Due to the unrelenting economic growth of industrial enterprises and financial services in mainland China and the government's encouragement of inbound investment and expansion of local enterprises through initial public offerings (IPOs) in overseas markets, demand for professional audit and accounting services is expected to surge this year.
According to Desmond Yuen, partner and head of China services for Grant Thornton Hong Kong, there will be greater demand for various services in the mainland. These include general auditing, financial due diligence, consultancy for merger and acquisition, as well as corporate restructuring services.
Mr Yuen says both local and multinational accounting firms are expanding rapidly in China. Local operatives, with their better understanding of existing practices and regulations, can help in pre-restructuring arrangements. Thereafter, overseas accounting firms with global experience will be able to reform a company's accounting system to international standards.
As local and international accounting firms have their own positions in the mainland market, they may complement each other in gaining and serving customers. Mr Yuen says different levels and models of partnership or cooperation exist. Due to the government's policy of not encouraging the set up of any more joint venture accounting firms, he explains, there are only about six joint-venture accounting firms in the country. These are augmented by different alliances among players in Hong Kong and China who refer customers to one another.
High demand for experience
According to Mr Yuen, accounting professionals with three to five years' experience are mostly wanted in Hong Kong, while China requires even more talented people, those who have been in practice for between five and 10 years.
The competition for talent, says Mr Yuen, does not come from direct competition but from the business sector. "It's about leaving the field of public practice." These accountants, he says, with both technical competence and management skills acquired from solid experience, are "highly marketable" and always the target of a commercial firm. Today, around 30 per cent of the 24,000 accountants in Hong Kong serve in the public practice sector.
According to Mr Yuen, there are push-pull factors that lead to the departure of experienced accountants. "Our work (in public practice) can be harsh," he says. "By contrast, in a commercial firm you will find your work more controllable. There is little need to travel as frequently as with an audit firm. Meanwhile, you can enjoy the same status and usually higher monetary rewards as those in public practice."
So what keeps him in the "battlefield"? "It's all about your passion, with an eye to the partner status of an audit firm and the social respect of your profession," he says. "There are never-ending learning opportunities in the profession. That's why it can be tough work."
Moreover, salaries for auditors are improving. Since a large number of accountants are required in an audit firm, but only one financial controller in a company, Mr Yuen thinks it unfair to compare the monetary rewards of the two positions. That's why most attempts to compete will detract from other positive aspects of the work.
Overseas training is also considered a driving force. "We provide opportunities for our mainland accountants to work outside, and the other way round, by letting our Hong Kong staff go to China." While most mainlanders welcome the chance to work overseas, Mr Yuen says many Hong Kong people are eager to work in China. "They realise the extent of what they can learn while stationed in the mainland."
Tips for expatriates
Today, no "hardship" allowances are payable to Hong Kong people working in China. But Mr Yuen says expatriate salaries will be adjusted because they are subject to higher taxes in the mainland. "Our point is to keep their net disposable income the same." The tax difference, according to Mr Yuen, is about 15 per cent on average.
In view of long-term development, Mr Yuen cautions that Hong Kong professionals should consider obtaining the China certified public accountant (CPA) qualification. Nowadays, CPAs in Hong Kong may be exempted from two subjects with regard to China's uniform examinations for CPAs.
He, however, stresses that exams in China are difficult, with emphasis on memory, and an average pass rate of less than 10 per cent. And he estimates that it takes around four years to obtain the qualification, which includes a requirement of two years' public practice experience in China. Currently there are only about 100 Hong Kong accountants who possess the China CPA qualification.
In addition to a formal licence, one's language and communication skills, as well as one's attitude towards learning, are important attribute for working in China. "Although you may be well experienced in the field, you still need to act humbly and start from scratch to learn about their different practices," says Mr Yuen.
Into the North
- Great demand for professionals with three to five years'
experience in general auditing, financial due diligence,
consultancy for merger and acquisition, and corporate restructuring
- Different levels and models of partnership or cooperation
exist in the mainland for local and international firms
- Besides a formal licence, language and communication skills,
and a positive attitude towards learning are important attributes
for working in China