Hong Kong Means Business interview with Sheila Dean

Friday 27 October 2017

Sheila Dean, Equiom Global CEO catches up with Hong Kong Means Business

Please recap the reasons why HK was viewed as an important market for the group:

Equiom entered the Asian market through its acquisition of AFP in Hong Kong in 2015 and further strengthened its position through the acquisition of Equation in 2016 and Solid in 2017. While AFP gave us a platform in personal and corporate tax advisory and structuring services, Equation and Solid provided a greater capability to serve inbound foreign capital coming into the region, using Hong Kong as a base, with a broad range of business outsourcing services.

Hong Kong, with established trade links, simple taxation system and rule of law, is globally perceived as a centre for doing business throughout Asia and particularly with Greater China. Its extensive business community and support services mean that entrepreneurs from around the world choose it as their platform for growth in the region.

Going forward, we see Hong Kong as a hub for all the commercially less accessible jurisdictions in the north of Asia; with an extensive and growing range of double tax treaties and excellent transport links, it often makes sense to use Hong Kong as a holding company for businesses operating in multiple Asian countries. Equiom’s ambition is to be able to support our Hong Kong or global clients as they foray into jurisdictions where the complexities of legal, tax and language can be challenging. Indeed, it was exactly this thinking which was behind our entry into the Japanese market earlier this year.

What services does the business provide?

The business provides accounting, payroll, company secretarial, trustee and tax services to international companies and individuals as part of the international group which also has offices in

Asia: Hong Kong, Singapore and Japan;

Middle East: Dubai, Abu Dhabi and Qatar;

Europe: Jersey, Guernsey, Isle of Man and UK;

Americas: British Virgin Islands and USA.

Is Hong Kong proving to be a strategic fit in your global provision of innovative and effective fiduciary solutions to corporations and High Net Worth Individuals (HNWIs) globally? Please outline the HK office’s specific role in this.

Hong Kong is a nexus for Asia and the rest of the world. It is a key onshore, or near-shore, structuring jurisdiction for capital flows from the West seeking to invest in the regions and increasingly important for private and corporate investors from China and other major outbound investment locations to the rest of the world.

From an inbound perspective, we are helping our clients navigate the local regulatory, legal and fiscal requirements of Hong Kong and surrounding jurisdictions and ensuring the ongoing compliance of our clients’ structures and operations. We are also providing cost-effective outsourced solutions, covering tax, human resources, finance and corporate secretarial, to allow our clients to focus on their core business.

Looking at the outbound element, our colleagues around the world are well established in their respective jurisdictions to service overseas investors coming into Europe, the Middle East and the USA. Hong Kong’s role in this is to provide quality client service and liaison with these offices in the client’s own language and time zone, and as a result the administration is often managed locally.

Can you now please outline the scope of your Hong Kong team & business, explaining how both have grown since opening?

Since our initial entry to the Hong Kong market, through a business with a strong English-speaking expat focus, we have broadened our client base to include more local HK and PRC families, adding several Mandarin-speaking professionals. The addition of the Equation team brought us a strong French-language capability to help us service the burgeoning French business community.

Having grown to 50 staff in Hong Kong, out of a total of 120 across Asia, we are offering more complex services such as fund structuring and aviation and yachting services alongside our core tax, accounting, payroll and company secretarial services to both private and corporate clients.

Since opening in Hong Kong, I believe Equiom has branched into other regional centres, such as Singapore. Could you please outline these expansions, including if/how Hong Kong has proven to be an effective gateway to markets in the region.

Equiom entered the Singapore market in 2016 through the acquisition of Heritage Trust Group, a licensed trust and corporate services provider of 50 people. Singapore provides both corporate services to groups operating in Singapore and surrounding markets in South East Asia, as well as an important jurisdiction for servicing HNWIs from around the region looking to establish trusts for wealth protection or investment structures.

The Japan office which we opened this year, through the acquisition of Solid Japan, is focused on supporting inbound foreign investment, addressing the complex local market requirements.

In both cases, Hong Kong has a role to play.

For Singapore, it is often the first port of call for Chinese HNWIs who are looking for assistance in assessing their options for worldwide investment and we can advise them on the benefits of various jurisdictions, including Singapore, but also other jurisdictions around the world. Certainly, having multiple centres in Asia helps us provide a more balanced approach to structuring decisions and our clients appreciate this impartial approach.

When we consider Japan, we are looking at the best way we can provide a gateway into that country and often this will include a Hong Kong holding structure and will match with the client’s operational footprint, or where we can assist to provide substance to operations. When we consider how we can help Japanese clients looking at their investments into other Asian markets, then it often makes sense to route these through Hong Kong from a practical and fiscal perspective.

Thinking about the region in general, can you please comment on the depth of opportunity APAC offers to players in the private wealth industry? (any figures/data to support this would be useful, illustrating the growth & projected growth for the sector)

According to a report from Boston Consulting Group, private financial wealth grew by 5.3% to $166.5 trillion in 2016 and APAC was the fastest-developing region. This trend has continued year on year and, furthermore, it is predicted that by the end of 2017 the level of private wealth in APAC will surpass that of Western Europe, surpassing North America by 2019.

In addition, 45 % of Asia’s billionaires are in China and the country has Asia’s largest spending population, so there is a definite Ultra High Net Worth demographic and the demand is there. The Hurun Report estimates that China has 594 billionaires compared with 535 in the US.

Given these figures, it is evident that there is a tremendous amount of potential in the region. Having a strong presence in APAC gives us access to a vast market and gives us the opportunity to provide the full spectrum of our service offering.

How and why is Equiom well placed to capture market share?

With our increasing size and ability to develop relationships with key local partners, we are well placed to gain new clients and provide additional services to existing clients. As a large professional services firm, with an unstinting approach to the quality of our client service, we will be one of the most trusted firms in this space in years to come and I look forward to gaining more momentum in the region.

How about the challenges for this sector? Businesses always need to be mindful of potential challenges on the horizon…. Any that you have identified? (if so, your strategy to overcome those?)

An oft-quoted obstacle in Hong Kong is the banking environment where that community has become significantly more risk averse than in the past and indeed is now becoming a drag on business. We are looking to enable our clients through constructive discussions with banking partners and looking to provide access to alternative offshore options where there is an impasse in Hong Kong. We will continue to be a solutions-driven group – this is the same ethos which has served Hong Kong so well in the past.

The cost of compliance is unavoidable, but it is about minimising the impact of these demands on the everyday business or client. We see compliance as something we can assist our clients with so that they can focus on their business, knowing they have a partner they can trust.

What are your future plans for Equiom in the region?

We are passionate about following our clients into jurisdictions where we can help them prevail against the challenges of that market. While we have existing operations in some of the largest and most important jurisdictions, we are acutely aware that we need to expand our presence to be able to provide the coverage our clients demand.

High on our list of priorities is to expand in mainland China and build further specialist expertise in the regions where we are already present. At the same time, we are considering opportunities in India, Indonesia, Malaysia and Vietnam, among others.’

We recently attended the Think Asia, Think Hong Kong event organised by the HK Trade Development Council in September. We found it to be a very worthwhile event reinforcing the strong relationship that exists between the United Kingdom and Hong Kong. At Equiom, we have a very good flow between our offices in the UK and Hong Kong and seek to gain both inbound and outbound business through this close cooperation. The event helped to make the most of this ongoing communication between our offices and to introduce our offering to new contacts involved in the region.

Basic details:

Where is Equiom's headquarters? We are headquartered in the Isle of Man.

How big is the firm's global business? We have more than 600 employees worldwide.