I recently retired as UK senior partner of BDO after 23 years as a partner with the firm. Last year, I took upA position as visiting professor at Xiamen University, China. My wife is Chinese and I?decided to’spend three months exploring business opportunities in the region and trying to learn some Mandarin.
I’m blogging about my experiences in China for Real Business catch up on my journey so far (see “related articles” on the right-hand side).
The commercial professions in China are young and their histories lie in the state apparatus, which spawned them. As a result, their leaderships have been on a rapid journey to modernise, as they compete with international players (albeit often in a somewhat protected domestic environment).
They also have clients with internationally-honed expectations of client service. Income levels at the top of the professions are at least comparable with those in the West – and far in excess of those at the entry-point or of senior professionals in China a generation ago. Rapid evolution is required or revolution may render them obsolete.
Chinese accounting firms were spun off in 1980s from state auditing bodies, supplemented by academics from the accounting departments of the leading universities.
The Big Four?(as they are now) audit networks were welcomed in less than 20 years ago, in order to support the modernisation and opening up of capital markets; latterly, the Ministry of Finance has restricted them somewhat (to prevent them gaining market dominance over local firms, in line with their presence elsewhere).
Advisory and consulting services are the fastest-growth areas; they are still nascent service offerings from most firms in China, but multi-nationals – and increasingly SOEs – are now buying these services.
Law firms in China have a similar history to the accountants. There are now essentially three types of law firm here: (1) Chinese law firms, with a state-related history; (2) foreign law firms, which cannot practice Chinese law, but support their clients’ (almost exclusively commercial) activities in China and which work with local lawyers, where required, eg for court work; and (3) internationally-minded Chinese law firms, often formed by lawyers who have worked overseas at early stages in their careers – they may not be as deeply-steeped in local law as the traditional firms, but they seek a client service mentality modelled on Western firms.
There is a full array of financial service providers in China: investment banks, M&A boutiques, IPO advisers, venture capitalists, private banks, wealth managers both indigenous and local, often with a Hong Kong twist in the mix.
Local firms have an advantage when it comes to deal completion (eg RMB investment funds get the pick of lead-investing on PE deals), but all sorts seem able to make a living. McKinsey recently reported that the period since the GFC has seen a marked move in loyalty in Asia towards Asian providers (eg of wealth management) and this has certainly been true of all types of such services in China.