Paul Leung, ASA, ARM
Director, CM Valuations Inc
Abstract: As the Chinese economy continues to grow, curiosity about the valuation practices of the isolated giant continues to grow with it. This article presents the experiences of a veteran appraiser who began his career in China and Hong Kong, as he looks into the major differences in the valuation assignment work from China and compares it with the assignments he completed in Canada.
I have worked as an appraiser in Canada and in China and Hong Kong. At the beginning of my appraisal practice, in the early 1990s, I worked for American Appraisal Hong Kong Ltd., which was the Asian-centric branch of the American Appraisal Associates whose main office was based in Milwaukee, Wisconsin. The company worked with businesses that aspired to be listed on stock exchanges. These companies needed appraisals to assist with their initial public offering (IPO): the process of offering shares of a private corporation to the public in a new stock issuance for the first time. An IPO allows a company to raise equity capital from public investors. In the mid-1990s, most private corporations or state-owned enterprises in China mainly focused on being listed on the Hong Kong Stock Exchange or New York Stock Exchange.
While with American Appraisal Hong Kong Ltd. I worked with the first petrochemical company as they took their corporation public in the Hong Kong and New York markets; we were tasked with preparing the appraisal assignment, which took us over six months to complete. The Milwaukee head office sent senior appraisers to assist with the assignment, and the project manager, Lee Hackett, FASA, ARM, FRICS, CRE, to oversee the appraisal process. It was a multi-faceted assignment that involved land, buildings, machinery and equipment, and intangible assets.
Other types of assignments I recall from my time in China were joint-venture assignments, which comprised state-owned and foreign enterprises. These involved big Western enterprises–such as Black+Decker, Pepsi, Carrier, Pratt and Whitney, and Chrysler– that wanted to participate in the local China market,. These large businesses took advantage of the growing Chinese market, and each formed a joint-venture corporation to manufacture products in China for the domestic Chinese market.
Although our office was in Hong Kong, most appraisal assignments took place in mainland China, so appraisal teams were frequently in China for over a week or two before returning home; for larger assignments, we might stay over a month before returning to Hong Kong. I enjoyed these stays. The teams would consist of various appraisers with all types of backgrounds from diverse disciplines and were wonderful to work with.
After many years in a fast-paced work environment, I decided to relocate to Canada for a lifestyle change and for my growing family. We moved to Canada in December 1998, an interesting time to move as winters in Canada brought their own challenges. The weather was nothing like I had ever experienced anywhere before. Not only the weather was bracing: the culture shock was more challenging than any assignment previously.
In Canada, I had to start my professional career over. I went back to basics and started with what I was most comfortable with: insurance appraisal assignments. These included assignments from the public sector, healthcare industry, and sometimes small-scale market value assignments, although these were comparatively less common.
The company I worked with completed insurance assignments around the world, but the travelling for assignments involved significantly shorter trips than those taken to China. Most assignments were no longer than a week, except for international travels. I took multiple trips to Australia to appraise a newspaper print and aluminum ingot plant. This assignment brought me to Australia for the first time, a very interesting trip, to say the least. Over the years at this company, I had even more opportunities to travel internationally to fascinating new countries like Italy, Germany, Denmark, and many others. After 10 years focused on insurance appraisals, I had an opportunity to join a national accounting firm as an in-house appraiser/ reviewer.
This new position brought me back to market value assignments. The accounting firm mainly focused on financial reporting, litigation assignments, and asset-based lending assignments. My last 10 years of training and experience with insurance appraisal became functionally obsolete; however, the exposure to the various industries became my strongest asset.
While there were many opportunities in China and Hong Kong, the assignments were not of the same caliber as my work in Canada. While in Canada, I was able to experience many different industries while working in my capacity as an equipment and machinery appraiser. I had the chance to network with many different people across numerous industries. It was my connections with other appraisers that granted me the opportunity to explore new growth with my appraisal license.
In 2018, I established my company, CM Valuations Inc., and after a few years, I expanded the services provided to my clients beyond the typical appraisals. As I was able to better connect with the clients and their appraisal needs, I began offering appraisal review services. I am excited to keep growing and expanding with the appraisal industry and cannot begin to predict the many changes that are to come.
Paul Leung, ASA, MRICS, has been working in the appraisal industry for over 30 years, primarily in the property, plant, and equipment sector. He has completed valuation and appraisal services on a broad range of personal property throughout North America, Europe, the Middle East, and Asia. valuation of property, plant and equipment includes but is not limited to oil and gas, construction, manufacturing, mining & quarrying, agriculture and food processing, and forestry.