Seeking balance amid expansion
International financial services consultancy PricewaterhouseCoopers (PwC) plans to hire more staff and open new offices to capture a bigger share of business opportunities in the rapidly-growing Hong Kong and mainland markets.
Ernest Ip Koon-wing, a 25-year veteran with the firm, will be spearheading the expansion. In July, Ip was appointed to the post of senior partner for China and Hong Kong. He was formerly the head of the Hong Kong and China assurance practice of the firm.
The 50-year-old will oversee a significant expansion of staff in his new role, as PwC raises its headcount on the mainland and Hong Kong from the present 10,000, to about 15,000 by 2016. The firm also plans to have five new offices by 2016, lifting the total number of offices from 15 to 20.
The firm's hiring plans are in contrast with ongoing staff cuts across the financial sector.
HSBC has announced a plan to axe 30,000 staff worldwide out of a total of 296,000 by 2013 - including 3,000 in Hong Kong. Bank of America plans to cut 30,000 staff out of 290,000 in the next few years; and Credit Suisse and Lloyds Banking Group said earlier this year they would be cutting staff. The lay-offs come as the banking sector wrestles with higher regulatory costs and a bleak market outlook because of fears about Europe's sovereign debt crisis and the economic slowdown in the United States.
Such worries are not shared by Ip, who told the South China Morning Post that his firm would continue to hire more staff to cope with the growing demand for accounting services on the mainland and Hong Kong.
'We aim to recruit fresh graduates as well as experienced professionals from various industries since we need to continually build a team of professional people to maintain and grow our market shares in mainland China and Hong Kong,' Ip said.
Ip says he also wants to achieve a more balanced business mix in his new role. Currently, PwC is heavily reliant on audit work to bring new listing candidates to the market, and annual audits of listed firms' financial statements.
Auditing services drive two-thirds of PwC's revenues, with taxation and other advisory services comprising the rest. 'This is different from other mature markets such as those in the United States or Britain, where there is a more balanced mix of business across the audit, taxation, and advisory services. I would like to see a similar business mix across the three lines of services on mainland China and in Hong Kong,' Ip said. Chinese financial reforms and the internationalisation of the yuan would mean more mainland financial institutions and other mainland firms would invest in overseas companies, or launch merger or acquisition bids, Ip said, noting that such moves would increase demand for advisory services.
In addition, international regulatory changes, such as the Basel III banking guidelines, will increase the need for advisory services, while the mainland's growing middle class will increase demand for wealth management, insurance, and taxation advisory services.
Audit work would remain an important part of PwC's business, as many mainland firms plan to be listed in Hong Kong and on the mainland, Ip said. However, PwC would be selective about accepting clients, given the number of high-profile accounting scandals relating to mainland firms' listings, he said.
Ip is a Hong Kong success story, having been born in the city and educated at Polytechnic University. He has four elder siblings.
'When I was at university in the 1980s, China had just begun its economic reforms, and many Hong Kong entrepreneurs went to the mainland to open factories. The investment market had started to develop and opportunities for the financial industry looked very attractive. This is why I wanted to be an accountant - as a stepping stone to get into the financial market.'
After graduating, Ip joined Coopers and Lybrand (which would later merge with PwC), and planned to stay in accounting for a few years before deciding on his next step. But the next step never came and he has now spent 25 years in the profession.
What attracted Ip to stay were the exciting changes in the financial markets as Hong Kong was transformed from a trading port into an international financial centre, Ip said. As an auditor he was closely engaged in this transformation, helping many mainland firms - including big names such as Bank of China, and Bank of Communications - to list in Hong Kong.
Ip was also a member of the Hong Kong stock exchange's listing committee from 2003 to 2009. During this period, he helped promote corporate governance reforms in Hong Kong.
The key to being a good accountant, Ip said, was simple: 'One has to have focus and come through a period of hardships. Success does not come overnight, but if you work hard and have the passion to do what you are doing, you will do it.'
Asia's percentage share of PwC's gross revenues for its 2011 financial year, or US$3.42 billion out of a total of US$29.22 billion