Specialist SAP HCM consultancy ROC has turned its attention to Asia. ROC Asia CEO Sandy Eastman told Inside SAP all about learning to do business in China.
ISAP: Could you tell us about ROC Asia’s expansion into China?
SE: We started in Australia first and then opened in Singapore about a year ago. Everybody kept saying “don’t go into China”, because it takes a lot to get set up and you could potentially put in a lot of money and never get a return. I didn’t really have an interest in expanding into China as a result, but then people in Singapore kept suggesting that it was the right move. So it was a matter of waiting for the right moment to do something in China, knowing full well that it’s not a place you just walk into and start doing business. It was July when we really made the move.
ISAP: What kind of opportunities does China offer in terms of Human Capital Management?
SE: I think they’ve always been very cognisant of HR. Ten to 15 years ago the Chinese government was bringing in professors from top universities, especially the University of Melbourne, to teach them how to manage people because they are growing so fast that they do not have enough experience. They really do need to train managers up and there is a lot of HR that’s required, and then they also have to have as much automation as possible because it’s just too labour intensive. They’ve got very different rules in terms of paid leave – it’s to do with seniority and so forth – and because it’s attached to a person, not a union, you’ve got to manage each person individually. Only a system could do that.
ISAP: In what ways is the SAP market different in China?
SE: Australia is comparatively very small. There are not as many opportunities because there are probably about five main players who have really got a hold on the companies that are big enough to buy SAP. You get to China and it wouldn’t matter if all of us went up there, there would still be enough work for everybody. You don’t understand the size of China until you get off the plane in Shanghai, and for an hour-and-a-half you drive through the city. The size was just… something that until you’ve seen it, you cannot absorb it.
ISAP: What factors did you need to take into account when expanding into China?
SE: There are a couple of things you have to know. First and foremost is the tax and how you will pay it. You really need to have an address before you actually set up the company. We’re using Servcorp, which is an Australian firm that allows you to rent an office from them and have a legal address for tax purposes. You also then need to have a telephone number and someone answering the phone at that address as well.
The other reason you need an address before you set up operations, is because you need to have business cards printed. Everybody expects to see an address that is local, so you can’t be giving them Australian business cards. You need to have Chinese on the back and English on the front and what’s important to anybody in Asia is that when you hand cards out you hand them out with both hands, with your thumbs on each corner, so it is facing the person. They look at your title first and your address second. It’s got to be a really good address, which is where Servcorp comes in because they have their offices usually in the bank district, usually on the 22nd or 32nd floors of buildings.
ISAP: What type of support did you receive for the expansion?
SE: We were fortunate enough to have partners that were already there. We had a German partner that’s been there for five years, so we wouldn’t have been able to do it without them. And also SAP offered help, but the best thing to do if you’re thinking of entering this market is to get an export grant, which Austrade is very, very helpful with. They will advise you on the tax situation. It’s very difficult writing a contract because it has to be in English and in Chinese, so you really do need to get assistance.
