WHERE HAVE ALL the accountants gone? They've gone to China with the Big Four accounting firms, most of them. A rush of initial public offerings (IPOs) by mainland corporations going public has prompted a huge, sudden demand for Hong Kong-based accountants to help prepare their stock market debuts in China. Steering most of the large listings are the Big Four accountancy companies - Deloitte Touche Tohmatsu, Ernst & Young, KPMG and PricewaterhouseCoopers. But to cope with the workload they have been snapping up accountants anywhere they can find them in Hong Kong - leaving lesser-mortal auditing and business advisory firms pondering where next to look for staff. Among those second-tier firms, Grant Thornton laments that the demand resulting from China listings has now left the firm with recruitment headaches. 'It's a struggle for us and a common theme among our competitors,' said Jonathan Leong, partner responsible for human resources at Grant Thornton. With about 200 professionals in Hong Kong and another 80 in Beijing and Shanghai, Grant Thornton ranks among Hong Kong's top four or five second-tier firms struggling to retain existing staff from the grasp of Big Four headhunters - and to recruit replacements. 'Everyone is short of staff and [is] poaching,' said Mr Leong. Most in demand are young qualified accountants with three to five years' experience, in the $15,000 to $25,000 a month salary bracket. Having met little response to advertising locally for the past three months, Grant Thornton is resorting to word of mouth. 'We are even asking our staff to keep an eye out for old classmates who might be interested. But it is very difficult finding people in this category - just below management grade,' he said. Recruitment in accountancy is cyclical. When economies crash, demand drops. But when it recovers, more contracts roll in for firms and the race is on to hire. 'Two or three years ago it was difficult to find jobs, but a lot of companies are hiring now so it is much easier,' said Mr Leong. Grant Thornton, which specialises in guiding middle market, entrepreneurial, small to medium-sized enterprises (SMEs) to bigger and better things, including eventual public listing, has a shortfall of 15 to 20 accountants in Hong Kong. Recruits are also needed in Shanghai. Grant Thornton has not even managed to fill its annual quota of graduate recruits, which it hires at about $10,000 a month. 'We usually take about 15 new graduates a year, but so far we have only confirmed nine or 10,' he said. The firm had interviewed about 100 candidates but 'some of those we wanted went to the Big Four instead'. As a result of high demand and limited supply, the firm is now looking abroad to fill the void with overseas-educated Chinese graduates seeking to return to Hong Kong. 'Normally, our priority is to recruit students from local universities, but because of the shortage we are now looking overseas,' he said. Grant Thornton is not panicking - at least not yet. 'The busiest period for this profession is from January to June and that is when we really need to be fully staffed to meet the peak demand, so we still have a couple of months to recruit. But it's very difficult. Everybody is after this category of staff, so it's not just us,' Mr Leong said. Almost inevitably, given the laws of supply and demand, the shortage seems likely to push up salaries. 'There are rumours in the market that the Big Four will be revising their salary scales, but I don't know by how much,' he said. Whatever the new benchmark by the Big Four, Grant Thornton was likely to follow suit in its twice-yearly salary review, which was next in October, he said. 'We typically follow the market,' he said. It is not only former state-owned China giants that are rushing for public listing and creating such a demand for accountants. Even mainland companies in the SME sector are harbouring IPO ambitions. Grant Thornton has several such firms seeking listings - from sectors as diverse as pharmaceuticals, food processing, technology and mobile phone distribution. 'The market is up and people see a window of opportunity. Quite a few are coming to the market,' Mr Leong said. With about 20 listed companies on its books, Grant Thornton is confident the mainland trend towards public listings will continue - especially in its niche market, just a level below big corporations that are seeking a new lease of life. 'We typically look for some track record of growth and business at a reasonable level. When companies are in the start-up phase, fees are more of an issue, so we usually come in further along the company's life cycle with a few years in business and hopefully making a profit.' Grant Thornton's role, he said, was to step in with advice and take companies 'to the next level', with a view to eventually listing. 'The Big Four are not necessarily interested in companies at the pre-listing level, but that is our niche. We ensure they meet international controls, corporate governance and procedures to properly plan their path to going public.' Headhunters' paradise Rush of China initial public offerings prompts huge demand for Hong Kong accountants. The Big Four auditing giants are snapping up local talent to cope with mainland workload. Demand is causing staff shortages for smaller accountancy and business advisory firms. The biggest shortage is in the three to five years' experience, $15,000 to $25,000 a month range. Salaries are predicted to rise in the next pay review.