BDO International has become the largest mid-tier professional
services network in China after admitting one of the nation’s
leading domestic firms.

Shu Lun Pan Management Co (SLP ManCo), a firm with more than
2,000 staff and fee income of CNY650 million ($95 million), joined
the mid-tier network this month, ending its affiliation with
Horwath International.

SLP ManCo’s move to BDO International was motivated by several
factors, including the firm’s desire to pursue business
opportunities overseas, BDO’s need to increase the size and depth
of its Chinese operations and the government’s plans for large
domestic firms.

China’s Ministry of Finance has been encouraging certain
domestic firms to find global mid-tier partners that can help them
expand operations abroad and eventually tackle the Big Four. The
International Accounting Bulletin understands SLP ManCo’s
move to BDO was encouraged by the government. RSM’s recent union
with Zhongrui Yuehua CPA is another relationship that was welcomed
by Chinese officials.

Broad coverage

SLP ManCo has firms in Beijing, Nanjing, Shanghai, Fuzhou and
Guangzhou, as well as branch offices throughout the country.

BDO already has four member firms in Beijing, Shenzhen and
Wuhan, and plans are underway to consolidate the network under the
SLP ManCo umbrella, with the aim of creating a single Chinese

The combined revenues of SLP ManCo and BDO’s other Mainland
members is about CNY920 million but this figure should comfortably
rise above the CNY1 billion mark this financial year.

SLP ManCo headquarters in Shanghai has more than 1,000 staff.
The firm also has 1,150 people spread across other locations. BDO’s
combined workforce across Mainland China is about 4,000 people.

It is difficult to predict how large BDO’s presence is in
relation to the Big Four as accurate Chinese figures are hard to
come by. BDO International chief executive Jeremy Newman believes
the combined Mainland presence is about a third to half the size of
the smallest Big Four firm. The next largest mid-tier network in
China is the RSM International, which has combined member firm
revenues of about CNY700 million, largely thanks to last year’s
addition of Zhongrui Yuehua CPA.

Newman said SLP ManCo will provide BDO with a more comprehensive
geographical coverage in China and depth. SLP ManCo is particularly
strong in the manufacturing sector and lists several big Chinese
state-owned enterprises amongst its clientele, including Bao Steel
and Shanghai Automotive Industry Corporation. Sino-foreign clients
include BASF and Guangzhou Honda.

“It significantly enhances our presence in terms of Chinese
businesses sending work out with subsidiaries. Over the past few
years our firms in the UK, US and Germany, in particular, have been
big beneficiaries of Chinese businesses looking to fundraise in
Western capital markets,” Newman added.

As part of BDO’s due diligence process, a quality review team
visited every Shu Lun Pan office to ensure the firm’s quality
control standards were up to scratch.

Newman said BDO was satisfied with the firm’s quality, tone at
the top and attitude towards raising the bar. “As the volume of
international businesses grows and develops we will need to make
sure that we provide extra support to them,” he added.

This support includes audit process tools that have Chinese
translations. BDO’s new audit methodology is to be rolled out
across China during 2010.

Arvind Hickman

Vital Statistics

International network: BDO International

Fee income: CNY650 million ($ 95 million)

Total Staff: 2,150

Headquarters: Shanghai

Chairman: Zhu Jiandi

BDO China revenue: CYN920 billion

BDO China staff: 4,000

Source: BDO International