The mainland's unemployment problems should not be allowed to impede the reform of its ailing state-owned enterprises, according to an accounting firm that specialises in corporate restructuring. Ferrier Hodgson & Marfan partner John Lees said a reluctance to reduce the size of bloated payrolls would hold up a successful restructuring of the sector. 'The overwhelming preference at the moment is to look after the worker, but we are saying if you build up a viable business it will grow employment in the long run,' Mr Lees said. 'If they can identify viable parts of a business and keep them going with a sufficient workforce at least they are saving some employment. 'We are not saying abandon employees, but we don't want to saddle enterprises down, it is not their problem,' he said. Ferrier Hodgson & Marfan took this message to the first of three conferences dealing with the restructuring of enterprises in Haikou last month. About 130 government officials, enterprise executives, bankers and lawyers attended the five-day conference, which was sponsored by the Asian Development Bank. Mr Lees said some delegates were initially sceptical about whether the reform model was applicable to mainland circumstances but later came to appreciate the conference's message. Many of the techniques for an effective restructuring process, such as debt for equity swaps, were not yet possible because of legal constraints, Mr Lees said. He said his firm was advocating the same approach to mainland restructuring that it applied to the restructuring of troubled Hong Kong firms. 'There is no secret to business, it's a universal concept,' Mr Lees said. Company executives were often behind decisions not to trim a company's workforce because of high redundancy costs, which a Western firm would simply write off as a business expense. 'It's just putting off the moment of truth,' he said. Mr Lees said there were reasons to be optimistic about the mainland's reform process. 'They know they have got problems and they are dealing with them as quickly as they can. 'The speed of the development of markets and the legal system has been fantastic. 'China has gone from having no systems to being very close to international standards in a lot of areas,' he said. Leading accounting firms have been seeking to establish a presence in the mainland as the country comes to terms with the immensity of the reform process that lies ahead. Mr Lees said Ferrier Hodgson & Marfan aimed to establish a mainland office before 2000. Ferrier Hodgson & Marfan already acts for a number of foreign joint-venture parties operating in the south.