Local accounting firms have witnessed fast growth in recent years and are gradually narrowing their revenue gap with the “Big Four,” an industry official said Monday.
In 2011, the average revenue of the “Big Four” — KPMG, Deloitte Touche Tohmatsu, Ernst & Young and PricewaterhouseCoopers (PwC) — was 1.68 times that of the best-performing local firm in China, whereas the gap in 2002 was 4.06 times, according to Chen Yugui, secretary of the Chinese Institute of Certified Public Accountants.
The “Big Four” have retained a dominant role in the sector, with combined revenues on the Chinese mainland totaling 10 billion yuan (1.59 billion U.S. dollars) in 2011, accounting for roughly 35 percent of the earnings of the top 100 firms in the sector, according to Chen.
Earlier this year, authorities in China issued a new regulation ordering the “Big Four” to practice as local firms after their joint venture agreements expire.
According to the new regulation, the auditing giants should form special group partnerships with limited liability to continue their business in China when their joint venture terms end.
Deloitte, KPMG and Ernst & Young will see their 20-year joint venture arrangements expire later this year, while PwC’s joint venture agreement will come to an end in 2017.
The new localized accounting offices should each have at least 25 qualified partners, 100 Chinese certified public accountants and registration capital worth 10 million yuan.