Overseas players welcomed in bid to lift competitive standards as mergers produce domestic rivals

The accounting sector has seen a wave of consolidations amid industry liberalisation before its accession to the World Trade Organisation.

About 152 accounting firms had been reborn by the end of March following mergers and acquisitions among 411 domestic accounting firms, according to the Chinese Institute of Certified Public Accountants.

The institute, controlled by the Ministry of Finance, is the regulator of the mainland accounting and auditing industries.

The sector's consolidation has gathered pace since last year after Beijing's call for domestic accounting firms to reach economies of scale through cross-regional alliances.

The move is seen as necessary to prepare mostly small domestic firms for competition with their international counterparts. 'With our economic growth and the further liberalisation of the accounting market after the WTO entry, accounting firms must expand in size and raise their professional standards,' said an official document released last year.

China had 6,045 accounting firms at the end of 1998, according to the institute. In February, assistant finance minister Li Yong estimated there were about 4,600 domestic accounting firms.

Of these, only about 100 qualified as medium-sized firms. The rest were small entities with little competitive edge, Mr Li said.