Two of the largest mid-tier firms in Hong
Kong are to merge their practices in a move that firmly establishes
the fifth-largest firm on the island city.

BDO McCabe Lo secured an agreement with the
former Horwath International member firm Shu Lun Pan Horwath Hong
Kong CPA Limited. The combined entity will operate as BDO Limited
from 1 May 2009.

Albert AuBDO Limited will have more
than 700 staff and generate annual fee income of about H$300
million ($38 million). Nine partners and more than 200 staff from
Shu Lun Pan will join BDO while Shu Lun Pan senior partners Clement
Chan and Hong Ng will join the firm’s executive board. The
10-member executive board act as the principal management body of
the firm.

China’s Ministry of Finance has been
encouraging large domestic firms to find global mid-tier partners
that can help them expand operations abroad and eventually tackle
the Big Four.

This merger follows, but is not directly
related to, the defection of Horwath’s former Mainland China firm
Shu Lun Pan CPAs Group to BDO International in January.

Albert Au, managing partner of BDO Hong Kong,
told the International Accounting Bulletin that talks
between the two entities began more than a year ago.

“We are two of the largest major accounting
practices, domestically bred back in the 1980s. Obviously Hong Kong
is a very small market and you know each other through professional
circles,” he said.

Shu Lun Pan Hong Kong is predominantly an
assurance firm with a strong portfolio of about 30 H-share listed
audit clients.

“Because of that they bring with them a fairly
impressive list of publicly listed clients and also clients that
have a very significant presence in China,” Au added. “Our
practice, on the other hand, is not just an audit firm. We also
have other areas such as business services and also specialist
advisory services. In this particular merger what adds to the value
of the firm is greater strength to our audit and assurance
side.”

Shu Lun Pan Horwath Hong Kong CPA Limited
managing partner Clement Chan said there is a strong synergy
between the firms.

“Their corporate values, interestingly, are
very similar and compatible with ours,” he said. “Together, we will
be a force to be reckoned with and it will be an excellent platform
to enhance our service capabilities to our clients globally.”

The merger means BDO firms will have more than
4,000 staff in Greater China at offices in Beijing, Guangzhou, Hong
Kong, Shanghai, Shenzhen and Wuhan. The combined annual fee income
of these firms is more than CNY1.2 billion ($175 million). BDO is
now placed fifth in both the Hong Kong and the Greater China
markets.

BDO China: Vital
statistics

BDO Hong Kong

Fee income

H$300 million

Staff

700

Greater China network

Fee income

CYN1.2 billion

Staff

4,000

Offices

Beijing, Guangzhou, Hong Kong, Shanghai,
Shenzen and Wuhan

Source: BDO International