On December 18^th 2009, China Appraisal Society (hereinafter referred to as “CAS”) released the Guidance Notes for Valuation of Investment Properties (Trial) and the Valuation Standard –Gems and Jewellery as an integral part of its continuous efforts of enhancing the regime within Chinese Valuation Standards and its promotion of better practices by the Certified Public Valuers (CPVs) in the pertinent emerging practices. To date, a relatively complete system of valuation standards covering major fields of practices has been established in China, including two general valuation standards, eight specific valuation standards, two applications and six guidance notes.

The valuation of investment properties has been developed as an emerging practice gradually over the world especially since the fair value measurement model was adopted for financial reporting purpose.  In 2006, the valuation of investment properties has become part of the Chinese valuation profession after the new Chinese Accounting Standards were released. Despite the business volume of the valuation of investment properties has not yet grown to a great extent in the meantime, there is a big room for the further development of this type of valuation practices as the number of listed companies adopting the fair value measurement model is growing, and the investors require more relevant accounting information thereof. The valuation of investment properties differs in certain aspects from the typical valuations for transaction purpose, secured lending purpose, etc. Specifically, the former is highly linked to the applications of the underlying accounting principles, which drives the determination of the exact subject of the valuation, selection of the valuation approaches, and the required disclosure of the valuation results, and so on. With an objective to regulate the underlying valuations of investment properties so as to better satisfy with the disclosure requirements under the financial reporting regime in the dynamic and emerging securities market in China, there is a strong need to establish a separate set of guidance notes based on the Application Guide of Valuations for Financial Reporting Purpose and the Valuation Standard – Real Properties. The Guidance Notes for Valuations of Investment Properties (Trial) copes with the new change of the underlying accounting principles, establishes a clear link between the valuation practice and the accounting and auditing practices, and focuses to address the specific needs or features under the financial reporting regime. The Guidance Notes take into consideration the prevailing conditions in the country to a large extent, and as a consequence, the guidance notes are able to provide practical solutions to the real life valuation issues on the ground.  In the meanwhile, they are also driving towards the convergence with the international standards, which in turn, would promote the process towards the internationalization of the valuation profession.

Gems and jewellery valuation is an integral part of the valuation practices in China, and is also an important sector to be better regulated with the valuation standards. The Valuation Standard –Gems and Jewellery, drafted based on the former Guidance Notes for Gems and Jewellery Valuation, highlights the specific features of gems and jewellery valuation as compared to the previous guidance notes. For example, it emphasizes that the gems and jewellery valuation would need to base on a proper grading of the underlying gems and jewellery, which in turn requires the valuation professionals possess the knowledge and experience relevant to the identification and classification of the underlying gems and jewellery.  Therefore, the new standard stipulates that the valuation professionals who sign off a valuation report concerning gems and jewellery should possess the certificates of China Practising CPV (gems and jewellery). The Valuation Standard –Gems and Jewellery is also highly consistent with the existing standards in all significant aspects such as structure, terminologies and contents, and it captures both the international experience and local practice to the maximum extent practical. The new Chinese gems and jewellery valuation standard is the first national gems and jewellery valuation standard in the world, and embodies the commitment of Chinese valuation profession to better serve the market and the economy.  It is expected that this will have a positive impact on the development of both the valuation practices and the associated valuation standards with respect to gems and jewellery in the world.

The formulation of the two valuation standards has been widely supported by all sectors of the society. In 2008, the China Appraisal Society established two project teams respectively, consisting of the leaders and experts from valuation firms, research institutions and regulatory bodies, which conducted an in-depth study on the underlying valuation theories and practices, convened many rounds of discussions, solicited and incorporated views of all the constituents during the entire process of modification and finalization.

The release of those two standards copes with the rapid economic development, meets the requirements of the developing market economy and the valuation profession, and is also another milestone in further enhancing the regime of Chinese Valuation Standards.  Hopefully, this would help direct and regulate the development of the pertinent valuation practice, so as to protect the legitimate interests of the general public and of those getting involved in the associated valuations.