Rise of accountancy profession in China
The accountancy profession is on the rise in China.
This is best viewed in the context of the "China growth story" as a whole and the global reach of the big "international" accountancy networks. As with many growth stories, it is unlikely to be in a straight line; there will be bumps along the way.
However, the prospects for Chinese accountancy firms look good in the longer term. For example:
- Many Chinese businesses (both state owned and private) are looking to branch out and gain access to foreign markets. That said, domestic consumption and growth is also a priority for the current Chinese administration.
- Perceived prejudice about so-called inferior Chinese audit standards may not hold water.
- The growth rate of the global accountancy networks in China may have reached something of a plateau, after a decade or more of impressive growth.
Against that background, some Chinese firms are positioning themselves to expand both within the Chinese domestic market and in overseas markets. One is likely to see several trends.
First, accountants' growth in the Chinese domestic market will be tied to the growth of the Chinese economy. Local firms may also be aided by: (i) the mandatory requirement for the rotation of audits of large Chinese state owned entities; and (ii) the requirement for increased localisation of the Chinese affiliates of the "Big 4" firms.
Second, the better resourced and more ambitious Chinese accountancy firms are likely to position themselves in the medium term so as to minimise competition with the big accountancy networks at home.
Third, some ambitious Chinese firms will look for attractive affiliations with overseas firms outside the so called "big players".
No doubt the management of the big accountancy networks are likely to be fairly sanguine about these developments and they would be right to be. Through their affiliates, they still have a large share of the Chinese market, in terms of audit revenues, advisory services, corporate clients and talent. Their "brands" are attractive and well known.
Many would also welcome another "big player" on the scene to increase competition in an industry which some consider is already far too concentrated, with the attendant risks were one of the large accountancy firms to fail.