This report highlights the opportunities and risks that UK businesses face when expanding in the BRIC countries.

1. Grow global:
building business in
BRIC nations

2. Contents
Introduction 3
BRICS in brief 4
BRIC economies today 6
Key issues facing UK businesses
when expanding into the
BRIC nations 8
Geography and infrastructure 9
Culture and language 11
Business practices 12
Resources 13
Expert insights into
BRIC expansion 14
Brazil 14
Russia 15
India 16
China 17

3. Introduction
Assessing the opportunities
and threats offered by the
world’s four leading emerging
economies
The BRIC countries are a vast opportunity for UK business. Brazil, Russia, India and
China are enormous markets that are rich in resources, but they pose significant and
specific risks. Understanding those risks is key to unlocking their potential and tapping
into the growth of their markets.
This report reveals those risks and opportunities. At a roundtable event, our experts in
each BRIC nation answered real questions from UK businesses interested in dealing
with these countries, and businesses planning to expand to BRICs in the future. The
result is an insightful background into working with the BRIC countries today. Real-
world expertise and insights will give you the best chance to succeed in these nations.
BRIC economies today Key issues facing UK businesses when Expert insights into BRIC expansion
Our report will give you a solid expanding into the BRIC nations Our regional experts give solutions to
overview of conditions in the BRIC After outlining the hard data and the problems that are worrying today’s
economies today. While the surging overall trends, we consider the real BRIC players – and the businesses that
growth of the 2000s has slowed in the issues that affect businesses in BRIC plan to reach out to BRICs tomorrow.
BRICs, they still offer many businesses countries. Areas of analysis include
an opportunity when compared to the geography, infrastructure, language and
sluggish home markets. Even though business practices. We consulted our
labour costs are rising in some, and experts on each country, and brought
fiscal policies in others might reduce in the comprehensive view from Nick
their competitiveness, there are still Earlam, founder and chairman of Plexus
compelling reasons like language, Cotton. Having worked across the
culture, and a will to work with UK BRICs over a period of decades, Earlam
businesses that rebalance the is well positioned to reveal operational
BRIC offering. insights on the key topics.
Grow global • building business in BRIC nations 3

4. The BRICs in brief
We highlight the key findings of this report; socio-economic, geographical and
environmental characteristics that UK businesses should take into account when
expanding into the BRIC nations.
Brazil
• A geographical asset is time zoning – for half
of the year Brazil is in the closest time zone to
GMT. Flight time to Rio is the same from the
UK as it is from New York
• With a population of 192 million from
incredibly diverse backgrounds of race, culture
and class, the thing that unifies Brazilian culture
is an effusive confidence, something that carries
into their business culture
• There is concern that Brazil is already an
expensive country and manufacturing is not
Russia competitive; however, manufacturing is still
crucial as Brazil develops. High operational
• As the centre of the former Soviet Union, costs are countered by the ease of working
Russia still holds a very significant role among there and the willingness of Brazil to open up
the Commonwealth of Independent States to investment
(CIS) surrounding it, with Russian spoken • After suffering from hyperinflation in the 1970s
across the Caucasus and Central Asia and 1980s, Brazil now has a very sophisticated
• Despite Russia’s abundant resources, there banking system with higher liquidity
has been a historic concern in the UK that it
is a difficult place to do business. With the
Eurozone stalled, Russia’s ongoing economic
growth and large consumer base should
encourage UK businesses to reassess their risk
and reward opportunities
• Russia has declared its appetite for new
foreign investors to help to develop high-tech
businesses, modernise the economy and create
an international financial centre in Moscow,
presenting real opportunities for
UK businesses
• Natural resources continue to be a prime theme
in the economy. Infrastructure replacement
and retrofitting may be a gold mine for British
engineering firms, financial and legal advisers
who are experienced in project finance
• Russia is the key regional hub in Eastern
Europe, pushing for its CIS neighbours to trade
more and become more user-friendly, including
the use of the Customs Union with Belarus and
Kazakhstan. Wider access to the CIS can be
launched from any of these three countries
4 Grow global • building business in BRIC nations

5. China
• There has been significant government
investment in infrastructure, including
transport, telecommunications and utilities
• As the economy of China shifts from an
agrarian to industrial base, natural resources are
key, and the subject of much protective feeling
among the Chinese
• Although Hong Kong is not the automatic
choice it was a few years ago, it is still a good
location for setting up offices, tax-efficient, and
a very easy place to do business, with excellent
transport links
• As China looks to move up the value chain
to a more consumption-driven economy, it is
becoming ever more interested in consumer
brands and in the service sector. This brings
fantastic opportunities for UK businesses
• Finding the right partners who you can trust to
help you find your way into the market is an
India important first step. Real knowledge of China
and good local connections are crucial
• The linguistic legacy has been paramount for
India in competing with other developing
economies. English is rooted deep in India’s
working culture, along with many British
business practices and shared legal heritage
• One major investment advantage of India over
China is its governance, legal system and a
stock market that is aligned with that of the
United Kingdom. Indian capital and equities
markets are also far more mature than China
and its other BRIC counterparts
• India is rich in resources, but although a major
producer of minerals and potentially of fossil
fuels, it faces many challenges in its exploitation
of this wealth
• Indian companies tend to be much more
hierarchical in structure and culture than UK
companies, with great importance placed on the
position you hold
• One of the sectors where India enjoys an upper
hand over China is the IT/BPO industry.
India’s earnings from the BPO sector alone in
2010 were USD 49.7 billion
Grow global • building business in BRIC nations 5

8. Analysis
Key issues facing UK
businesses when expanding
into the BRIC nations
Dealing with BRIC countries requires very specific
insights in terms of geography, culture, business
practices and resources, and understanding each in turn
is essential to build up a successful strategy for growth.
Changing to fit the BRIC challenges
Part of that learning process is about how to change
as a business to suit these challenges. “The economic
outlook is blurring in a world where, until recently,
mature economies looked to emerging markets to tap
into dizzying growth patterns as a matter of course,
becoming swollen and complex businesses as a result”,
says Robert Fuller, UK International Business Centre
Director at Grant Thornton UK LLP.
“Size and strength are no longer advantages. Speed and
agility are what you now need to make rapid decisions,”
he says. “The Arab Spring, IMF leadership change, the
deaths of Bin Laden and Steve Jobs, even the royal
wedding has affected supply chains and increased
volatility. But even in this more challenging environment,
there is more cross-border business going on.”
8 Grow global • building business in BRIC nations

9. Geography and USD 1 per day. However, China had though many businesses might initially
already started its gradual economic believe that Brazil is a natural partner
infrastructure reforms whereas India embarked on its for US companies, its location is equally
economic liberalisation a decade later convenient for the British.
UK investment into China has in 1991. While both economies have As the centre of the former
traditionally been in the heavily shown similar successful trends in GDP Soviet Union, Russia still holds
urbanised eastern coastal region. growth rate, the performance gap in a very significant role among the
However, as China looks to increase the last three decades has been huge. Commonwealth of Independent States
urbanisation and reduce the disparity of China’s GDP (USD 7.23 trillion) is 4.35 surrounding it. This is reflected in the
wealth between rural and urban areas, times bigger than Indian GDP (USD fact that Russian is spoken across much
there has been significant government 1.67 trillion) and has grown at 10% of the wider region of the Caucasus and
investment in infrastructure, including per annum for the last three decades Central Asia. There is new momentum
transport, telecommunications and compared to 6% for India. in the Customs Union with neighbours
utilities. The rate of high-speed rail China has followed the traditional Belarus and Kazakhstan, although
building alone is impressively fast. This development model, whereas India Ukraine is seeking a separate trade
creates potential new opportunities for tried to jump from an agriculture- arrangement directly with the EU.
UK businesses in the less developed based economy to a service Russia’s recent entry into the World
western parts of China, where costs dependent economy, resulting in low Trade Organisation (WTO) is likely to
are lower, incentives generally better, manufacturing and infrastructure give a new boost to the UK’s insurance,
and Western companies may have a growth. Unlike India, China is still banking and telecom industry leaders,
competitive advantage. investing vast amounts in manpower which will then enjoy much better
“China is investing huge sums in development and strengthening of market access to Russia.
infrastructure – just look at some of infrastructure.
the airports being built in second-tier A growth comparison of Chinese
cities, which would put the UK airport and Indian infrastructure is worth
network to shame. This is opening up making before any business considers
the vast hinterland areas, and giving their decision, see page overleaf (10).
China a real competitive edge over the When comparing BRIC nations,
other BRIC economies – it is just easier another key geographical asset is time
to get around,” says Nick Farr, Head of zoning. Surprisingly, while many
China Britain Services Group at businesses cite Russia’s proximity to the
Grant Thornton UK LLP. UK as a benefit, for half the year Brazil
In the 1980s both China and India is in the closest time zone to GMT.
were very poor economies with India Flight time to Rio is the same from the
leading China in per capita GDP by UK as it is from New York, so even
Grow global • building business in BRIC nations 9

10. A comparison of Chinese and Indian infrastructure
Power Railways Ports
India has a total installed capacity of Indian Railways cover a total track of India has 12 major ports and 200 non-
around 200 GW, as against 1000 GW 65,000 km, against 91,000 km in China. major ports (minor and intermediate
in China. Though India’s installed As of 2007, India had 225,000 freight ports) spread across nine coastal maritime
capacity has increased by 40% in the wagons, 45,000 passenger coaches and states. The capacity of major ports has
last four years, India’s overstressed 8,300 locomotives, whereas Chinese increased to 532.07 million tonnes per
power grid is one of the most obvious Railways owned about 578,000 freight annum (MTPA) in 2007-08 (555.67 MTPA
signs of their lagging infrastructure wagons, 44,000 coaches and 18,300 by 2008-09 – provisional) and the traffic
development. It takes five to six years in locomotives. India moved 750 million during the same period touched 519.3
India to build a thermal power plant, as MT of freight while China moved 4.5 million tones, running at 97.6% of the total
against two to three years in China and times that of India, at 3,300 million capacity.
around four years in other countries. MT. Indian railways moved 6.2 billion China on the other hand has become
This is attributable to delays in passengers while China moved 1.4 one of the world’s most dynamic shipping
acquiring sites and obtaining approvals, billion passengers. Despite the Indian markets, with ocean shipping handling
shortage of equipments and EPC lead in passenger numbers, the quality 95% of the country’s foreign trade. Driven
bottlenecks. India, however, is the only of passenger travel in the Chinese by higher exports and import of raw
BRIC country to have Power Trading Railway is far superior, and China has materials.
Exchanges. express trains with speeds of 300 kmh.
China has also shifted its focus The maximum speed of a passenger Telecommunication
to increasing renewable sources in train in India is about half that of China has around 700,000 3G mobile
its energy mix. It has led the way by Chinese Railways at 160 kmh. towers in comparison to India which has
occupying a 43% share of global wind around 350,000 2G mobile towers as of
capacity installed in 2011 as against Civil Aviation 2011. India also has the world’s second
India’s 7% share. Global wind power India has 128 airports, including 15 largest mobile phone user base, with over
growth looks very strong and is on international airports that handled 143.4 919 million users as of March 2012. This
a continued rise, largely because of million passengers in 2010-11. China compares to 1,020 million users in China,
China’s incredible level of investment. has around 500 airports of all types now the world’s largest mobile phone user
and sizes and passenger throughputs base. India has over 121 million internet
Roads reached 486 million. The trips per capita users whereas China has over 450 million
The Indian road network stands at 4.32 in India still remain very low (0.04) internet users as of December 2011. Indian
million km, with density of 0.66 km per by the standards of other emerging telecom sector has however become the
square km of land. This is much greater markets, including China, which is at world’s most competitive and in spite of
than China, with 0.16 km per square 0.15. China’s domestic traffic is five this, India is one of the fastest growing
km. In fact, the road network in China times the size of traffic in India, despite telecom markets with a growth rate of
still ranks among the sparsest in the having a population just 15% larger. over 26%.
world relative to geographic area and This is reflected in the fact that India
population. However, most of the roads has one aircraft for every 2.89 million IT/BPO
in India are congested and narrow with people, miniscule in comparison to 1.14 One of the sectors where India enjoys an
poor surface quality. million in China. upper hand over China is the IT/BPO
industry. India’s earnings from the BPO
sector alone in 2010 were USD 49.7 billion,
while China earned USD 35.76 billion.
Seven Indian cites are ranked as the world’s
top ten BPOs, while only one city from
China features on the list.
10 Grow global • building business in BRIC nations

11. Culture and language
Location is not all that makes Brazil so
convenient, “People often think that it’s
just for the Spanish or Portuguese to
carve out markets in Latin America, but
they’re forgetting that there’s already a
lot of history between the British and
Brazil,” says Colin Johnson, Director at
Grant Thornton UK LLP. “A Brazilian
contact once explained to me that
they just like dealing with the British,
because we respect contracts.
Such insights reflect a truth about
BRIC nations: despite many people
thinking these economies are new
and modern, they are often ancient
and struggling under third-world
inefficiencies. The key to good
operation is to start slow, find the right
people and build trust.”
English as a business language English teaching in schools across the
Language is perhaps the biggest country, looking to tap into a growing
factor that can be overlooked when international outsourcing and IT
“Such insights reflect a
dealing with China. While they are market. truth about BRIC
a dizzying cultural mix of Daoism, The subtleties of Chinese culture are
Confucianism, Buddhism, Marxism and a far cry from the fun and adventurous
nations: despite many
Socialism – with a generous tradition spirit of the Brazilians, explains Nick people thinking these
of superstition over things such as Earlam, founder and chairman of
numbers and colours thrown in – it is Plexus Cotton: “It’s my favourite place economies are new and
with language that many businesses fall to do business in the BRIC countries, modern, they are often
down. “It’s not a literal language: your but risk-taking is a given there.” With
translator doesn’t just need to know a population of 192 million from ancient and struggling
English, he must be able to convey incredibly diverse backgrounds of under third-world
the exact meaning of your thoughts in race, culture and class, the thing that
Chinese, which is so much more,” says unifies Brazilian culture is this effusive inefficiencies. The key to
Nick Farr. confidence, something that carries into good operation is to start
Contrast this with working in India, their business culture too.
where English is the business language. slow, find the right
Rooted deep in their working culture,
along with many British business
people and build trust.”
practices and a shared legal heritage, it
Colin Johnson
becomes a significant advantage. The
Director, Grant Thornton UK LLP
linguistic legacy has been paramount
for India in competing with other
developing economies. However,
Chinese authorities are ramping up
Grow global • building business in BRIC nations 11

12. Business practices
When dealing with Brazilians, says The importance of transparency
Earlam, you must have simpatico. Despite the distance, business in India
Getting cross or confrontational won’t is comparatively open and transparent,
work – your partners have to want operating much along British lines.
to work with you. “It requires good Many find they have the same thought
relations with everyone, partners and processes as us. Their bureaucracy,
employees. You have to make your however, is still a concern, according to
interest their interest.” It is a marked Anuj Chande, Head of the South Asia
contrast to his views on Russian Group at Grant Thornton UK LLP.
practices, however. In China the risks are real for those
Earlam is not enthused by the who do not appreciate the differences
prospect of working in a culture where in business practice. “China certainly
he believes nothing is sacrosanct. has a very different business culture
“Though for some the opportunities to the Anglo-Saxon world, but the
outweigh the risks, the problem is that differences are not as extreme as some “China certainly has a
I believe if you are successful in Russia, commentators would lead you to
someone else can come along and take it believe. The key is to be prepared, and very different business
from you to own themselves.” invest the time and effort to understand
culture to the Anglo-
One major investment advantage the market properly” says Nick Farr,
of India over China is its governance, Head of China Britain Services Group Saxon world, but the
legal system and a stock market that at Grant Thornton UK LLP. Industry
is aligned with that of the United and trading require real knowledge
differences are not as
Kingdom. While India’s well-developed of China and having good local extreme as some
legal system is based on British legal connections are important, both in
roots, China has legal problems business and, in some cases, political
commentators would lead
surrounding issues such as the low links. But for businesses that invest you to believe. The key is
enforcement of IP protection. This is properly in China, the opportunities
perhaps illustrated by the competitive can be huge.
to be prepared, and invest
strategies in China and India. Domestic There is, some believe, a deficit of the time and effort to
Indian firms have been quicker than the understanding. One important principle
Chinese counterparts to internationalise to remember is that the short-term understand the market
their businesses. profit motive is a significantly lower properly.”
Indian capital and equities markets priority for the Chinese, dwarfed by the
are also far more mature than China importance of status, of a desire to build Nick Farr
and its other BRIC counterparts. The long-term relationships and a real focus Head of China Britain Services Group,
Chinese capital market lags behind that on building a strong balance sheet, Grant Thornton UK LLP
of India both in terms of predictability be it through acquisition of strong
and transparency. While the Indian global brands, cutting-edge intellectual
stock market is based on international property or of natural resources. There
guidelines, in China it is more has been a real focus in recent years
dependent on rules and regulations of on accessing resources, which western
the government, which is the majority governments ignore at their cost.
stakeholder in listed State-owned
companies.
12 Grow global • building business in BRIC nations

13. Resources
As the economy of China shifts from and create an international financial
an agrarian to industrial base, natural centre in Moscow, all of which should
resources are key, and the subject of represent real opportunities for the UK
much protective feeling among the and other countries.
Chinese. One only needs to look at Russia has built up reserves of
the markets for rare earth metals to USD 145 billion in its Reserve and
understand that the Chinese are playing Welfare funds from oil and gas profits.
a long game with their resources, while So far, USD 40 billion has been
they simultaneously build strong links allocated to shore up the economy if
with resource-rich developing nations. the eurozone crisis deepens and oil
“The Chinese have this long-term view prices fail to support the State budget –
of resources,” Earlam says. “There is which breaks even at USD 117 a barrel.
a resource war being fought out there Even with rebalancing efforts, natural
that they really understand – while resources will continue to be a prime
China is the great new challenge of our theme in the economy and there is also
time, it is only a challenge that realists significant infrastructure replacement
Despite Russia’s
can handle, people who can see the and retrofitting due in Russia and across abundant resources, there
world in the way that they can.” the region. This may be a gold mine for
With the discovery of major oil British engineering firms, financial and has been a historic
reserves in Brazil, some fear that legal advisers who are experienced in concern in the UK that it
manufacturing competitiveness will project finance.
decline. There is concern that Brazil In India, multi-layered regulatory is a difficult place to do
is already an expensive country and approvals and overlapping jurisdictions business. With the
manufacturing is not competitive; new of states and central government mean
oil reserves will add to currency and that coal projects can take 8-12 years to Eurozone stalled, Russia’s
commission, compared to 5-6 years in
cost pressures. While the Brazilian ongoing economic
government has worked to reduce other countries.
the Real exchange rate, exporting There is also a lack of transparency growth and large
in the allocation of concessions,
large goods from Brazil may not be
with priority given to public sector
consumer base should
competitive enough, as has already been
seen with car exports to Mexico. companies, and inadequate mineral encourage UK businesses
Despite Russia’s abundant resources, concession databases. Lastly, India
lacks local risk capital for exploration
to reassess their risk and
there has been a historic concern in
the UK that it is a difficult place to do companies, which already operate in a reward opportunities.
business. With the Eurozone stalled, high risk and capital-intensive business.
Russia’s ongoing economic growth and While the majors tend to focus on
large consumer base should encourage exploring late stage development
UK businesses to reassess their risk and projects, it is these capital-poor junior
reward opportunities. While the WTO miners who have traditionally taken
rules should ensure a more transparent up grassroots exploration. India’s
and level playing field, Russia has also mineral wealth is there, and waiting for
declared its appetite for new foreign conditions to improve with investment:
investors to help to develop high-tech once these problems are overcome the
businesses, to modernise the economy gates are open.
Grow global • building business in BRIC nations 13

14. Conclusions
Expert insight into the
BRIC expansion
We ask our regional experts to answer real questions from businesses aiming to
maximise their BRIC strategies
Brazil Q How does the banking system make changes in the economy, manufacturing
foreign investment more challenging? is still crucial as Brazil develops.
A First, you have to understand that Relatively high operating costs are
Colin Johnson there is no country like it in Europe. countered by the ease of working there
Colin Johnson has over They have different standards and and the willingness of Brazil to open up
twenty years’ experience expectations, and that carries over into to investment.
of investment in emerging
the banking system. In fact they have a
very sophisticated banking system, and Q What are the challenges for UK
markets, especially in with higher liquidity. After suffering companies working within the Brazilian
relation to Latin America from hyperinflation in the 1970s and tax system, and what would be the
where he has acted as 1980s, they have this in place to counter
it.
simplest ways to work around these
problems?
an investment manager, A The taxes on imports of both goods
lender and advisor. He Q Is manufacturing competitiveness and services are substantial. There are
is Chairman of the Brazil declining in Brazil? some ways around this, at least in part,
A One thing to remember is that your but care needs to be taken in structuring
and the Latin America competitors are already there, from business. Some companies have, for
Groups for CityUK and French and Canadians to the Dutch. instance, started working on part-
Brazil Financial Services They’ve all seen the opportunity. completed imports, but again careful
Despite the oil rush that may drive fast structuring is needed.
Champion for UKTI. He
also leads Grant Thornton Q Brazil is often referred to as being a
International’s energy high cost country to operate within – is
this still accurate, and if so what are the
sector. benefits that outweigh these costs?
A Brazil is still high cost, but it is a
very substantial market in its own right.
It is still expected to see significant
growth (though not at Chinese
rates) and is also a substantial part of
the Mercosur and Latin American
marketplaces. So although it is high
cost, it is often still cheaper than seeking
to import items especially after taxation
is taken into account.
14 Grow global • building business in BRIC nations

15. Russia Q How do you leverage Russia as for growth are real, not just in Moscow
a hub to drive business across the but in many other major cities. Both the
municipalities and citizens have money
Nigel Davies
Commonwealth of Independent States
(CIS)? to pay for the right goods and services.
Nigel works within A Finding a regional team or advice The strategy to diversify the Russian
Grant Thornton from inside each country is key to economy into hi-tech and financial
International to assist with managing the commercial, tax and
legislative challenges in new markets.
services is a real opportunity for growth
for agile UK players. If you have a no-
cross border corporate Some UK businesses have the advantage compromise policy from the beginning
and project finance that their primary customers have you can manage any corruption risks.
opportunities for clients already expanded across the region Teaming with or hiring people with local
so they can follow in their footsteps, experience should reduce any surprises
across the 27 member reducing the risks. Others may need to behind import, distribution, plant, staff,
firms present in Central build up more organically and will need and tax issues which will be less familiar
and South Eastern Europe careful research into potential markets, to a UK HQ team.
local management and any JV partners.
and the Commonwealth of While Russia is not a member of the EU, Q Are there alternative safeguards to
Independent states where they are the key regional CIS hub with finding local partners?
he has previously lived strong existing distribution links. The A Foreign investment is always
influenced by government strategy
and worked for 10 years.
mechanism of the Customs Union with
Belarus and Kazakhstan allows wider and market developments in the target
He has built close links to access to the CIS from any of these three country. Foreign Direct Investment
the international financial countries. Do not overlook the skilled (FDI) in Ukraine is falling at present
institutions and other key and competitively priced workforce in
Central and South East Europe, which
because of uncertainty around
government strategy but the basis for
stakeholders active in the may be a key component in many CIS strong commercial expansion is still
region. supply chains. there. Russia is doing fairly well by
comparison because economic growth
Q What is the best way to secure growth and scale look more secure. However,
in Russia? seeking co-financing from some of
A There are many examples of Western the international financial institutions
businesses who are achieving double on the ground may reduce your risks.
digit revenue and bottom line growth in Embassies and trade associations are also
Russia, much stronger than in their home a good source of information and advice,
markets. Starting a business from scratch which can help you make informed
may be a little challenging but once you decisions.
have broken through, the opportunities
Grow global • building business in BRIC nations 15

16. India Q What are the key drivers that make members working in the business
India attractive right now? are awarded a significant degree of
A India already has booming importance and respect. In terms of
Anuj Chande industries, they are in the process of people management, it’s more about
Anuj Chande has a broad deregulation and they already operate who is managing whom. Overall it is a
range of experience from within similar structures to us. In those less inclusive and consultative approach
than in the UK.
performing strategic and
terms it’s a familiar and secure place
to operate, and getting better as time
organisational reviews, goes on and implementation of modern Q How easy is it to set up in India as
grooming for IPO and practices expands. a British business, and what types of
raising funding both debt Q What are the main risks to operating
partnership are most common between
UK and Indian businesses?
and equity, to M&A advice in India? A Setting up in India is relatively easy.
and disposals. Anuj is Head A Despite the attraction for outsiders Investors have two choices which need
of the South Asia Group at of being a growth economy, there are to be carefully evaluated. They can set
aspects of operation that you ignore at up as a foreign entity through a branch
Grant Thornton UK LLP. your peril. Taxes are one such worry or project office, or as an Indian entity
today. When you do the sums, it’s which is either wholly owned or a joint
frightening how fast costs can stack up, venture with a local partner, depending
especially since state taxes often come on the sector the company is in.
on top of indirect taxes and local taxes
from trading internally.
Q How do Indian companies compare
to British ones in terms of people
management, and what changes should
UK companies be prepared to make to
meet their expectations?
A Indian companies tend to be much
more hierarchical in structure and
culture than UK companies, with great
importance placed on the position
you hold. In addition, a significant
proportion of Indian companies –
including public ones – are family
promoted and controlled. Family
16 Grow global • building business in BRIC nations

17. China Q Is Hong Kong still a good location acknowledged that the UK has many
for setting up offices? leading brands, and that the UK is the
A It’s still an important gateway for second largest service exporter in the
Nick Farr a number of reasons. Firstly, it acts as world. This is generating significant
Nick Farr specialises in a bridge between east and west, with activity, both in the form of acquisition
international tax, with a a Mandarin and Cantonese-speaking of leading UK brands such as Gieves
& Hawkes and Weetabix, as well as
particular focus on cross-
Chinese community, but with extensive
English-speaking and institutions built significant investment by UK service
border structuring. With on the British model. Secondly, it is sector clients in China. It is important
over 15 years’ experience, an easy place to do business, and very for the UK to continue to capitalise on
he has worked with a tax-efficient, with excellent transport
links. Recent structural changes may
these opportunities.
range of clients, from mean Hong Kong is not the automatic Q How can a business put the
entrepreneurial start-ups to choice it was a few years ago, but it operating risks of China into context?
A Nobody can deny that there is
large listed multi-nationals. still presents a strong case for many
businesses investing in the region. real opportunity in China, the world’s
He has particular expertise If you want to focus on the Chinese fastest growing economy. The key is
advising companies mainland markets, it has great links, realising that it is not one market but
expanding into China and better than Singapore, but if you want many. The question is how best to
access to, say, India, then Hong Kong access this large and disparate market,
Asia. Nick is Head of China will not be your first choice. especially in the face of hurdles like
Britain Services Group at bureaucracy and concerns about IP
Grant Thornton UK LLP. Q Is Germany becoming a better protection. Finding the right partners
trading partner for China than the UK? who you can trust to help you find
A China historically saw Germany as your way into the market is an
its first choice as an investment partner, important first step. And doing your
especially given their economic strength homework thoroughly is essential – for
and large manufacturing base. However businesses that are properly prepared,
there are signs that this is changing. the operating risks should be fully
Recent eurozone woes mean the UK manageable.
currently offers more stability. More
importantly, as China looks to move up
the value chain to a more consumption-
driven economy, it is becoming ever
more interested in consumer brands and
in the service sector. China has openly
Grow global • building business in BRIC nations 17

18. Contacts
For further information on any of the issues explored in this report contact:
Colin Johnson Nigel Davies Anuj Chande Nick Farr
Director (Brazil expert) Associate Director (Russia expert) Partner (India expert) Partner (China expert)
T 020 7728 2103 T 020 7728 3126 T 020 728 2133 T 020 7728 2691
E colin.johnson@uk.gt.com E nigel.davies@uk.gt.com E anuj.j.chande@uk.gt.com E nick.farr@uk.gt.com
Robert Fuller Astrid Castro
UK IBC Director Marketing - Emerging Markets
T 0118 955 9146 T 020 7728 2839
E robert.fuller@uk.gt.com E astrid.castro@uk.gt.com
For other queries please contact your local Grant Thornton office:
Belfast Gatwick Liverpool Norwich
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Birmingham Glasgow London Sheffield
T 0121 212 4000 T 0141 223 0000 T 020 7383 5100 T 0114 255 3371
Bristol Ipswich Manchester Southampton
T 0117 305 7600 T 01473 221491 T 0161 953 6900 T 023 8038 1100
Cambridge Kettering Milton Keynes Thames Valley
T 01223 225600 T 01536 310000 T 01908 660666 Oxford
T 01865 799899
Cardiff Leeds Newcastle
Reading IQ
T 029 2023 5591 T 0113 245 5514 T 0191 261 2631
T 0118 955 9100
Edinburgh Leicester Northampton Reading (Pinnacle Building)
T 0131 229 9181 T 0116 247 1234 T 01604 826650 T 0118 983 9600
18 Grow global • building business in BRIC nations

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