The future of fashion - Hong Kong Institute of Certified Public ...

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hina’s economy avoided a major slowdown last year, and the country’s new leader, Xi Jinping, said last month that the economic goals for this year would be to achieve sustainable development and social stability. “Such priorities bode well for consumption and for a move to a more sustainable growth driven by the services sector and domestic demand,” says Dariusz Kowalczyk, senior economist at Crédit Agricole Corporate and Investment Bank in Hong Kong. However, other analysts doubt such a rebalancing of China’s economy is practicable in the near term. “There has been a recalibration of China’s prospects,” says Ken DeWoskin, the head of the China Research and Insight Centre, a Beijing economic think tank, and a senior adviser to Deloitte. “You can’t count on consumption as a major driver of growth anytime soon,” says DeWoskin. Economists cite a number of reasons why the Chinese population is unlikely to spend more, including a historically high savings rate, elevated levels of inflation, recent economic volatility and persistently low consumer confidence. The recent government leadership change is also likely to inspire caution among consumers. Some economists are even more bearish on the Mainland’s prospects, given the slowing growth and reduced demand for exports. “We think the best days are over for the China growth story,” says John O’Connell, global head of research at Macquarie Bank in Sydney. O’Connell fears that China is approaching a middleincome trap, referring to the economic stagnation that can occur – as happened to Brazil and South Africa – when countries reach a middle level of income and are unable to compete with either advanced economies in high-skill innovations or with low-income economies in cheap production. “The shift to consumption needs to be managed carefully to avoid the middle-income trap,” he adds. Part of China’s problem lies January 2013 39
The year ahead “ Mexico will gain at China’s expense as it becomes the destination of choice for manufacturing fixed-asset investment.” off its own shores, analysts say. Among its significant developed export markets, the euro zone remains in a slump and the United States continues to struggle. Among key emerging markets, former high-flying economies such as Brazil and India have posted sluggish growth. Besides, O’Connell notes that China has a blunter competitive advantage than it used to when it comes to manufacturing. “Given China is already seeing strong wage growth, and is likely to face labour shortages, we believe companies will look to locate new plants elsewhere.” China’s manufacturing costs have risen relative to those of Mexico, which has a large and growing pool of workers, close proximity to U.S. export demand and exten- 40 January 2013 sive trade agreements. “Mexico will gain at China’s expense as it becomes the destination of choice for manufacturing fixed-asset investment,” says O’Connell. Accounting For accountants, 2013 may be a year of reflection. Hans Hoogervorst, chairman of the International Accounting Standards Board, said last month that stakeholders want a period of relative calm for a few years, to “let the dust settle” and allow everyone to get used to rules made effective over the past couple of years. In Hong Kong, 2013 kicked off with three inter-connected standards: HKFRS 10 Consolidated Financial Statements, HKFRS 11 Joint Arrangements and HKFRS 12 Disclo- sure of Interests in Other Entities. “Accountants will be making sure this consolidation package is given proper attention,” says Catherine Morley, head of the technical department at KPMG and deputy chairman of the Institute’s financial reporting standards committee, on the three new standards. “It’s a new mind set,” Morley adds, describing the new standards as cause for careful thought by executives as well as auditors. “Whether you’re the auditor or the CFO, think about the entities you’re involved with – for example, you might call them associates but you need to have a de facto control discussion,” she advises. “Similarly, you’re quite happy with the phrase ‘joint venture’ but IFRS 11 makes a
Page 1 and 2: ISSUE 1 VOLUME 9 JANUARY 2013 PLUS
Page 3 and 4: President’s message “ I look fo
Page 5: 38 Your chop Your Logo ILLUSTRATION
Page 8 and 9: EU places ECB in supervisory role a
Page 10 and 11: NEWS GREATER CHINA Economic policie
Page 12 and 13: Mainland may adopt IFRS de facto co
Page 14 and 15: OW UR GET George W. Russell finds o
Page 16 and 17: Mainland M&A M&A concerns are magni
Page 18 and 19: e very rigorous. “You definitely
Page 20 and 21: THE LEAD PHOTO: SAMANTHA SIN Januar
Page 22 and 23: PHOTO: SAMANTHA SIN the hard work p
Page 24 and 25: Entrepreneur CPAs Peter Nixon Filli
Page 26 and 27: Constant adaptation in fashion-cons
Page 28 and 29: want a chief financial officer’,
Page 30 and 31: While Au did not follow his father
Page 34 and 35: distinction between joint operation
Page 36 and 37: latory scrutiny from Washington, Ch
Page 38 and 39: Furthermore, it is not always clear
Page 40 and 41: The Institute had significant conce
Page 42 and 43: People on the move The latest profe
Page 44 and 45: Gangnam was already well-known to K
Page 46 and 47: Exports of Port weather storms Cons
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