Tony pringle, the availability of company information in bric countries

Tony Pringle

Regional Managing Director

UK & Ireland

What kind of information?

• Legal status

• Financials – P&L, balance sheet

• Activities

• Directors / Management

• Corporate structures

• M&A activity

• Associated news

• Independent research

Expertise in aggregating and linking data internationally -

honed in our work across Europe

Europe

Total coverage over 75 million companiesBRIC coverage over 10.5 million companies

Our three pillars of information

BRIC is home to more than 40% of the world's population

Total BRIC GDP = 18.8 trillion forecast 2010 mil usd PPP source EIU

...it will continue

• China is already second economy

• Goldman Sachs predicts China will be first by 2027, others as soon as 2020

• BRIC dominate manufacturing and supplies of raw materials

Common features…

• Economic expansion ahead of infrastructure

• Business culture tremendously different from “the West”

China

China introduction

Scale

• China is huge

• Officially around 10 million companies China

• As many companies with a market capitalisation larger than $1bn

than Europe and the US combined

Massive social and economic change

• Many rules and regulations are recent

• Local interests can be very influential

• Disclosure is not part of the culture

• Human capital not in place to deal with large scale quality audits

Types of companies

• 个人独资企业： sole proprietorship enterprise/sole investment enterprise

• 国营企业： state-run enterprise

• 国有企业： state-owned enterprise

• 集体企业： collectively-run enterprise

• 乡镇企业： township enterprise

• 公营企业： public enterprise

• 私营企业： private enterprise

• 私营工商业： privately owned industrial and commercial enterprise

• 公私合营企业： joint state-private enterprise

• 合作社企业： cooperative enterprise

• 合资企业： joint venture

• 外向型企业： export-oriented enterprise•  

• 技术密集型企业： technology-intensive enterprise• 国有大中型企业： big-and-medium-sized state-

owned enterprise• 亏损企业： money-losing enterprise• 联合企业： conglomerate• 工业企业： industrial complex• 生产型企业： production enterprise• 三资企业 : Tri-capitalized enterprises• 中外合资企业 : Sino-foreign joint ventures• 中外合作企业 : Sino-foreign cooperative enterprise• 外方独资企业 : Foreign-funded enterprise• 股份公司： Joint-stock company or stock company• 劳动密集型企业： labor-intensive enterprise

Some commonly used terms regarding Chinese company ownership:

“Enterprises” in China – Regulatory Procedures

Private Enterprises (All types)

Public Enterprises

SAIC(State Administration

of Industry & Commerce)

SAT(State Administration

of Tax)

CSRC(China Security

Regulatory Commission)

Stock Exchange

The system

Listed companies

Accounting standards, January 1st 2007, became law for listed companies to file accounts largely in line with IFRS, there have been issues around implementation. There is also a code of governance for listed companies

Banks and financial institutions

File at CBRC (China Banking Regulatory Commission and the PBC (The Peoples’ Bank of China)

Wholly foreign owned enterprises

Also required to file annual return & accounts to SAFE (State Administration of Foreign Exchange)

Local filing

Companies also have to file monthly balance sheets to their local tax office. Local tax is variable

Commercial secrets for state-owned firms include information related to strategic plans,

management, mergers, equity trades, stock market listings, reserves, production,

procurement and sales strategy, financing and finances, negotiations, joint venture

investments and technology transfers

Challenges

Challenges

•Transition from a centrally planned economy. Simply a compilation of the assets owned by a particular company, with no measure of profit and loss

•Accounts often aren’t audited as there are skill shortages - accounts may not balance

•In West, we rely on formal, legally binding accounts, in China, business there is much more emphasis on relationships and connections

Accounting standards/different emphasis

Who BvD works with

• SinoRating, part of Sinosure. Government owned. Background in credit insurance. Have connections to official sources and can provide around 550,000 company reports

• Majority of accounts come from the National and Provincial Registration Bureaus – (500,000) companies. Currently about 80% of the data.

• Complemented with data from 40 different sources – due to quality everything needs checking – duplicates need removing: sources include National Government, Statistic Bureaux, Industry and Commerce departments, tax authorities

• Also from companies directly – about 60% response rate

Russia

Official processes

Listed companies and banks

Accounts available via their website and an independent source

such as a newspaper

Companies

• File accounts at the Russian Statistical office

• Only 3 or 4 companies have a licence to obtain the filings

• No public access

The system

• As recently as 10 years ago Russian businesses saw data as low priority.

They would rather invest in more outward areas of their business

than quality data

• This is changing rapidly – largely due to international education and

wider experience of international business

• Companies still don’t always file data in order to conceal performance

or general lack of compliance

Challenges

“In Russia, avoid the street salesmen and companies without an office which give out only cell phone numbers.”

Challenges

• One of the three companies with direct access to data from

the national statistics office

• Information on around 5 million companies but only 1 million have

detailed financials – the rest are summaries

• Provided in local language

• Available from BvD in English and standardised format

Who BvD works with

India

India Introduction

• A union of 28 States – very regional and diverse

Accountancy practices vary between states

• Emergence of free economy 1991 huge internal re-alignment in

business laws – confusion

• Nature of business – raw materials, large entities,

but growing number of larger entrepreneurial business

The system

• Companies Act 1956

Publish annual accounts of fair and true disclosure with a proper standard

of accounting and auditing

• Accounting practice largely influenced by the UK

• E-filing only introduced very recently for company registration

by the Registrar of Companies

Challenges

• Financial reports are not available

• Things are not systematic or compulsory – and a lack of compliance

• Companies in India have a low interest in domestic data

• Like China business is driven by relationships

• Centre for Monitoring Indian Economy (CMIE)

• Data from independent research and stock exchanges.

• Financial data for 37,335 companies in India.

• We will potentially add directory type data

Who BvD works with

Brazil

• No specific filing requirements for “private” companies

• Brazil – 4 million companies on Orbis, 27,000 with detailed financials

• BvD sources:

• D&B - all the financial data that they have plus directory type information for other companies

• WVB – listed companies

• Provided in the context of credit reports – reports are created as and when requested

Overview

Conclusions

• Desire to participate in international business will improve availability of data

• Quality of financial data will improve as audit skills are developed

• Availability of financial data in many developing countries still largely driven by the work of credit agencies

• Beware - organisations sell data that’s illegally sourced with no mechanism to update it or that parades as official data but can’t be sure of authenticity

CIVETS

– Colombia (new data)– Indonesia– Vietnam– Egypt

– Turkey (new data)– South Africa