PYA launching business consulting service with focus on China
By Tom Ballard, Chief Alliance Officer, PYA
One of PYA’s newest advisors brings an exciting new dimension to the firm – international business consulting with a particular focus on China.
“In this global economy, for companies considering expansion internationally, they ought to make China a part of their global strategies,” Steven Gu, Senior Manager in the firm’s Atlanta Office, says. “If they don’t, they are missing the boat,”
Gu, who was born in China and came to the U.S. in 2002, is both a Certified Public Accountant and attorney. He joined PYA in January after working for several accounting firms including KPMG.
“Steven will establish PYA’s International Practice to offer inbound and outbound services to Chinese companies in their expansion into the U.S.,” said Marty Brown, PYA President. “His unique bi-cultural and bi-lingual background assists organizations in managing the political, legal, tax, and economic business issues.”
Gu is an engaging, articulate and very knowledgeable individual who has significant M&A experience working for large corporations, both domestic and foreign. With his Chinese heritage, he has a unique background as it relates to helping companies understand the country, as well as Southeast Asia in general.
“Don’t just simply think of China as one gigantic $11 trillion economy,” Gu advises, but rather consider it is an economy made up of many trillion dollar size sub-economies.
“How you feel about China really depends more on which part of the sub-economy you are competing in,” he adds, “Some basic manufacturing and traditional industries are experiencing significant headwinds, while other sub-economies are exhibiting strong growth potential.”
He cites the entertainment sector where more than 60 percent of the box office receipts for the Top 10 U.S. movies in 2015 came from the Chinese market.
“2016 will be a pivotal year in China,” Gu says, explaining that the country is transitioning itself from an investment-intensive, export-led model of growth to one that is innovation-driven, serviced-oriented, and consumption-led.
“This presents both significant challenges and opportunities for companies and foreign investors in China,” he says. “It requires companies to have a clear-eyed analysis of the investment environment and also requires companies to think about new and innovative means of tapping into opportunities in a rapidly transforming economic landscape. We are here to help guide our clients through the rules of China so they are successful.”
Gu notes that many conversations focus on the fact that the Chinese economy is not as robust as expected just a few years ago.
“There are lots of debates about whether China’s Gross Domestic Product (GDP) growth is one percentage point up or down, but people too often forget the absolute scale of China’s economy,” Gu says. “While 6.9 percent GDP growth in 2015 represents a 25-year low for China, its share of the global economy will be larger than ever.”
He cites forecasts by the International Monetary Fund showing that China is expected to continue being the largest contributor to world GDP and is expected to account for nearly 20 percent of world GDP by 2020. This compares to 15.5 percent for the European Union and 14.9 percent for the US.”
Today, information technology is making it much easier for many smaller companies to operate globally.
In addition to helping domestic companies do business in China, Gu will also advise many Chinese companies to expand to the U.S. market. He sees significant opportunities for two reasons.
“While Chinese companies are growing stronger, they are starting to get ready to compete globally,” he explains. “They want to move up in the value chain instead of just being the low cost manufacturer. This Outbound Direct Investment (ODI) is a diversification strategy for them.”
The second reason is labor costs which are no longer an advantage for Chinese-based companies. This includes not only wage pressure, but also the availability of qualified workers.
“Things have changed a lot,” Gu says. “Innovation, R&D, and being close to the customer will drive their interest in being in the U.S.”
In 2015, Chinese outbound investment hit a record high of $118 billion in U.S. dollars with Chinese outbound M&A accounting for $87.7 billion, a 40 percent year over year increase.
Prior to coming to this country in 2002, Gu earned his law degree (an A.B. in China) and was working as an in-house counsel for the People’s Bank of China. He followed his girlfriend, now his wife, to this country where he earned a Masters of Accounting degree from West Texas A&M followed by a LL.M (Master of Laws) from the University of Florida School of Law.
Gu is a Board Member of the Corporate Development Society of the Technology Association of Georgia and a Global Commerce Council member at Metro Atlanta Chamber of Commerce. He served as a key committee member in planning Atlanta Mayor Kasim Reed’s first trade mission to China in 2012.
Gu is in Knoxville this week meeting with business executives and others.