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Enoch Yiu

PricewaterhouseCoopers plans to triple staff numbers in Hong Kong and the mainland to about 10,000 within a few years of its merger with former rival Arthur Andersen.

The two accounting firms will officially be merged in Hong Kong on July 1 and operate under the PricewaterhouseCoopers (PwC) name.

Silas Yang Siu-shun, chairman and senior partner at PwC, said that after the merger the firm would have about 6,000 workers split between Hong Kong and the mainland. PwC employs 3,500 workers at present.

The merger will make the new entity the largest accounting firm in Hong Kong and the mainland.

'The accession of China to the World Trade Organisation presents us with a lot of business opportunities in the accounting profession,' he said.

'We need to have unlimited resources and talent to capture those new business opportunities in China. Combining the size and resources of the two accounting firms gives us a good platform to compete in China.'

Mr Yang said PwC employed 38,000 people in the United States and 20,000 in Britain.

'We will only have 6,000 staff in Hong Kong and China after the merger - it is not enough to capture such huge opportunities. We need to bring on board a lot more talent to allow us to expand our client base in Hong Kong and China,' he said.

Mr Yang said the firm planned to recruit about 1,000 workers every year until it reached its goal of 10,000.

He believed that in the long run, PwC could have 20,000 staff in China and Hong Kong, putting it on a par with Britain.

Premier Zhu Rongji has said that China needs 300,000 certified accountants to handle the business requirements of China's economic reform, while there were now only 70,000 certified accountants in Hong Kong and the mainland.

'This shows that a lot more of training and recruitment is needed,' Mr Yang said.

Another benefit of the merger with Arthur Andersen was that a number of Andersen's blue-chip clients would be brought into the fold.

Bank of China and China Unicom have already switched to PwC and others like Pacific Century CyberWorks would follow, Mr Yang said.

Assuming all of Andersen's clients remained with the merged group, PwC would serve as auditor to 14 out of 33 Hang Seng Index firms.

It would also be the auditor for half of the companies in the China H-share and B-share markets.

This would give PwC more than 40 per cent of the market share of blue chips.

But Mr Yang said he would like to see more large domestic firms join PwC's client list after the merger, as domestic firms would be an important part of the company's business in addition to its international clients.

The company now serves almost an equal number of international clients and domestic clients.

Mr Yang would like to take that ratio up to 75 per cent large domestic clients.

Arthur Andersen's Hong Kong and mainland businesses decided to join PwC in March after the United States arm of Arthur Andersen hit troubled waters following the collapse of energy giant Enron.

Andersen's US office, as auditor of Enron, was blamed for not detecting Enron's hidden debt problems. Andersen, with its Enron audit partner David Duncan, destroyed key documents relating to the collapse.

This shook public confidence in the accounting industry, leading to a raft of US reforms.

Mr Yang considered such reforms a healthy move as they might force the US to move its own accounting standards closer to the International Accounting Standards used by many other European and Asian countries.

This would close the gap between accounting standards worldwide, and would benefit companies with cross-border listings, he added.

Besides Hong Kong and the mainland, Arthur Andersen's other operations joined other rival firms in different countries, effectively cutting down the number of international accounting firms.

Mr Yang believed that there would be little chance for further mega-mergers among the leading accounting firms as some countries would ban such moves to give clients more choice.

But he said the mainland and Hong Kong had many smaller accounting firms and that it was likely that these small firms would consolidate to increase their competitiveness.



Merged firm to triple workforce