KPMG explores new avenues to lift revenue
KPMG will increase efforts to expand its advisory services in Asia to offset the impact of the decline in initial public offerings and other transactions amid the financial crisis, according to new KPMG Asia-Pacific chairman Carlson Tong Ka-shing.
Mr Tong assumed the top Asia role at the international accounting firm on April 1, in addition to his existing title as chairman of the China office.
Talking about his dual role KPMG amid the global financial crisis, he admitted this was a challenging time as revenue from auditing would drop as a result of the poor market sentiment.
To cope with the crisis, he said the firm would need to explore new business to add revenue and cut costs.
'Amid the financial crisis, we have to diversify our business lines in a bid to add revenue,' Mr Tong said.
'We have seen a substantial drop in auditing demand related to initial public offerings and mergers and acquisitions, as the number of deals have been falling due to the poor market sentiment.'
In Hong Kong, there were only seven public offerings in the first quarter of the year raising HK$15.45 billion, compared with 10 that raised HK$32.73 billion in the first quarter of last year.
'Our people should spend more time out in the market to identify new opportunities and to explore growth areas,' Mr Tong said. 'I believe advisory services is one of those areas. We have strong advisory business in some of the more developed practices but there is room to grow advisory services in other parts of Asia.'
'During a crisis, there would be increasing demand in corporate restructuring, cash flow management as well as how to implement a better risk control system. We can also offer advisory services for banks to meet with complicated new regulations such as Basel II,' he said.
On the cost-cutting side, KPMG from this month would offer a partly paid leave programme for its 9,000 staff in Hong Kong and the mainland. Under the scheme, staff will take up to 40 working days of leave in the next 12 months, during which they will be paid 20 per cent of their salary.
'We prefer this partly paid leave programme as we do not want to lay off staff. We want to cut expenses but, at the same time, we want to preserve our resources ready for market recovery in the future,' Mr Tong said.
The response to the programme has been positive, as Mr Tong said more than 80 per cent of the Hong Kong and mainland staff have so far voluntarily applied for up to four weeks of leave under the scheme.
On recruitment, he said KPMG this year would hire about 1,800 graduates and experienced accountants with skills in mainland and Hong Kong accounting practices, bringing the total headcount to more than 10,000. In the Asia-Pacific, it had 31,000 staff as at the end of last year.
Mr Tong said continuous recruitment was needed even in a downturn to prevent a shortage of experienced staff.
In the Asia-Pacific, KPMG has member firms in almost all the countries including Australia, China, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam, as well as in Hong Kong and Taiwan.
Mr Tong said the firm would expand in all areas and would strengthen links between the operations. 'Over the past few months, our member firms in the Asia-Pacific have been working closely together to create greater regional alignment in terms of how we 'go-to-market' and to share our knowledge and experience to develop our people and business more efficiently.'
