China Companies Rank Lowest in Survey of Transparency Reporting

October 18, 2013 Leave a comment

China Companies Rank Lowest in Survey of Transparency Reporting

Chinese companies ranked the lowest in a survey of public reporting practices in emerging markets, underscoring concern that the government’s anti-corruption campaign may not take root in the corporate sector. The 33 Chinese multinationals surveyed averaged a score of 2 out of 10 points in Berlin-based Transparency International’s “Transparency in Corporate Reporting” survey, released today. Chery Automobile Co., the closely held carmaker based in Wuhu, China, joined one other company among the 100 surveyed with a score of zero across the three categories measured.The report draws attention to a Chinese business environment that’s ripe for corruption because of minimal public-reporting requirements. Leaders of the ruling Communist Party have warned that corruption threatens their grip on power and have announced anti-graft investigations of a number of officials in recent months.

“Results show that companies from China lag behind in every dimension,” Transparency International said in the report. “Considering their growing influence in markets around the world, this poor performance is of concern.”

Companies from India fared the best, with Tata Communications Ltd. (TCOM) leading the list with a score of 7.1. Tata Global Beverages Ltd. (TGBL) and Tata Steel Ltd. (TATA) were second and third. Lenovo Group Ltd. was the highest ranking Chinese company at 19.

Angela Lee, a Beijing-based spokeswoman for Lenovo, didn’t immediately reply to an e-mailed request for comment.

The study measured three categories: reporting on anti-corruption programs, organizational transparency and country-by-country reporting of revenue, expenses and tax payments.

Government Connections

Transparency International urged emerging-market companies to disclose their anti-corruption measures and government connections. It said 60 percent of those surveyed didn’t disclose information about political contributions.

Indian companies performed well thanks to laws that require them to publish key financial information about their subsidiaries, the report said. Seventy Five of the companies surveyed were from BRICS nations — Brazil, Russia, India, China and South Africa.

Eight of the 10 lowest ranking companies on the list were Chinese, including China National Chemical Corp. and China Shipbuilding Industry Corp. Along with Chery, Mexico’s Controladora Mabe SA scored zero points.

“With the notable exception of the Indian companies, most emerging market companies in the sample are still a very long way from disclosing financial data across all countries of operations,” the report said.

To contact Bloomberg News staff for this story: Nicholas Wadhams in Beijing at nwadhams@bloomberg.net

Filed under Investing Process, Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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