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April 30, 2008

RSM International welcomes China’s fifth-largest firm

The largest mainland China professional services firm outside the Big Four has joined the RSM International network. Zhongrui Yuehua Certified Public Accountants (Zhongrui Yuehua) reported annual revenues of about CYN500 million ($70.7 million) in 2007. The firm has 2,600 staff, including more than 1,000 CPAs and 51 partners.

Zhongrui Yuehua has 19 offices across mainland China and is headquartered in Beijing, where it has 900 staff.

The addition means RSM International now has the largest coverage of any mid-tier network in Greater China, which includes Hong Kong and Taiwan, according to IAB’s recent China survey (see issue 423). The combined fee income for RSM firms is about CYN647.6 million and the total work force includes 3,018 staff and 74 partners.

RSM International chief executive Jean Stephens told IAB discussions with Zhongrui Yuehua began six months ago. “We have been quite thorough going into China to make sure we find the right partners and the right firm for us. We are delighted to be welcoming this firm,” Stephens said.

“In the past, RSM has been serving mainland China clients through our Singapore and Hong Kong offices but this brings us a whole different level of resources. It brings full national coverage in a market that is absolutely critical for us. It increases our ability to serve those larger clients coming out of China, which is quite interesting as we grow and develop. It also gives us the national coverage and level of quality to be able to serve our clients as they have needs in China.”

Zhongrui Yuehua chairman Gu Renrong described RSM membership as a “major development” for the firm. “Joining RSM ensures we are well placed to continue growing our international client base and expand the proportion of listed and foreign investment enterprises,” he said.

China’s fifth-largest firm is the result of a merger between China Rightson and Yue Hua in December 2007. Prior to that, Horwath International member firm Shulun Pan CPAs was acknowledged as the largest firm outside the Big Four.

RSM International chairman of the Asia-Pacific region Poh Weng Wong told IAB Zhongrui Yuehua is strong in the aviation, energy and steel sectors, and has a client base that includes more than 100 public companies and several enormous state-owned enterprises. Among the firm’s clientele are China Aviation, military supplier China North Industries, the Chinese power grid group and several steel mills. Wong explained that the sheer size of some of Zhongrui Yuehua’s clients means that inward referral work is less likely to impact on the firm’s revenue stream then outward investment.

He predicts RSM membership should also help to protect the firm’s Chinese client base. “The clients are very large companies and when they go overseas to be listed in Hong Kong or elsewhere they tend to lose out to the Big Four. So they reckon [entry into RSM] will help to retain their client base and as result will also help them to continue to grow.”

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As part of the recruitment process, Stephens and Wong have been in discussions with the Chinese government and the Chinese Institute of Certified Public Accountants about RSM’s plans in the country. Both said they were encouraged by the official support shown towards these ambitions. The addition of Zhongrui Yuehua is a sign that RSM plans to become one of China’s Big Ten.

Over the next three to five years, Zhongrui Yuehua plans to double revenue by growing at least 20 percent each year. It also plans to boost its tax and consulting arms to 40 percent of the total fee split.

Arvind Hickman

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