TITUS VON DEM BONGART
Key issues in China: Labor cost and Loyalty
Titus von dem Bongard is a parner at Ernst and Young. Originally from Germany.
How long have you been living in China?
It has been almost 17 years.
Can you briefly describe your company and your work? What does your company do? What’s your job?
Ernest and Young is a multi-disciplinary company. We cover audit, financial statements for companies, tax consulting etc... We are handling transaction support for merger and acquisitions. We do due diligences for potential acquisitions as we targets companies. That is the kind of management consulting we cover, related to financial support for CFOs.
What is your job here at E&Y?
I’m responsible for the relationship and businesses with German, Swiss and Austrian clients. At the same time, I am a tax partner. So that it means, that I am advising companies on how to structure companies efficiently, mainly for tax purpose.
Who are your main clients?
Our clients are large corporations, multinational companies. We also have a few small and medium size companies.
For the most part, we do auditing services. Auditing means that on a regular basis, we are checking the financial statements made by companies. This means we have a very deep insight into the organization from a financial point of view. And in this regard, we also have a very close and long term relationship with these clients. We are very important because we are the ones who have to certify their accounts. That is why we have a very close relationship and we often offer other services to the companies. For example, tax services. To give you an example, our biggest German audit plan is for Siemens. Wherever they are in the world, we are helping them to do the audit but we also try to provide other services like transaction services, tax services and so on.
Do most of the employees work across divisions?
It is a very specialized business. Even if I take my own example. I am specialized in a very individual and specific tax field which is international taxation and Chinese corporate taxes. Audit requires a different skill set. I am a lawyer, which many auditors are not.
We provide a wide range of services which require different and specific qualifications from different people.
How do you usually recruit your employees?
We usually hire people directly graduating from university. We have certain universities we look at, where the skillset we require is taught. In a few cases, when we build up a new service for a client, then we can identify someone who works in that field (with a competitor or with a client for example) and we ask him/her to join us . But the usual way of recruiting is going to universities …
Do you recruit mostly from universities in China?
In China, yes.
What is a typical day at work for you?
It is very important for us to stay close to our clients. So I’m on the phone a lot! I try to meet clients as much as possible. Usually, when I meet a client, it is important for me to understand how they are doing, how is the business going , do they have any problems, can we assist in some areas. Then, whenever we provide a piece of advice to a client, I need to double-check what my colleagues have to prepare, look at memos, look at the laws and create tailor made advice to the client.
What has changed the most since you start doing business here in China?
I think the major change is that people have become much more important than at the times when I came. Labor has become more expensive. Whenever you have employees, it is not like in the old days, you never had to worry about salary payment. However today, a Chinese individual may even be more expensive than a foreigner. At the same time, the loyalty is going down. So people are changing quickly and this puts a lot of pressure and attention to the area of people management. How to find people and how to maintain them. Another matter is the increasing competition from Chinese companies. In the old days the foreigners were competing to each other’s, but these days more and more Chinese competitors appearing and become serious contesters.
How would you describe doing business in China compared to the rest of the world?
I think the big advantage of China is that the market still has a huge potential to grow. When we look at Europe, the possibilities to grow the business are very limited because everybody is fighting for the same cake. The cake doesn’t grow anymore whereas here in many areas and industries, you still have a growing cake, a growing demand for things. Look at cars for example, there is the opportunity to get a bigger share of the market and a bigger share does not necessarily mean other companies’ share will be reduced. The business opportunities are much greater here in China.
