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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Rolla Coasta who wrote (9922)	7/12/2001 10:32:51 PM
From: Rolla Coasta	Read Replies (1) \| Respond to of 9980

Reborn firms prepare for arrivals Overseas players welcomed in bid to lift competitive standards as mergers produce domestic rivals china.scmp.com BEI HU The accounting sector has seen a wave of consolidations amid industry liberalisation before its accession to the World Trade Organisation. About 152 accounting firms had been reborn by the end of March following mergers and acquisitions among 411 domestic accounting firms, according to the Chinese Institute of Certified Public Accountants. The institute, controlled by the Ministry of Finance, is the regulator of the mainland accounting and auditing industries. The sector's consolidation has gathered pace since last year after Beijing's call for domestic accounting firms to reach economies of scale through cross-regional alliances. The move is seen as necessary to prepare mostly small domestic firms for competition with their international counterparts. "With our economic growth and the further liberalisation of the accounting market after the WTO entry, accounting firms must expand in size and raise their professional standards," said an official document released last year. China had 6,045 accounting firms at the end of 1998, according to the institute. In February, assistant finance minister Li Yong estimated there were about 4,600 domestic accounting firms. Of these, only about 100 qualified as medium-sized firms. The rest were small entities with little competitive edge, Mr Li said. They are facing growing competition from the Big Five international accounting firms - Arthur Andersen, Deloitte Touche Tohmatsu, Ernst & Young, KPMG and PricewaterhouseCoopers - which have set up in China. International accounting firms have been lured by the high growth prospect of the domestic industry. In 1998, accounting firms reported turnovers in excess of six billion yuan (about HK$5.58 billion), according to an institute report. Analysts have said that China's demand for certified public accountants (CPAs) would be boosted by the scrapping of a decade-old moribund system of domestic initial public offerings to one based on international standards. China's entry to the WTO, which could happen as early as November, will compound that by forcing more domestic firms to conform to international corporate governance standards. Mr Li estimated that 300,000 CPAs would be needed, against the 70,000 at present. China has encouraged international accounting firms to fill the gap. But restrictions on their operations remain. For example, expatriate accountants are required to pass the Chinese certification test, administered exclusively in Putonghua, to qualify as partners. However, during its negotiations to join the WTO, Beijing has committed to eliminating the mandatory localisation requirement and allowing foreign accounting firms unrestricted access to its market. The Big Five received a pat on the back in May when Beijing approved them to audit domestically listed financial companies. Mr Li hoped a crop of large local accounting firms, with staff sizes between 600 and 1,000, would emerge within five years to rival the Big Five.