CHINESE BIG 10 PLANS SIGNAL BRIGHT FUTURE FOR MID-TIER


The Chinese Ministry of Finance has outlined plans to create 5-10 major accounting firms within the next decade and speed up the development of the domestic accounting profession.

The Chinese Ministry of Finance (MoF) has outlined plans to create 5-10 major accounting firms within the next decade and speed up the development of the domestic accounting profession.
The draft paper suggests these major local firms should each have annual fee income of CNY3 billion ($439 million), good international reputations, competitiveness and the ability to offer cross-border services.

The aim of the proposal would be to provide audit services to about 100 large corporations, which the MoF estimated would lead to the industry doubling in size to CNY60 billion.
Currently, the Big Four are estimated to each have fee income in excess of CNY2 billion, but these proposals will send a strong signal to global mid-tier networks that they have a bright future in China.

The expansion would be a significant increase on the current industry total published in this year’s International Accounting Bulletin China survey (see IAB 443), which estimated the combined fee income of China’s major accounting networks and associations at about CNY16 billion.
Speaking before the announcement, BDO International chief executive Jeremy Newman said the MoF is pursuing a policy of developing large Chinese firms in partnership with established leading mid-tier networks, among other strategies. This is a departure from the Ministry’s earlier policy to create 10 domestic Chinese firms that could establish their own global networks.
“[The MoF] are very keen that we help with the growth and the development of a significant Chinese-based, Chinese managed firm so that we provide input, guidance and advice to the Chinese people to run the business, rather than catapulting non-Chinese people or people from Hong Kong into that business,” Newman said.

The MoF document estimated there were more than 7,200 accounting firms in China employing more than 85,000 practising accountants.

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