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November 14, 2008

Stuttard interview: Think global, act global

By Nicholas Moody

China, Finland and Kazakhstan are three countries John Stuttard has more knowledge about than most. The former Lord Mayor of the City of London talks to Nicholas Moody about his career advising global businesses and insights on succeeding in the rapidly-evolving business environment of China.

John Stuttard, former Lord Mayor of the City of LondonJohn Stuttard has the sort of resume that would tire most people just reading it.

The former Lord Mayor of the City of London has spent 41 years with PricewaterhouseCoopers (PwC), where he was a UK partner from 1975 to 2005. He now serves as vice-chairman of the PwC UK advisory panel and chairman of the PwC Kazakhstan advisory board. 

That’s not to mention the Commander of the Order of the Lion of Finland, which he was awarded by the Finnish government in 2004 for his services to Finnish industry.

Early next month Stuttard is due to release his second book, The City of London and its Lord Mayor – From Whittington to World Financial Centre.

The book provides an overview of the Lord Mayor’s role and includes an analysis of the key success factors behind London’s emergence as a leading international financial centre.

It also covers the evolving impact of the sub-prime crisis, the Northern Rock incident and runs right up until October this year when the UK government announced its £500 billion ($768 million) bank bailout package.

Top accolade

Stuttard has recently been awarded an honorary membership to the UK-based ACCA (Association of Chartered Certified Accountants) for his role in the international development of the accountancy profession. There are only five such honorary members, including current International Accounting Standards Board chairman David Tweedie.

The ACCA recognition is in part due to Stuttard’s involvement with China over the past 14 years. From 1994 to 1999, he was chairman and chief executive of PwC’s operations in China, which led him to write his first book, The New Silk Road – Secrets of Business Success in China Today.

His interest in China has continued since then. He served on the China-Britain Business Council from 2000 to 2006, and recently lectured in Shanghai at the Liu Jia Zui Financial Forum.

Stuttard keeps in touch with what is going on in China and how things have changed since he left. In general he agrees capital flows are shifting increasingly eastwards and expects greater activity in Asia than in the world’s developed markets.

He says that while China has been opening up economically since 1978-9, when it launched its Open Door policy, the main period of growth has been post-1993. In that period foreign direct investment increased from $10 billion in 1993 to $80 billion in 2007.

“The same thing has been happening with the accounting firms, so if you take Coopers, when I first went there in 1994 we had 50 people in the whole country, when I left five years later we had 1,500 people, [PwC] now have 10,000,” he says.

“It has been quite a sea change, and in particular it accelerates because for the first of those 15 years, 1993 and 1994, there were very few people that understood double-entry bookkeeping, let alone IFRS or anything sophisticated like that, so the growth has been very rapid in recent years.”

With an increasing number of accounting institutes and firms operating in China, Stuttard says there are a number of things they need to bear in mind when looking to expand their influence.

Some of the key challenges facing non-Chinese are a rapidly evolving investment environment, constant regulatory changes, undeveloped corporate governance, and uncertainties and variations in the legal environment and local practices.

“The concept of getting to know people and building relationships is terribly important – more so than it is in most other societies. Doing business anywhere in the world depends on relationships, it is who you know and how you get on with people, but in China it is much more important,” he explains.

Communication, perseverance and patience are also crucial to doing business there, as is what Stuttard calls foreplay.

“When you go to a business environment you have to show respect to the person you are seeing, you can’t just go charging in saying ‘we’re here, you have to do this and that’, nor can you expect an agreement to be reached quickly,” he says.

He says the Chinese accounting profession has improved the quality of its staff and its international focus – but non-Chinese need to adopt a Chinese approach to business.

“When you go to China is not like going to any other country. It is not like going to Russia or India. It’s completely different. I think [non-Chinese groups] need to respect that, look at business through Chinese eyes and that will help you to be successful,” he says.

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