A week after the merger of RSM China and Crowe Horwath China was announced, creating one of China’s biggest domestic firms Ruihua, the global networks confirmed the firm has requested to be a member of both organisations.
RSM and Crowe Horwath International said the situation is "specific to China" and that the networks will in all other markets "remain mutually respectful competitors".
When questioned on what the future may hold, Crowe Horwath International chief executive Kevin McGrath told IAB, "My guess is that Ruihua will look at its working relationship with both networks and will likely make a choice, eventually, among networks, but I also believe the time frame for that choice is months, if not years."
As reported last week by International Accounting Bulletin the merger creates a firm with combined revenue of RMB 2.8bn (USD 458m), 334 partners and 9,000 staff.
According to the Chinese Institute of Certified Accountants data for 2012, Riuihua will be larger by fee income in Mainland China than Ernst & Young and KPMG, which reported fee income of RMB 2.2bn and RMB1.7bn respectively, providing a "legitimate alternative" to the big four, according to McGrath.
Ruihua will be managed by Yang Jiantao, principal partner of Crowe Horwath China, and Gu Renrong, principal partner of RSM China, who will both work as managing partners of the firm.
RSM chief executive Jean Stephens said: "The merger creates one of China’s largest accountancy and advisory firms in this strategically important market".
Stephens told IAB the new firm would "open doors" in the country, adding "we will need to continue to work with leadership and management and make sure we stay close with them, and work with the whole team in China in making sure we’re linking up as much as possible to the rest of the world."
Last week in Beijing at the China International Fair for Trade in Services (CIFTIS) conference representatives from the Chinese Ministry of Finance reaffirmed the Chinese agenda to grow strong domestic firms but called for those firms to push their growth internationally.
The MoF reiterated the main priorities for the profession in China are to uphold integrity and ethics, talent development, improving firm governance and for government departments to develop policies to assist Chinese firms in their international growth.
As a result of the MoF’s push, Stephens told IAB that she would expect mergers, but added "it could happen again, and there are a couple of others out there where this could happen, but I imagine this is a unique situation."
RSM China and Crowe Horwath merge