The merger of BDO McCabe Lo (BDO) and Shu Lun Pan Horwath Hong Kong (SLP Horwath), effective in seven days' time, will strengthen BDO International's position as the fifth-largest accounting network worldwide. It also heralds a greater focus by the international network on the business possibilities in the mainland. SLP Horwath has been operating in Hong Kong since 1981. Its nine partners and more than 200 staff will join BDO in Hong Kong and the two senior partners, Clement Chan Kam-wing and Hong Ng, will join the merged firm's executive board. The merged firm, to be called BDO, will have a fee volume of more than HK$300 million and a workforce of 700 accounting professionals in Hong Kong. Following the merger, BDO-affiliated firms will have more than 5,000 accounting professionals in greater China, and a turnover in excess of HK$1.2 billion with offices in Beijing, Guangzhou, Hong Kong, Shanghai, Shenzhen and Wuhan. 'Our merger with BDO is in alignment with our Chinese partners at Shu Lun Pan Shanghai who joined the BDO network earlier this year,' said Mr Chan, managing director of SLP Horwath. The recent admission of Shu Lun Pan Shanghai, China's largest domestic accounting firm, to the BDO network pre-empted the announcement of the merger with the Hong Kong office. 'We believe the merger will significantly enhance our service capabilities and open up opportunities in Greater China. The growing size of the firm also creates opportunities to develop industry focused and specialised services, enhancing our position as the preferred choice for potential clients,' Mr Chan said. BDO will provide a full range of professional services, some of which are not available under SLP Horwath in Hong Kong. These include China tax services, business services and corporate secretarial services. The services provided in specialist advisory services area will be strengthened and expanded in the combined firm to include areas such as litigation support, forensic investigation and valuation. Audit and assurance and risk advisory services are two potential areas for growth in China, Mr Chan said. The increasing sophistication of the mainland market meant that these services were earmarked for high growth, along with business services, consulting, tax advisory and tax planning. BDO will maintain two offices, in Sheung Wan (BDO's current premises) and Wan Chai (SLP Horwath's offices) until one of the leases expires, at which point the firms will merge into one location. 'We're complementary in our reputation and philosophy but one of the more important aspects is size - size does matter,' Albert Au, managing partner of BDO McCabe Lo, said. 'As we move towards trying to compete with the bigger firms we're also competing for bigger and more sophisticated clients, and the resources required are proportionately larger in terms of the number of people we need to deploy. Without that size, one doesn't have the credibility. 'Size also enables us to invest in training, technology and the other things necessary to providing more sophisticated and value-added services. That's where the synergies will arise,' he said. Having met during work both carried out with the Hong Kong Institute of Certified Public Accountants Mr Chan and Mr Au, a former HKICPA president, began discussing the possibility of a merger last summer. The BDO-affiliated firm in Shanghai, Shu Lun Pan was an additional catalyst to merge, Mr Chan said. 'Horwath changed its name about two years ago to reflect our close partnership with Shu Lun Pan Shanghai. About three months ago, Shu Lun Pan Shanghai also joined BDO International as one of the network's China member firms. 'We share common ideas and values and we see synergies and places where we complement each other in the local market. With our China member also joining BDO, we see a lot of potential co-operation and even possible equity arrangements with our Chinese firm,' he said. 'China is a very important part of the jigsaw for us. This is only the first step of the journey. Somewhere, we will likely see our Chinese and Hong Kong practices develop a much closer co-operation,' Mr Chan said. BDO has member firms in cities across China but none of them are as big as Shu Lun Pan Shanghai, which has 10 offices nationwide. The addition of this firm has taken BDO's presence in China to an advantageous position comparable to any of the Big Four firms in China, Mr Chan said. 'Because of our working relationship with Shu Lun Pan for the past eight or nine years, we have established an understanding and a close relationship. With the improved platform of our firm in Hong Kong and the expected closer development of A and H shares, we see many potential synergies between the Hong Kong and China markets. Hopefully, closer co-operation with our BDO mainland Chinese firms will create a platform to equip us to deal with the changing market dynamics in the mainland. 'We have a clear game plan as far as our medium to long-term development is concerned,' Mr Chan added. 'We see ourselves as a well co-ordinated team of BDO offices serving our markets.'
