investment destinations: China, India, Russia, Vietnam, Mongolia and Emerging Asia.
“China Briefing and our other titles have definitely helped develop the firm. Now we have to employ editors, sub-editors and researchers. Before, it was just me and a basic computer typing away about legal and tax issues in China. There was no email and there were no web sites, it was all print copies, sending faxes and distributing it to hotel business centers, trade organizations, embassies, consulates and chambers of commerce. Now we’re distributed globally by Springer (one of the world’s largest academic publishers) and run numerous web sites and mobile apps. It’s been quite an evolution.”
The firm also joined the Leading Edge Alliance global accounting network several years ago, an organization of several hundred international firms with a combined turnover in 2011 of some US$2.7 billion.
How has joining the Leading Edge Alliance helped Dezan Shira & Associates?
“Joining LEA helped expose us to two elements: practice development issues, as many of the other members are far bigger than we are and they’ve been able to mentor us through our own growth, as well as handling enquiries from member firms. Obviously China is a hot topic for many of them and we’ve been here. It’s been a mutually rewarding partnership with LEA.”
When and why did Dezan Shira & Associates decide to expand beyond China?
“Dezan Shira & Associates expanded out of China in 2006. By then we had nine China offices and were looking both to hedge against China and to develop other markets in Asia we thought would compete with China for FDI. We chose India and Vietnam.”
Development in China has continued apace, with the firm opening in Tianjin and Suzhou in 2011, bringing their total compliment of China offices to 12, while Asia expansion has also continued with a new office in Singapore.
“We are seeing a lot of bilateral and multilateral business come our way as a result. We handle Chinese clients in Singapore and Indian clients in China, and just about everyone wants to get a foothold in Vietnam and India these days.
What is the key to the firm’s success?
“The firm’s success has been built on its staff, as it has long been impossible for one person to handle everything; we went far beyond that years ago. With a staff of several hundred, Dezan Shira now has long-term partners, managers and senior personnel in place that have remained with the company for many years. We have a friendly, family, productive-style environment, and very few senior people leave us. We pay well and offer great career progressions – we have equity partners for example that originally began with us as interns, and we have equity partners from China as well as from the West. It’s a good blend.”
So what does the future hold?
“We’re actively looking to acquire similar, yet smaller consulting firms to us in China, and we’re already talking to some firms out there. Hopefully we’ll be able to absorb one or more of the more local businesses in China who have built up a good local client base but need assistance to get to the next level. Companies interested in joining forces with us should get in touch, we’re looking at acquisitions right now and budgets are in place. Otherwise, we’re interested in moving inland this year – Chengdu looks like a possibility, as does Wuhan. Along the east coast, Xiamen is developing nicely and we’ll need to do something in Urumqi at some point.”
Is any further growth planned for overseas?
“We’re starting to beef up our management in countries like India and Vietnam, and have begun the process of relocating some of our senior expatriate management from China, where they have learned a great deal, to these countries. So we’ll use 2012 to boost our management infrastructure in these emerging markets and our offices there.”
“In terms of new offices, we’re opening an office in the United States in March, again with one of our senior managers relocating from China to head that up, and we may do something in Canada towards the year’s end. Seattle is interesting from the U.S. side and doesn’t have much China representation, as are Vancouver and Toronto, and New York and San Francisco remain fertile ground for us. Our North American presence will help us promote American investment into China, India, Vietnam and elsewhere in Asia. Now we have the regional Asia infrastructure in place to properly support that in terms of getting accurate and detailed legal and tax advice to our North American clients quickly and efficiently. You can’t do that properly without having a strong presence in China and the other countries we are established in.”
What’s been the biggest headache, both in regards to the firm and for yourself?
“People. It’s always people. HR is by far and away the most difficult thing, hiring, training and hanging onto staff. After that, for me personally, IT. When I grew up at school there were no computers, but I can do great long division and algebra! Some of the things computers and software can do nowadays were impossible just 20 years back when we started, so I guess we really are a business that has ridden on the back of two booms – emerging China and the IT revolution.”
Any celebration plans for 2012?
“The business growth we have planned is celebration enough, however we’ll be having some client parties towards the end of the year, and there will be an updated edition of “The Story of a China Practice” coming out. We’ve still got a long way to go. We’ve actually been planning our own five year plan for growth, and that calls for tripling our China size and expanding throughout Asia with Thailand, Malaysia, Cambodia, Indonesia, the Philippines, Bangladesh and even Dubai and Nairobi all on our map. So we’ll have a really big party when we get there in five years’ time and Dezan Shira & Associates turns a quarter of a century old. Then I’ll be satisfied and will open a large bottle of vintage Laphroaig. The entrepreneurial fun is in the achievement.”
Chris Devonshire-Ellis is the founding partner and principal of Dezan Shira & Associates, and the founder and publisher of China Briefing. Please contact the firm at firstname.lastname@example.org for market entry, legal, regulatory, tax, accounting and due diligence advice concerning foreign direct investment into China, Hong Kong, India, Vietnam, Singapore and Emerging Asia.
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