Bigger is better when doing accounting business in the mainland, says Nick Allen, partner in charge of audit and assurance services for Hong Kong and China at PricewaterhouseCoopers.
'One of the critical factors for success in China is generally the size of the practice. The major assignments everyone is competing for, and we are seeking to build our practice around, are frequently large state-owned enterprises and listings, which require significant resources to bring them to market and audit thereafter,' Mr Allen says.
'In our experience, overnight expansion is quite difficult in China. It is not easy to find the different types of people you want, and in large numbers. PricewaterhouseCoopers' merger with Andersen [in 2002] enabled us to double our size overnight, without the difficulties one would have if one tried to grow indigenously.'
PricewaterhouseCoopers now has more than 2,000 audit staff in the mainland, compared with more than 1,000 in Hong Kong, enabling it to give large mainland assignments the geographical coverage they need. The scale of such assignments may require audit teams to visit numerous clients' premises in different provinces to complete the necessary work, Mr Allen says.
'It is not unusual for us to mobilise 300, 400 or 500 people in order to complete these types of assignment. We would like more people, and we do recruit between 600 and 750 each year in China alone. We have nine offices in China, and the past nine months after Sars have been very active in terms of corporate activity in China,' he says.
'Experience is important, as you cannot realistically do an audit by sending out 700 new graduates to do the work. A team should be a mixture of different experiences and skill sets. Mergers with local firms have advantages, but not the same level of training and experience as their opposite numbers in the major accounting firms. There are risks in doing audit with people who can't fully understand the methodology. You can always try to recruit from your competitors, but this is not a very significant source of people.'
The firm also transfers staff from overseas, particularly Hong Kong, to work in the mainland, but language skills are important, especially when critical specialist needs such as in the banking and insurance sectors are involved.