key to KPMG China
KPMG China has opened its 11th office in Shenyang, but expansion
in China is not just about putting dots on the map, according to a
senior figure. KPMG China head of transaction services Honson To
told IAB that pursuing the biggest state-owned companies
as clients, expanding offices organically and placing senior staff
in new offices are all part of the firm’s strategy in China.
“The strategy we pursued, going back 20 years, was that we
wanted the biggest state- owned companies as our clients. We now
have companies like China Mobile, China Telecom, Sinopec and more
recently China Construction Bank – to the extent that now we have
more than our fair share of the market, if you look at market
capitalisation in Hong Kong where many of the larger enterprises
are listed,” To said.
The market capitalisation of KPMG’s clients listed on the Hong Kong
stock exchange is HK$10.26 trillion ($1.32 trillion), which
represents 38 percent of the market share. To said the best way to
compare the success of different firms in China, where disclosure
of fee income is not a legal requirement, is through the client
base – where a portfolio of big clients is a mark of success.
“You will see ourselves and Pricewaterhouse-Coopers way ahead. We
don’t pride ourselves on the number of clients but on the value of
clients. Market cap isn’t necessarily in direct proportion to audit
fees, but that is what we strive for; we want blue chip clients,”
To said.
The Shenyang office will be the firm’s third in northern China, as
it has existing offices in Beijing and Qingdao. It will be the
firm’s fifth new office in two years and another is to open in
Nanjing in 2008.
To said the firm has the goal of opening two offices a year for the
next ten years. It also plans to increase staff numbers to 9,000 in
the next two years. The Shanghai-based head said KPMG has
specifically adopted a strategy to place senior staff in new
offices and provide a full range of services in each of those
offices.
To added it was easy to shy away from moving senior people into the
newer offices, putting a dot on the map and saying the firm had an
outpost there. “[But that approach] doesn’t make sense for our
people; it doesn’t make sense in terms of the market. We want to
have partners going into these offices to explore the local
clientele,” he said.
The new Shenyang office has opened with approximately 50
professionals to provide tax, financial advisory and business
advisory services.
Growing the firm organically, rather than through mergers and
acquisitions, is another factor that differentiates KPMG from its
competitors, according to To. “Deloitte and Ernst & Young both
acquired local accounting firms in China. It’s a route that we
decided that we wouldn’t go for because we didn’t think the
cultures would be compatible – it wasn’t something we wanted to
pursue,” he said. Local recruitment was another aspect of the
firm’s expansion strategy.
This year, KPMG employed 1,700 university students across China,
bringing its number of nationwide staff to more than 7,000.
Nicholas Moody
