News & Events


Increase in Business Startups Over 40 Times Faster in BRIC Countries Than Other Nations
3/29/2012 8:00:00 AM by UHY Advisors MI, Inc.

FOR IMMEDIATE RELEASE
Press Release


Contact:
Krystina Borrocci
Director of Marketing

kborrocci@uhy-us.com
586-843-2633


Increase in Business Startups Over 40 Times
Faster in BRIC Countries Than Other Nations,
Study Finds

Sterling Heights, MI (March 29, 2012) – The increase in new business startups is now on average 40 times faster in BRIC nations than other countries, according to UHY, the international accounting and consultancy network.

The research shows that BRIC nations are, on average, creating 18% more new businesses per annum compared to non-BRIC nations, which are, on average, creating just 0.4% more new businesses per annum.

UHY professionals studied data on new business registrations over the last five years in 19 countries across its international network, including the G8, as well as key emerging economies, including the BRIC nations (Brazil, Russia, India and China).*

According to UHY professionals, policymakers have been taking measures to encourage greater entrepreneurial activity during the financial crisis, but the research highlights the need for some countries to do more to help new business startups, which in many countries are struggling with low demand and restricted access to bank finance.

While in some countries the number of new businesses being created has increased by double digits over the last five years, in others the number of new business startups has decreased by a double digit percentage.

The country with the fastest increase is Russia, one of the so-called BRIC nations, which has seen a 25.6% annual increase in the rate at which new businesses are being created over the last five years. Nearly 3.2 million new businesses were registered in Russia in 2010, compared to 1.3 million in 2006.

The country which has seen the biggest slowdown in the rate of new business creation is Spain. The annual growth rate over the last five years is minus 14.6%. 76,622 new companies were created in Spain in 2010, compared to 143,859 in 2006.

The research reveals, however, that over the past year, the gap between BRIC and non-BRIC nations has narrowed. The increase in new business startups in 2010 was, on average, 3.3% for non-BRIC nations, compared to 18% for the BRIC countries.




John Wolfgang, chairman of UHY comments: “The difference in the rate at which new startups are being created is quite staggering, with the number of new incorporations decreasing for about half of the countries in our study. The BRIC nations are all in the top half of the table, while among the G8, only Canada, France and Russia have seen an increase in new startup formations over the last five years.

“Small businesses are often considered the engine of growth and employment and therefore critical to economic prosperity. Many governments – particularly in the West – are under pressure to increase tax revenues to reduce public deficits. Unlike large multinationals, which can shift economic activity to low tax jurisdictions, the tax burden falls disproportionately on small businesses.

“While just three out of the 19 countries surveyed continued to see a decrease in new startups over the last year, the concern now is what impact the ongoing eurozone crisis is having on new business creation. The uncertainty is almost certainly having a chilling effect.”

He adds: “Governments can do more to encourage business startups. Many of the respondents to our study highlighted high taxes and complex employment regulations as barriers to growth for small businesses.”

The research shows that, among the G8, France has the highest growth rate for business startups. This is due to a new structure for small companies called ‘Auto Entrepreneur’ which was introduced in 2009. These are micro businesses with turnovers under € 80,000 for industrial enterprises and under € 32,000 for services.

Auto Entrepreneur companies are exempt from business taxes for the first two years and have considerably lighter compliance requirements than other companies.

Franck Narquin, Partner of UHY GVA in France, a member of UHY, comments: “France has always been seen as a country in which it is quite difficult to start a business. The tax burden on businesses is high – particularly social security contributions – and employment law is restrictive. The Government has at least made steps in the right direction with the new Auto Entrepreneur programme, but much more needs to be done to increase competitiveness.”

The research also reveals that the number of new startups in Dubai declined 4.8% from 2006-10, but jumped 53.1% in 2010 alone.

Rajiv Saxena, Managing Partner of UHY in UAE (Dubai) says: “Dubai suffered a severe property slump during the credit crunch, and a significant number of state-backed entities were forced to restructure their debt. Confidence in the economy has revived in the past year, however, political instability elsewhere in the Middle East has led to an influx of foreign businesses into Dubai.”

Nikolay Litvinov, partner of UHY Yans-Audit LLC in Russia — which has the highest increase in startups – comments: “Russia is one of the few countries among the G8 to have recovered quite strongly from the financial crisis. Russia’s abundance of natural resources has meant it has benefited greatly from the commodities boom in recent years. Our flat rate corporate tax rate of 20%, which is the lowest among the G8, has also helped to make Russia an attractive place to start a business.”

Max Gosch, Partner of UHY's member firm, UHY Fay & Co in Spain – which has seen the largest decease in startups – comments: “Like many European countries, the Spanish government is focused on reducing public debt and has recently raised taxes on wealthier citizens. Many of these wealthier citizens will be entrepreneurs, so these tax rises could hamper small business creation. Business startups in Spain face many problems. Aside from low demand for goods and services, and restricted access to bank funding, high taxes and restrictive labour laws are also serious impediments to growth.”

* Figures obtained from official sources. In the majority of countries, data is only collected on incorporated entities. The five most recent years of data for each country was obtained, 2006 to 2010.

Notes for Editors

About UHY Advisors

At UHY Advisors, Inc. we deliver professional financial, tax, and business consulting services to mid-sized and larger companies we refer to as the dynamic middle market. As professionals we are constantly evaluating opportunities to propel incremental growth, avoid financial pitfalls, and reduce costs. We call our philosophy The Next Level of Service. Our clients tell us it’s what sets us apart. UHY Advisors, Inc. is one of the Top 20 professional services firms as ranked by Accounting Today.

UHY LLP is full service national accounting firm with international resources and a broader range of services that include: SEC audits, Internal Audit and Sarbanes Oxley Reporting as well as Turnaround and Transaction Services. These additional services have been part of the growth of UHY and its commitment to meet the demands of middle market clients.

For additional information please visit us on the Web at www.uhy-us.com.

UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of “UHY Advisors.” UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. and UHY LLP are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. “UHY” is the brand name for the UHY international network. Any services described herein are provided by UHY Advisors and/or UHY LLP (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.

Press inquiries:

Krystina Borrocci
Director of Marketing
kborrocci@uhy‐us.com
586-843-2633

For UHY, the international network:

Dominique Maeremans
+44 20 7767 2621, or email: d.maeremans@uhy.com

Paul Arvanitopoulos or Nick Mattison
Mattison Public Relations
+44 20 7645 3636 or pa@mattison.co.uk
Mobile: + 44 7941 943960

About UHY
UHY is proud to celebrate its 25th Anniversary in 2011. Established in 1986 and based in London, UK, UHY is a network of independent accounting and consulting firms with offices in nearly 240 major business centres in 78 countries. Over 6,300 staff generated an aggregate income of US$583 million in 2010, ranking UHY the 23rd largest international accounting and consultancy network. Each member of UHY is a legally separate and independent firm. For further information on UHY and its individual member firms including those referred to in the above release can be accessed here www.uhy.com. UHY is a full member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit www.forumoffirms.org.

For more information on UHY, please contact Dominique Maeremans, Marketing & Business Development Manager, UHY International, Quadrant House, 4 Thomas More Square, London E1W 1YW, UK. Tel: +44 20 7767 2621, or email: d.maeremans@uhy.com