Success ingredient

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[ 14 ] A Plus + August 2009

August 2009 + A Plus [ 15 ]

Sitting in his Central office, 54-year-old Carlson Tong reminisces about when he first

embarked on an accountancy career back in the 1970s. Even as an article clerk working for Watts Gregory & Daniel in the Welsh city of Cardiff, the young Tong was already making a name for himself as a champion for Chinese restaurateurs and small business owners in the United Kingdom.

Tong recalls how, as an outgoing and cheerful guy from Hong Kong, he made friends with the Chinese business owners who then became his clients.

“I learned a lot working on the accounts for local Chinese businessmen who owned restaurants, Chinese takeaways and Chinese provision stores. How often do you get the chance to bring in clients, deal with them and

become their financial adviser and tax accountant?” he says in an interview with A Plus. “When some of them were required to go to court, I became their interpreter. I did everything for them. It was really good experience.”

Tong says he realized early on that being honest with clients was the best approach: “I told them, ‘you must be straight, you must pay your taxes, I am not interested in any funny business, otherwise don’t come to me.’” By the time he qualified as a chartered accountant in 1979, he had enlisted more than 40 clients all the way from Cardiff to Bristol and London.

Perhaps this entrepreneurial spirit is what eventually propelled Tong from an article clerk to the chairmanship of KPMG in China and Asia Pacific in April this year.

An honest approachKPMG’s Carlson Tong tells Reggie Rathour how personality and hard work helped him rise through the ranksPhotography by Brian Ching

[ 16 ] A Plus + August 2009

+16The journeyAfter completing his high school studies at St. Paul’s Co-educational College in Hong Kong in 1971, Tong took a gap year, something unusual in those days. A year later, he flew to the United Kingdom, where he enroled in a two-year business studies diploma course in Cardiff College of Commerce and graduated in 1974.

“I went for an interview with a local firm in Cardiff, Daniel Hughes & Co. (subsequently merged with another local firm to become Watts Gregory & Daniel), and was given a five-year contract as an article clerk. I never went to university,” Tong explains.

Knowing that he needed to move on to an international firm, he joined Peat Marwick Mitchell & Co. (now KPMG) in the U.K. in 1979 after he qualified. “I am very lucky as I had many good mentors in my professional career and met my wife, Gill, who is my best partner,” he says.

Tong’s career trajectory has moved nowhere but upwards ever since: Having relocated back to his birthplace in 1985 after a chance meeting with Alan Deacon, the human resources partner of Peat Marwick Mitchell in Hong Kong at the time, he made partner four years later and became co-chairman of KPMG China in 2007. In April, Tong reached the pinnacle, becoming the firm’s sole chairman in China and across Asia Pacific.

His rise to the top, Tong says, came with sacrifices in other areas of his life: Finding it hard to juggle the responsibilities of being KPMG China’s co-chairman, head of the Hong Kong stock exchange’s listing committee and serving on the Institute Council, he decided to resign from the Council after acting as a vice president for a year.

“One of the biggest disappointments in my 35 years in the profession is not

having the chance to serve as the president of the Institute,” he says. “Something had to give, my commitment to the firm came first and I knew I would not be able to take on another role as president of the Institute. Everybody told me to do it, but I knew personally I couldn’t have done it. It was my personal decision and I have no regrets.”

Head-count controversyDuring his time with the listing committee, from which he stood down last year, one of the issues discussed frequently was the controversial head-count rule and the practice of share splitting.

These rules became the centre of contention in the recent court case involving PCCW’s HK$15.9 billion privatization plan. The telecoms company allegedly used share-splitting tactics to garner support for its scheme, but the Hong Kong Court of Appeal rejected the plan due to vote rigging allegations. Pacific Century Regional Development, controlled by PCCW Chairman Richard Li, is challenging the court ruling and the case will be heard later this month.

Tong says he cannot talk about the case, as PCCW is a client. On a personal level, he believes the head-count rule should be reviewed and clearer guidance given on what is acceptable when it comes to share splitting.

Under the law, a publicly listed

company wishing to privatize must obtain approval from at least half of the number of shareholders attending a vote meeting (known as the head-count rule). Since the majority is based on the number of shareholders and not the number of shares they hold, an individual who has only one share will have the same voting power as another holding 100 shares.

“It doesn’t really make sense that one person holding one board lot can count as much as someone holding more shares,” he says. “The whole idea of having the head-count rule is to make sure you have minimum support. But if you allow share splitting, in principle, you are bypassing that rule.”

Another hot debate concerning Hong Kong’s capital markets is the growing threat of Shanghai as an international listing destination. Tong, however, is quick to point out that he doesn’t see the two cities as rivals, quoting the recent words of Secretary for Financial Services and the Treasury K.C. Chan that “Shanghai is like New York and Hong Kong is like London.”

“If the Chinese city catches up with Hong Kong, it does not mean that we will lose out on what we have,” Tong says. “I don’t have problems with ‘H’ shares going back to list in China with a dual listing if there is active trading on both sides. What’s wrong with that?”

While Tong wants to see increased cooperation between the two bourses, he rules out the possibility of a merger

Success ingredient

One of the biggest disappointments in my 35 years in the profession is not having the chance to serve as the president of the Institute.

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Cars are an important symbol in the lives of the Tongs. Carlson Tong’s father, Carlos, was a car sales manager responsible for distributing British Leyland and later Porsche automobiles in Hong Kong. Fascinated by the products he dealt in, the senior Tong kick-started a family tradition by giving his children Christian names that began with the alphabet “C” – so Carlson’s brother is Carl, his sister is Carol, his daughter is Catherine and his brother’s children are called Clinton and Constance.

But when Carlson’s son was born, his wife, Gill, put the brake on the “C” tradition. She opted instead for Owen, a typical Welsh name, and when the family later adopted

a disabled child in Hong Kong, they named the boy Michael, whose tie with the family began with an episode involving a car.

“Michael, whose birth name is Chi Tat – which means ‘wish comes true’ in Chinese – was about three years old when we adopted him,” Tong explains. “My wife used to visit him at the orphanage in Wong Tai Sin.”

Gill later took him home on weekends, travelling on the Mass Transit Railway and in minibuses. She used to say that Michael would always become very subdued and completely cut off when returning to the orphanage in the minibus, as if he knew that his fun time with the family was over.

“During one public holiday, the

family decided to take him home by driving all the way from Hong Kong to Kowloon. He was very cheerful in the car and did not know where he was going. When we arrived at the orphanage, he suddenly burst out crying, not knowing what was happening and why he had returned home in a car instead of a minibus.

“It was really sad. We did not know what was going on in his mind. He would not stop crying. As a result, everybody burst out weeping and it was at this stage that the family decided once and for all that we were going to adopt him,” he says.

So the family car, or a ride in it, eventually sealed the fate of Chi Tat, making his wish come true.

A family car ride

in the near future. “To merge, the yuan has to be fully convertible and I can’t see that happening soon,” he says, adding that the yuan will nonetheless gain prominence as a trading currency.

One sensitive issue on cross-frontier cooperation that Tong champions is mutual recognition between the Chinese Institute of CPAs and the Hong Kong Institute of CPAs. Many Hong Kong accountants are concerned that granting recognition and practising certificates to their mainland counterparts would increase competition in the market. In addition, the training programmes for the two institutes are very different.

“It’s a win-win situation for all,” Tong argues. “China has fewer than 300,000 qualified accountants, similar to America. How many people are there in China compared to the U.S.? China

needs more accountants and Hong Kong can help.”

KPMG currently has more than 9,000 partners and staff in Hong Kong and China, with more than 7,000 of them working in 10 offices across the mainland.

Out of the woods? While the financial crisis appears to be finally getting under control in recent months, Tong believes it will take a while for economic growth to resume and consumer spending to get back on track.

He is, however, already seeing some signs of recovery in the Hong Kong and mainland economies, with strong support for a wave of new flotations after Beijing lifted the moratorium on initial public offerings. Tong cites the example of Bawang International

Group, which was oversubscribed by 400 times when the Chinese shampoo maker applied for listing on the Hong Kong stock exchange.

“It’s all about confidence. When people have confidence, companies will get listed. I think the IPO market will be strong for the rest of the year unless something blows up again,” he says.

Tong is also upbeat that mergers and acquisitions will resume in the second half of the year, with leading Chinese companies continuing to pursue investment opportunities overseas.

Despite all this, he says the third quarter will remain tough and there will likely be a time lag between an increase in transactions and the work pipeline.

“Our business doesn’t turn around when consumer spending goes up. We need to see more IPOs, more transactions and more mergers and

[ 18 ] A Plus + August 2009

acquisitions to create activities. We are hoping that things will pick up in the fourth quarter. China will be the first to recover,” he says.

Tong says no matter where the market is heading, it’s crucial for KPMG to maintain top form: “I have seen so many cycles and the most important thing is to keep to your values, standards and quality. Don’t lower them because the market climate has changed with more competition. Your pricing must of course be competitive but don’t lower your quality.”

The executive recognizes that the markets have changed since the financial crisis and says there is a need for diversification. He sees growth opportunities in advisory services such as corporate recovery, restructuring, cost saving, cash flow management, business process improvements and information technology.

“We are the liquidators of Lehman Brothers in Hong Kong and the Asia Pacific region, which is one of the largest projects of its kind and we have more

than 100 staff working on it,” he says.Although business is boding well

for Hong Kong and China, Tong says the mainland is not removed from the rest of the world. “While we can feel good and business is going well, all the time you have to watch what is happening in America. So don’t be naive to think that China can be completely decoupled from the American and European economies and achieve 20 percent GDP growth, while the rest of the world is in negative territory. It just can’t happen.”

Hanging up his bootsWith his retirement looming in two years, Tong says he would like to devote more time to community services. He is already a board member of the Hong Kong Sports Institute, an organization dedicated to identifying and developing local sports talent to compete in the international sports arena. He also served as vice chairman of the Hong Kong Chinese Orchestra, during which time he helped corporatize

the organization by turning it into a separate unlimited company. The orchestra is now in the process of building up a bigger repertoire of songs and trying to educate school children about Chinese music.

“I think music and sports are good for young people and that’s what makes the city tick. I’m interested in that and would like to continue my involvement with some of those activities when I eventually retire,” he says, adding that he will also consider some suitable independent directorships if he were approached. “Most of all, I look forward to spending more time with my wife and my family.”

So has he enjoyed his work so far? Once again, Tong pulls out another quote from a close friend who told him, “You should never say you enjoy your work. He says if you enjoy your work, you should pay your employer. The right answer is to say that I can put up with this job.

“So, to answer your question, I almost enjoy my work.”

Success ingredient

Profile1974-79 Five-year articleship with Watts Gregory

& Daniel accounting firm in Cardiff

1979-85 Joined KPMG U.K. (then called Peat Marwick Mitchell & Co.)

1985-89 Returned to Hong Kong to join KPMG

1989-2007 Partner of KPMG Hong Kong

2006-2008 Chairman of the main board and the GEM board listing committee of the Hong Kong stock exchange

April 2007 Elected co-chairman of KPMG China

April 2009 Became sole chairman of KPMG China, chairman of KPMG Asia Pacific and appointed member of KPMG’s global board and global executive team