CHINA is drafting regulations to govern operations of joint ventures by international accountancy firms and hasten localisation of the profession. The rules, which will be promulgated by the Ministry of Finance (MOF) early next year, will cover four major areas. They include provisions for the management of accountancy joint ventures and representative offices. They also will permit the ventures to open branches and Chinese certified public accountant (CPA) firms to become members of international counterparts. Named as interim regulations, they will be the first legal framework for international accountancy joint ventures since the first one was allowed to establish three years ago. There are so far eight accountancy joint ventures in the mainland, formed by the international big six, Kwan Wong Tan & Fong of Hong Kong and Grant Thornton. But only Horwath International has been allowed to have a Chinese member firm. 'Overall, I welcome the regulations - the four proposals,' Coopers & Lybrand China chairman John Stuttard said. However, he did have reservations: 'There is something about them that is not very helpful. 'We have made our comments to the CICPA (Chinese Institute of Certified Public Accounts) and we think they can improve. The CICPA is the regulatory body of China's accountancy profession under the MOF. Mr Stuttard applauded the decision to allow them to open branches to cope with growing business in China and to pick up mainland member firms. 'There are some aspects of the regulations that will create difficulties, but this is something we are discussing with the MOF. It is not a big problem,' he said. The rules will ask the joint ventures and representative offices to provide detailed information such as the distribution of expatriate and local staff for each assignment. Its aim is to ensure that Chinese nationals participate and gain practical work experience as mainland authorities have found progress towards localisation has been slow. It is understood that the CICPA proposes limiting the number of expatriate senior managers to 25 per cent for each assignment, but the requirement will serve only as a guideline, instead of being stipulated in the regulations. The rules are being revised after consultation with the international firms and are expected to be finalised by the end of the year. 'What the CICPA is doing is introducing rules, so it can do in a Chinese way what the Hong Kong Society of Accountants does in Hong Kong,' Mr Stuttard said. He did not expect the localisation requirement would create problems for the firm as it had enough qualified people in China. It has 88 Chinese nationals with an average age of 24 who have taken the CPA examinations, compared with its total mainland workforce of more than 300. Coopers and Lybrand today will open its first training centre in Shanghai. The firm estimates that it will have spent US$4 million on training in China this year and a similar amount will be spent next year. However, it has no plans to open more mainland training centres. 'We will put it under review, depending how fast our business grows in China,' Mr Stuttard said. He said Coopers and Lybrand planned to consolidate its mainland business before seeking to duplicate the rapid growth of the past two years.