A Chinese firm is seeking to expand through Asian mergers in order to cement its position among the nation’s largest domestic firms.
The Reanda Group plans to capitalise on a government policy to develop 5 to 10 ‘super big’ domestic accounting firms within the next decade. It is planned that these super firms will eventually challenge the Big Four for supremacy in China and grow their operations internationally.
Typically, global mid-tier networks have been partnering domestic Chinese firms in order to grow, but this is an example of a Chinese firm branching out.
The Reanda Group’s founding member is Reanda Beijing, a firm with about 700 staff. Reanda Beijing was a BDO member firm in China until about three years ago. When the two organisations split, the Chinese firm decided to follow government encouragement to grow and become international.
The Reanda Group has been actively looking for new additions in recent years. The group has about 1,700 people in 16 branch offices, covering most of China’s major cities.
In 2008, the group’s combined fee income was about CNY310 million ($47.5 million); the Beijing firm contributed CNY140 million. The 2008 figures would have made the Reanda Group the ninth-largest mid-tier organisation in the International Accounting Bulletin’s China survey. The largest was RSM China with revenue of CNY601 million.
The Chinese government hopes each ‘super big’ firm will grow to annual fee income of CNY3 billion, which is about the average size of the Big Four in China at present.
One recent addition to the Reanda Group was a member firm in Hong Kong, which will help the group develop an international network.
The Hong Kong member is a joint venture between Reanda and local firm Lau & Au Yeung CPA. It is called Reanda Lau and Au Yeung CPA and operates from the same offices as Lau and Au Yeung CPA.
Lau & Au Yeung CPA has six partners and about 100 professionals. In 2008, the firm had turnover of HK$33 million ($4.26 million).
The firm is a founding member of the Elite Federation of Accountants (EFA) Network, which has been morphed out of loose affiliation between Lau & Au Yeung CPA and firms in Singapore and Macau, as well as one of Reanda’s branch offices, Reanda Zhuhai. The arrangement has caught the attention of Reanda Beijing but it is unclear whether this firm will join.
“Because we have the spirit to go overseas through this EFA concept, they thought we were the right partners to help them to develop the Reanda network overseas,” managing director Franklin Lau explained.
An international name for the new network has not been finalised, but it will most likely include the prefix Reanda.
Lau said the new organisation has been in contact with firms from countries including Vietnam, Malaysia, Brunei, Indonesia and Thailand. The response has been positive.
“After we complete the Asian region’s affiliation, we will see whether we can go out and talk with firms in the Western countries,” Lau said.