As well as affecting the way many of us live our lives, the global recession of the last three or four years has raised questions about, and brought to the foreground of our attention, corporate governance and the role of regulators in all areas of business.
In part due to its role in monitoring and helping companies through tough times, PricewaterhouseCoopers has never been far from the heart of the issue and we wanted to find out more.
Jack Bird, pictured below, is an international tax partner at PwC in Japan. He agreed to sit with Ray Pedersen and chat about some Japan specific corporate tax issues and challenges, and his personal predictions for 2012 onwards.
The Big Four audit firms (PwC, Deloitte, Ernst & Young and KPMG) are well known throughout the world, is there a big rivalry?
Well there is not a big difference between the four. We would all say that we offer the same services. We are not one big company like say IBM, but our standards are the same and we operate together.
How successful has PwC been in Japan?
Even though we are the largest audit firm here, we are still relatively tiny. We have 169,000 people in 158 countries around the World. In the US for example, we have tens of thousands of people, in Japan we just have 500. I think it is partially down to the number of small tax firms here.
Have you seen many differences in the way the way tax is managed here compared to other countries?
Japanese companies don’t plan as much. They don’t usually have the tax divisions like we do in the US, for example. Sometimes they pay tax for stupid reasons, which I as a tax professional find astounding!
The larger companies here are proud to pay tax. A couple of years ago, after Toyota suffered losses, I saw their President on TV saying that he was looking forward to being the number one tax player in Japan again. I am pretty sure you wouldn’t hear an American CEO saying something like that!
A number of issues caused a stir in Policy Governance in Japan last year. What affect has that had on operations here?
I have not seen many changes. All companies in all places have their accounting scandals. Enron in America, Parmalat in Italy and last year Olympus in Japan. These things happen and they always will, but I have not seen any massive alterations here in the past few months.
To be clear, Japan has problems which are different from other countries. Managers here tend not to pay themselves huge amounts. It is more for the group dynamic rather than personal enrichment, this is the opposite of America.
Nearly half of the CEO’s polled in a recent PwC survey believed that the Global economy will decline even further over the next twelve months. What are your thoughts on the subject?
I am optimistic that we will see a recovery. There are always ups and downs and I think it has been down long enough. The US economy seems to be getting better, which means that Obama will probably go on to win the Presidential election (that is by no means a political endorsement of him).
I also think the Europeans will figure a way out. If I were to bet I would say that Greece will be out of the Euro within a year, but either way I don’t think it will be a big catastrophe.
What about the prospects for PwC in 2012?
Well the good news is that our core business of auditing and tax will go on as normal. We are a utility, people will always need their tax compliance done, books audited etc. So this part of our business is very stable. The consulting and advisory side however, is not booming. We make money on deals and there aren’t many deals happening at the moment. That said, it is getting better than it was. It’s not 2008, but at the same time it is not 2006. It is a good time to look for office space in Tokyo though!
According to a poll in Fortune magazine PwC is the 48th best company to work for in the US, what is like working for them here in Japan?
We have been higher than that in the past. I think I have seen us as high as five. It is a good place work. This is my second time to work here, after leaving for a few years, so they must be doing something right!
I also think it is great for young people. We are a sophisticated, international company that is welcoming to all kinds of people. We have so many different nationalities working for us, it is almost like the United Nations.
What are the biggest challenges you have faced working in Japan?
Well, most of my clients are foreigners. They come to Japan and they see what appears to be a very Westernized society and this brings assumptions. Underneath though, things are done differently. My job as a guy who has been here for a while is to explain to Japanese people what the foreigners want to do and vice-versa. It can be difficult.
Someone from Overseas might see something that is completely illogical to him and can’t understand why his local subsidiary is saying no. I suppose my job is to act like a bridge between the two.
Interview by Matthew Hernon and Ray Pedersen