Ruihua CPAs, the Chinese joint member of RSM and Crowe has become the exclusive member of Crowe, leaving RSM without a Chinese firm.
The firm was the result of a merger between RSM China and Crowe Horwath China in 2013. At the time, it had 344 partners, 2,600 staff and annual revenues of about CNY2.8bn (then worth $475m).
In a highly unusual turn of events, the firm requested, and was granted, join membership of both RSM and Crowe.
Perhaps as an effort to shore up support, at the start of 2015 Ruihua principle partner Yang Jiantao was appointed as co-chairman of the network, a position he continues to hold. Zhang Lianqi, management committee member of Ruihua CPAs and member of the National Committee of Chinese People’s Political Consultative Conference (CPPCC), was elected to the Crowe Global board in 2017.
Following the move to become an exclusive member of Crowe, Crowe Global will establish a China Marketing Centre in Beijing. The Centre will work with global CEO, David Mellor, and Ruihua CPAs to establish greater opportunities for Crowe member firms to provide high quality assurance and advisory services to Chinese enterprises investing overseas.
Although it was one firm, it remained able to split its fees between RSM and Crowe for the purposes of the IAB country rankings. In the most recent IAB China survey Crowe were ranked 9th by fee revenue and RSM 14th. If all of RSM’s Chinese fees were combined with Crowe’s, this would lift Crowe Global to 2nd in the table, behind PwC.
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By GlobalDataJiantao said: “We thank our clients for their consistent trust and support of Ruihua. As a fresh start for both Ruihua and Crowe, we shall leverage our strengths and capabilities worldwide to better serve them and help them achieve sustainable and healthy development.”
Mellor said: “I believe in the importance of China and Chinese businesses to the future of the global economy. The exclusive membership of Ruihua CPAs in the Crowe network is a great achievement which will provide lasting value to our members. We have worked hard to build strong relationships with the Chinese firm since it joined our network over nine years ago. This commitment has proven to be an asset when servicing multinational clients. This move unifies our existing strengths and capabilities and enables the network to further develop its presence in the region.”
Speaking to IAB Mellor said: “I do not believe that having Ruihua join us 100% will change the strategic direction of this network but I would argue the strategic direction of this network was set with an understanding of the demand for a firm like Ruihua would bring to the table. We're committed to cross border business and servicing the cross border business needs of our clients.
“We are committed to developing our people in all of our member firms and we are committed to developing the service we provide to the communities in which we work. Those three commitments I do not think will change simply because Ruihua is large.”
Mellor said the decision was made independently by Ruihua and that Crowe was not involved in their decision making process. He did comment however that Crowe were aware that Ruihua wanted to make a choice between the two networks.
Mellor said that he has not lingered on the reason why Ruihua decided to choose Crowe, though he said: “What I would like to think was part of their decision making process, but I do not know, I think we have always stressed the importance of china to our strategy. I think we have always made effort with the regulators and the Chinese Institute of Certified Public Accountants (CICPA) to demonstrate the importance of not just inbound business into China but outbound business from China.
“From a personal perspective I think if I was in China, how I service my clients’ needs as they go abroad would probably be a factor that would make my decision if I was one of their partners. But I honestly don't know, I suspect it has not been an easy decision for them.”
RSM said that it has been planning for this change and does not expect any disruption to client services.
RSM's global CEO Jean Stephens commented “China is an important region for internationally ambitious middle market businesses that RSM serves. We are in advanced discussions with a potential new member firm that will meet our clients’ needs and share our global values.
“Our clients in the region will continue to receive the highest quality service, supported by an ongoing office in China and member firms in Hong Kong, Singapore and Taiwan. We are excited about the ample opportunities the market presents and look forward to our next stage of our growth in China and the broader Asia Pacific region.”
