China Accounting Firms - Ways to Power Your Customary Operation

The opening of China to foreign investment more than 30 years ago marked the beginning of the economic rise from one of the poorest countries to today's second-largest economy in the world. But investment and prosperity have evolved very differently in different regions of China. It is foreseeable that with the increasing number of new attractive investment locations in China, China investment will gain in importance. Investors should therefore keep an eye on emerging trends. These include increased competition for local investment zones for foreign capital as well as the dynamically developing new investment locations in western China.

China continues to open to foreign companies and investors

Since the early 1990s, as a consequence of the establishment of system of socialist market economy, China began to reform the accounting sector. For this purpose, a number of relevant regulations have been adopted which led to the gradual emergence of a new calculation system, balance system and accounting system in accordance with the market economy and international requirements. This new system is now established essentially, it consists thousands of large and small accounting, consulting and accountancy offices and approximately 60,000 officially approved auditors.

A sustained stable economic development which would also offer established international accounting, consulting and auditing company’s great business opportunities can be expected in the upcoming years in China. According to statistics, there are currently more than 1,200 officially approved foreign enterprises, 174,000 state-owned enterprises, 82,000 collective enterprises, 410,000 joint ventures and more than 2.2 million private enterprises (source: CIIC 2015). Both accounting and auditing as well as consulting has become the global level as an important market for related services. Since the mid-1990s, foreign accounting and consulting firms are allowed to operate as agency or branch in China. Meanwhile, several international companies have settled in China, among them the 4 largest in the world: KPMG, Ernst & Young, Deloitte & Touché and Price Waterhouse Coopers.

Recognize opportunities - and take them!

The role of accounting is historically much lower in China than in Western countries. Chinese see accounting and controlling more as a necessity than a tool for information gathering and management of the company. Foreign companies are often therefore facing major challenge. Sometimes it can be very difficult to introduce a transparent and proper bookkeeping and reporting according to Western standards. Here, the involvement of an external service provider which understands both the Chinese and Western culture might help.

More and more Chinese accountants are aware of the importance of enhancing the professional qualification. In addition, the Chinese government has established a national Accounting Institute to improve the training of accountants. At the same time the Chinese government has expanded the scientific exchange and international cooperation in the field of auditing, accounting and consulting.

Strong links between China and Hong Kong

Despite the great advances in qualified education and training of accountants and auditors and the modernization of accounting in China, compared to other countries there is still a lot accumulated needs. Hong Kong’s experience in the industry could be used here. Experts from Hong Kong could accelerate the development, especially economic and trade contacts between Hong Kong and the Chinese mainland. These accountants know the conditions on the mainland better than foreign counterparts and they possess the Chinese language skills. This could be of great benefit. Simultaneously, they could use their international experience and play the role of mediators between foreign investors and Chinese businessmen.