1. Introductory Remarks 2. Establishing a Foothold in China – Success Stories 3. Corporate Establishment and the Chinese Legal Environment

1. Building
Bridges to
China
PART 1
Jochum S. Haakma
Global Director of Business
Development, TMF Group
1 28 September 2012 - Chester Beatty Library

2. Building
Bridges to
China
Jochum S. Haakma
Global Director of Business
Development, TMF Group
2 28 September 2012 - Chester Beatty Library

3. Building
Bridges to
China
Kieran Desmond
Regional Director, UK, Ireland &
Channel Islands, TMF Group
3 28 September 2012 - Chester Beatty Library

4. Building
Bridges to
The Hangzhou Bay Bridge China
 Costing $1.7bn, the S-shaped 36km-long Hangzhou Bay Bridge is
the longest ocean-crossing bridge in the world. It shortens the
journey between Shanghai and Ningbo by 75km
4 28 September 2012 - Chester Beatty Library

5. Building
Establishing a Foothold in China Bridges to
China
Outsourcing Success Stories
Kieran Desmond
Regional Director
TMF Group
5 28 September 2012 - Chester Beatty Library

6. Building
Bridges to
Our Corporate Services China
Setting up and supporting your foreign entities
6 28 September 2012 - Chester Beatty Library

7. Building
TMF Group’s Global Reach Bridges to
China
100 Offices – 75 Countries
Netherlands, Belgium, Luxembourg, United Kingdom, Jersey, Guernsey, Ireland, Germany,
Liechtenstein, Denmark, Sweden, Finland, Norway, France, Switzerland, Italy, Spain, Malta, Austria,
Poland, Czech Republic, Slovakia, Hungary, Slovenia, Bulgaria, Croatia, Romania, Serbia, Ukraine,
Russia, Kazakhstan, Turkey, Cyprus, Israel, United Arab Emirates, Mauritius, South Africa,
Venezuela, Colombia, Brazil, Ecuador, Peru, Bolivia, Chile, Paraguay, Argentina, Uruguay, Mexico,
Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Dominican Republic, Canada,
United States, Aruba, Bonaire, Curaçao, British Virgin Islands, Cayman Islands, Jamaica, Bermuda,
China, Hong Kong, Japan, Thailand, Singapore, Philippines, Vietnam, Malaysia, Labuan, Taiwan,
India, Australia, New Zealand, Samoa.
7 28 September 2012 - Chester Beatty Library

8. Building
Bridges to
Sample of our Global Clients China
 35,000 clients including over 50% of of Fortune 500 & FTSE 250 companies
8 28 September 2012 - Chester Beatty Library

9. Building
Bridges to
China
TMF
Group’s
Competitive
Advantages
TMF Expansion Plan
in China
9 28 September 2012 - Chester Beatty Library

10. Building
Bridges to
TMF Group – what makes us unique? China
Helping business to seamlessly operate across borders
 ONE Firm – solely focused on helping clients do business internationally
 Global Reach - more than 100 offices in over 75 countries
 Independent – a wider range of services for clients, including offering local
directors or managing bank accounts and local payments
10 28 September 2012 - Chester Beatty Library

11. Building
Bridges to
How We Help Clients China
3 drivers to help our clients succeed globally
 Provide expert local delivery and central control of all accounting, corporate
secretarial and HR processes to ensure your business is fully compliant
Reduce Risk 
wherever you are doing business
Enable you to accelerate and control your global expansion by leveraging our
corporate platform with minimum start-up investment
 Transparency of your global accounting and corporate data
 Reduce local corporate compliance, finance and administration costs
Control Costs
 Reduce the risks of late filings and so avoid penalties and interest payments
 Consolidate service providers to give better value for money
 Completeness of worldwide bookkeeping and reporting can reduce audit fees
 One provider for all countries where you are operating
Simplify 

Single point of contact so all communications are efficient and co-ordinated
Provide consistent and robust accounting and reporting across the world
Operations
 Consolidated reporting on all entities - a clear view of your global performance
 Enable your management team to focus on your core business
 Single global contract and billing arrangements
11 28 September 2012 - Chester Beatty Library

12. Building
TMF Group Competitive Advantages Bridges to
China
 We have more than 100 offices in over 75 jurisdictions worldwide and we can offer
Global reach our services in the countries where you operate
 As a true group (not a franchise), TMF is able to provide central
Central coordination coordination, allowing for control and visibility, with a single point
of contact
 Services from in-country specialists with in-depth knowledge of local rules and
Local delivery regulations, understand local practice from different cities
 Close working relationship with local government authorities in different cities
 To capture practical variations from different cities in China by China network, KPO
 TMF Group provides a comprehensive range of corporate
Full scope  administrative outsourcing services, including financial, legal, and
 HR administrative services
 As an independent services provider, TMF Group can provide the
No conflicts  full scope of corporate administrative services, and can work with
 any bank or advisor of the clients’ choice
 Excellent client ratings and retention
Track record
 TMF Group adheres to strict internal and external compliance procedures
TMF compliance  Client Acceptance and KYC procedures supervised by the Group Compliance
Center
12 28 September 2012 - Chester Beatty Library

13. Building
Bridges to
Case Study – Controlling Client Spend China
TMF saves client up to 25% on
outsourced global bookkeeping
as it expands
 Our client provides analytical studies on sales for retailers
 The firm operates in 22 countries around the world, employing local admin staff
How we helped
 TMF Group reviewed the costs of outsourcing its back office functions
 This saved the client over 20% of its costs
 TMF Group now manages 40 countries in total for the firm
13 28 September 2012 - Chester Beatty Library

14. Building
Bridges to
Case Study – Simplifying Operations China
TMF takes over the complexities
of administration and compliance
for an international fund client
 Our client manages real estate funds for retail, office and private properties in
Europe
 This necessitated the need to create numerous fund holding, asset and management
entities across multiple territories, compliant with varying regulations
How we helped
 TMF’s international teams took over the bookkeeping, accounts preparation,
consolidated accounts, VAT and tax compliance work, with a single point of contact
 This enabled the client to cut its back-office admin headcount and to reduce the
costs and inefficiencies of having multiple service providers
14 28 September 2012 - Chester Beatty Library

15. Building
Bridges to
Case Study – Simplifying HR Compliance China
TMF ensures international
compliance on staff hiring and
salary payments for global media
group
 Our client is a global media company with over 9,000 staff in 108 territories
 This required a complex understanding of the local rules and obligations in each
country, and careful co-ordination of payroll management
How we helped
 TMF took over all processes and payments through the client’s SAP accounting
system, with all approvals managed online
 This gave the client clarity and control over its HR processes, as well as assurance
that it is fully compliant in all countries
15 28 September 2012 - Chester Beatty Library

16. Building
Bridges to
Case Study – Reducing Service Providers China
Our global Corporate Secretarial
service consolidates an insurer’s
service providers – giving
transparency and lower headcount
 Our insurance client is expanding its business globally, growing the number of
legal entities from three to 50 within two years
 The firm was using multiple service providers, external lawyers and in-house staff to
track entities, filing obligations, directors, shareholders and certification
How we helped
 TMF’s corporate secretarial teams took over all legal administration, with a single
point-of-contact, including implementing an internet-based database of all records
 This enabled the client to reduce the number of service providers down to one,
control its in-house legal staff headcount and improve local compliance
16 28 September 2012 - Chester Beatty Library

17. Building
Bridges to
Case Study – Compliance for the Last Mile China
TMF local offices and experts in
accounting and statutory reporting
take care of client’s shared service
center ‘last mile’
 Our client is a global drinks manufacturer with a shared service centre for account
transaction processing and closing books in 16 countries
 In consolidating finance into a single centre, the firm had lost the local knowledge
and resource to report in each territory – the ‘last mile’
How we helped
 TMF’s offices, linked to the client’s SAP system, were able to take on local accounts
conversion, annual statutory reporting, VAT and CIT filings
 This meant the client did not have to manage multiple service providers, worry
about co-ordination or the quality of local compliance
17 28 September 2012 - Chester Beatty Library

18. Building
Bridges to
Case Study – Accelerating Client Growth China
Client uses TMF’s global
platform to accelerate its
growth and reduce the risks of
international expansion
 Our client is a successful domestic provider of facilities management services
 In 2010 the firm was invited to pitch for a global contract with an existing customer, but
it had no foreign corporate structures or employees to fulfil the opportunity
How we helped
 TMF’s global office and expert platform enables the client to set up and close down
local branches as its customer demands
 This gives our client the flexibility to expand (or contract) with limited risk or spend
 TMF now provides local accounting, consolidated reporting and payroll services
18 28 September 2012 - Chester Beatty Library

19. Building
Bridges to
China
Outsourcing:
Why it is such a
key strategy for
expanding to
China?
19 28 September 2012 - Chester Beatty Library

20. Building
The Chinese Challenges Bridges to
China
China is booming, but presents serious challenges for local and foreign businesses
 Rising employment costs and business inflation
1. Business Risks
 Increasing competition
 Human resources constraints – hiring and retention
2. Regulatory Burden  Understanding the state and 33 regions’ varying rules
 Selecting the right investment structures
 Business license applications and delays
 Complex tax regime with risks of excessive liabilities
 Convoluted customs clearance and trade regulations
3. Control & Expense  The distractions of managing the above risks and burdens
 Gaining transparency on business performance
 Ensuring all policies and procedures are consistently applied
 Expense and risk of investing in a local accounting and
administrative workforce
20 28 September 2012 - Chester Beatty Library

21. Building
Bridges to
China China
Some key findings from the China Business Report (2011-12)
conducted by AmCham in Shanghai …
 78% of companies surveyed report they are “very profitable”
 80% of companies surveyed report revenue growth in 2011 over 2010
 51% of companies surveyed state their operating margins improved
 67% of companies surveyed report their China revenue growth is higher than
revenue growth generated worldwide
 Top 3 business challenges: (1) costs (2) human resources & (3) competition
 No significant improvement in legal and regulatory barriers - 71% said either staying
the same or deteriorating.
Corporate presentation
21 28 September 2012 - Chester Beatty Library

22. Building
China: Market Challenges Bridges to
(AmCham Business Report 2012) China
 Top Business Challenges:
1. Rising Costs
2. HR Constraints
3. Increasing competition
 Top Regulatory/Legal Challenges:
1. Bureaucracy
2. Unclear regulatory environment
3. Lack of government transparency
Corporate presentation
22 28 September 2012 - Chester Beatty Library

23. Building
Bridges to
Challenges for Foreign Companies in China China
CEIBS
Survey
2012
23 28 September 2012 - Chester Beatty Library

24. Building
Bridges to
China
Outsourcing:
TMF Expansion Plan
WWWWH
in China
24
TMF competitive advantages
28 September 2012 - Chester Beatty Library

25. Building
Bridges to
Reasons to Outsource China
 Reduce and control operating costs
 Improve company focus
 Gain access to world-class capabilities
 Free internal resources for other purposes
 Resources are not available internally
 Accelerate reengineering benefits
 Function difficult to manage/out of control
 Improve efficiency of allocating scarce capital
 Mitigate/ share risks
25 28 September 2012 - Chester Beatty Library

26. Building
Bridges to
Evaluating Outsourcing Services? China
Client Individual Market Firm’s
Requirement Advisor’s Experience of Capabilities
Capabilities Firm or Individual
Advisor
Specialist skills Technical know- Market know-how Solutions know-
how how
Intellectual Independence, Facilitation and Information and
horsepower creative thinking communication analysis
and problem
solving
Execution and Speed Energy and Road map
implementation momentum
26 28 September 2012 - Chester Beatty Library

27. Building
Factors that Support Successful Bridges to
China
Outsourcing
 Alignment with your company’s goals and objectives
 Clear outsourcing strategy and implementation plan
 Selecting the right outsourcing partner
 Ongoing management of the outsourcing relationship – use a
scorecard
 Properly structured contracts
 Open communication with any affected internal staff
 Senior executive support and involvement
 Near term financial justification
27 28 September 2012 - Chester Beatty Library

28. Building
Choosing an Outsourcing Bridges to
China
Partner
 Capabilities – differentiation from competitors, specialist skills
 Commitment to quality and service
 Competitive pricing - highest delivered value
 References/reputation - client list
 Responsiveness, flexibility
 Flexible contract terms
 Scope of resources
 Real value-added capabilities
 Cultural match
 Existing relationship
 Location, geographic footprint, size
28 28 September 2012 - Chester Beatty Library

29. Building
Bridges to
China
Professional Services
Outsourcing in China
29 28 September 2012 - Chester Beatty Library

30. Building
Chinese Government’s Bridges to
China
1000-100-10 Project
 In 2006, the Chinese government announced the 1,000-100-10
project whereby it aimed to create/attract 1,000 local Chinese
outsourcing companies, 100 world-class outsourcing companies
and to establish 10 key cities as the location of choice for the
outsourcing industry.
 The results rapidly exceeded expectations…..
 In February 2009, the Chinese government designated 21 "Service
Outsourcing Model Cities” and each of the cities implemented a
range of policy measures to promote the local service outsourcing
industry.
 The balance between manufacturing and services activities in China
will shift gradually from 60/40 to 40/60.
30 28 September 2012 - Chester Beatty Library

31. Building
Chinese Cities - Industry Focus Bridges to
China
31

32. Building
Bridges to
China
About China &
TMF China
32 28 September 2012 - Chester Beatty Library

33. Building
China: 15 Years+ of Rapid Growth Bridges to
China
 For each of the last fifteen years China has been the recipient of between
USD 65 – USD 110 billion per year in foreign investment.
 China invested nothing in Brazil in 2009, but by 2010 was the largest foreign
investor with over USD 20 billion in foreign investments
 Retail sales across the country increased by 14% last year as the market
shifts to a focus on internal consumption. TMF is at the heart of this growth,
helping retailers to accelerate their store opening programs across the
country
33 28 September 2012 - Chester Beatty Library

34. Building
China: 15 Years+ of Rapid Growth Bridges to
China
 China is now the world’s second largest economy, having overtaken
Japan recently
 Every quarter the growth in China exceeds the annual GDP of
Greece, and every year the GDP of Spain
 The country has experienced almost two decades of economic
growth exceeding 10% per annum
 Chinese growth is expected to be around 7% in 2012. Growth in
central and western China continues to race ahead in double-digit
figures
 In the coming years the Chinese economy will become the world’s
largest, overtaking the USA.
34 28 September 2012 - Chester Beatty Library

35. Building
Bridges to
China
TMF’s Core Services Offering
in China
35 28 September 2012 - Chester Beatty Library

36. Building
The Core Service Offerings in China Bridges to
China
Administration Transaction-Based Services Value Added Services
Bookkeeping,  Preparation of voucher and  Group reporting, IFRS / USGAAP vs
Accounting & processing of accounting data PRC GAAP
Reporting  Bookkeeping and Reporting  Internal Control – Implementation /
 Disbursement processing Ongoing review and maintenance
 Tax filing and payment  SOX compliance
 Tax invoicing process  Pre-IPO accounting support
 Inventory count – Cycle or Annual
 Provision of interim accountant or
account manager
Corporate  Incorporation / Deregistration  Company restructuring
Secretarial & Legal  Administration for change of  Health check for completeness,
Administration company particulars timeliness and correctness
Support  Annual filing / Annual examination  Ongoing maintenance of statutory
records and information in TMF
database
 Provision of interim / nominated legal
representative / director/supervisor
Human Resources &  Payroll calculation  Social security administration
Payroll Services  Individual IIT filing  Recruitment
 Work Permit and Visa application  Training
 Staff Performance / Retention
 Assessment and Development
36 28 September 2012 - Chester Beatty Library

37. Building
Labour Leasing/ Nominee Bridges to
China
Employer Services
 Nominee Employer services enables our clients to enter new
markets quickly and/or to operate in a specific market without the
administrative/compliance burden of maintaining their own local
entity.
 Employer without establishment (Europe) - registering the client’s
foreign client entity as a local/in-country employer, whereby TMF
carries out the registration and the ongoing payroll for the local
employees. Focus on tax considerations.
 Special Purpose Company acting as employer - In certain
countries, the SPE will need to obtain a license for the provision of
nominee employer services. Indemnification required for TMF.
37 28 September 2012 - Chester Beatty Library

38. Building
Bridges to
Trade Support Services – Hong Kong China
 Order Processing
 Capture data from client systems and process purchase orders
 Shipping
 Arrange shipping and check letters of credit
 Liaise with Hong Kong bankers to transfer letters of credit to manufacturers
 Deliver samples to clients and arrange factory visits
 Arrange import / export declarations with Customs and Excise
 Documentation and Back-office Support
 Prepare documentation for bills of ladings, documentation required for letters of credit,
and follow-up documents post-shipment
 Communicate with manufacturers, report net proceeds upon completion of
transactions, and move funds according to instructions
38 28 September 2012 - Chester Beatty Library

39. Building
Who are TMF China’s Clients? Bridges to
China
 95% of TMF's clients in China are global corporations and foreign investors
coming into China. They include manufacturers, and companies involved in
retail, commodities, energy, transport, and IT and communications.
 “Many companies were initially attracted to China as a low-cost
manufacturing base and a place to grow B2B services. However, as China's
economy matures and its population becomes more prosperous, they now
find they have the world's largest consumer society on their doorstep.
“Whichever way you look at it, it's a winner.” - Ernest Wong, MD TMF China
39 28 September 2012 - Chester Beatty Library

40. Building
Bridges to
China
TMF Group’s Expansion Plans
in China
40 28 September 2012 - Chester Beatty Library

41. Building
Bridges to
TMF China in 2009 China
41 28 September 2012 - Chester Beatty Library

42. Building
Bridges to
TMF China in 2011–2012 China
42 28 September 2012 - Chester Beatty Library

43. Building
Bridges to
TMF China in 2013 - 2014 China
 We have been helping
businesses succeed in
China since 2005
 Ten offices today,
expanding to 25 by
2014
 Our SSC in Chengdu
provides low-cost
processing for clients
43 28 September 2012 - Chester Beatty Library

44. Building
TMF China in 2014 Bridges to
China
Harbin
Shenyan
g
Beijing
Dalian
Tianjin
Jinan Qingda
o
Xi’an
Zhengzho Nanjing
u
Hefei
Wuxi Shanghai
Cheng
du Chongqin Wuhan Suzhou
g Ningbo
Hangzho
Changsh u Fuzhou
a
Xiamen
Guangzho
u Shenzhen
Hong
Kong
44 28 September 2012 - Chester Beatty Library

45. Building
TMF Group’s Expansion Plans in Bridges to
China
China
Now 2013/4 By end-2014
 Hong Kong  Dalian (SSC)
 Beijing  Suzhou
 Shanghai  Jinan 25 offices in China
 Tianjin  Harbin
 Qingdao  Nanjing Over 700 employees
 Chengdu (SSC)  Wuxi
 Chongqing  Ningbo 2 Shared Services
 Guangzhou  Xiamen Centres (SSC):
 Shenzhen  Fuzhou - Chengdu
 Shenyang  Hangzhou - Dalian
 Wuhan  Changsha
 Hefei
 Zhengzhou
 Xi’an
45 28 September 2012 - Chester Beatty Library

46. Building
Bridges to
Focus on Chengdu China
 Capital of Sichuan, 14m people
growing by 15% annually. Home of the
Panda
 150,000 Foxconn employees built more
than 40m iPads in Chengdu last year
 51 colleges and universities in the city,
with almost 600,000 students on
campus and 120,000 graduates every
year
 Currently 100+ employees in Chengdu
and growing fast
 Chengdu will be the primary hub for
TMF China’s 25 offices in 2014/5
46 28 September 2012 - Chester Beatty Library

47. Building
Chengdu SCC and its Satellite Offices Bridges to
China
How the SCC and satellite
offices work together
 Initially, a typical satellite office
consists of small office with a
meeting room, supported by a local
Client Relationship/Compliance
Manager and a Business
Development Manager, plus two or
three additional staff.
 Each satellite office also has a
dedicated team of 10 or more staff
in the SCC who perform the actual
client work, which is coordinated by
the Relationship Manager.
47 28 September 2012 - Chester Beatty Library

48. Building
How TMF Group Integrates its Global Service Bridges to
Offerings China
 Management by country and region
MATRIX MANAGEMENT
 Management by global business line
 Common software platforms
 Global client account management
 Performance management controls
48 28 September 2012 - Chester Beatty Library

49. Building
China Summary Bridges to
China
 TMF China understands the regulatory burden and business risks of
expanding in China
 Our impressive reach across the country is growing fast
 Our local knowledge and global reach means simplified operations for you
 A single point of contact from anywhere in the world gives you control and
transparency
 We can help you succeed in China
49 28 September 2012 - Chester Beatty Library

50. Building
Bridges to
China
China Case Studies
50 28 September 2012 - Chester Beatty Library

51. Building
China Case Study 1 Bridges to
China
Accelerating Client Growth
North American branded retailer
launches multiple Chinese
stores
 Our North American client, a global retailer, for which we have been providing outsourced
accounting and payroll services for many years across the world.
 In 2010, they launched an aggressive organic expansion plan into mainland China,
launching from their Hong Kong base.
How we helped
 TMF’s offices around the country were able to quickly register the retailer with all the
relevant provinces’ tax authorities prior to the set-up of local shops, and ensure their
business was authorized to employee local staff.
 This meant our client was able to focus on store openings and securing their supply chain
without the burden of regional administrative tasks.
51 28 September 2012 - Chester Beatty Library

52. Building
China Case Study 2 Bridges to
China
Controlling Client Spend
Brazilian manufacturer establishes
Chinese production JVs

52 28 September 2012 - Chester Beatty Library

53. Building
China Case Study 3 Bridges to
China
Simplifying Operations
Industrial company restructures
China operations
 A global industrial client with numerous plants in China was reorganizing to take
advantage of new investment incentives in one of the many Chinese free trade
zones.
 This included restructuring more than 80 legal entities in mainland China.
How we helped
 TMF’s local experts helped review the entire structure, including holding, WFOE, JV
and RO entities.
 They were able to then close entities no longer required, and register new companies
to enable the client to facilitate trade and take advantage of the new tax incentives.
53 28 September 2012 - Chester Beatty Library

54. Building
Bridges to
China
Platform Solutions
54 28 September 2012 - Chester Beatty Library

55. Building
Platform Solutions - Payroll Bridges to
China
Employer Information
Leave Application
n-line
Human Resource Dash Board
Productivity
Commission
Information
55 28 September 2012 - Chester Beatty Library

56. Building
Platform Solutions - Payroll Bridges to
China
Employee Portal
Personal Profile Leave Application Commission Appraisal result
On-line Information
56 28 September 2012 - Chester Beatty Library

57. Building
Platform Solutions - CoSec Bridges to
China
O & R Management
Conflicts ISAE 3402 Back-up
Company review
manager (SAS 70) recovery
 Provide periodic  Ensure company  Adheres to the  Adheres to the
review and has procedures IASE3402(SAS7 IASE3402(SAS7
validation of data to deal with 0) Type II 0) Type II
library conflicts of standard protocol standard protocol
 Send periodic interest  IASE3402(SAS  IASE3402(SAS
email reminders  Record any 70) process 70) process
to notify directors’ assures that we assures that we
reviewers to conflicts of meet the highest meet the highest
check interest, including standards for standards for
completeness 3rd party benefits security and security and
 Accurately and connected have the have the
oversee the persons appropriate appropriate
activities of controls and controls and
subsidiaries security in place security in place
57 28 September 2012 - Chester Beatty Library

58. Building
Platform Solutions - CoSec Bridges to
China
Facilitation
Company Profile Group Structure Management Audit Trail
Report
58 28 September 2012 - Chester Beatty Library

59. Building
TMF Offices in China Bridges to
China
TMF China Support
59 28 September 2012 - Chester Beatty Library

60. Building
Bridges to
TMF Group China
Operating or
expanding globally?
TMF Group helps to reduce the risks
and to control the costs of doing
business across borders
60 28 September 2012 - Chester Beatty Library

61. Building
Bridges to
China
Thank You!
61 28 September 2012 - Chester Beatty Library