Talent localisation in China has been given a boost with the recent regulatory changes announced by the Ministry of Finance last week. By the end of this year, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers – which operate as joint ventures on the mainland – have to hand over control of their operations to their Chinese partners. In addition, firms have to be helmed by a mainlander within three years.
Most of the big four have publicly stated their support for the new policy. KPMG’s Chinese affiliate has said in a statement that it will “respond positively to the programme by ensuring a smooth and successful transformation of the firm from the existing joint venture structure” and that it would work towards “achieving continued localisation”.
The shift is likely to have far-reaching implications on China’s recruitment landscape. After all, according to an estimate in a Wall Street Journal report, more than 90 per cent of senior positions at these firms are currently held by non-Chinese.
Nevertheless, headhunters we spoke to believe that restructuring of the workforce is on track. Crystal Zang, finance director, Robert Walters China, says: “The localisation of the big four firms has been discussed for years in China, so firms are well prepared, it’s not shocking news.”
Besides, the policy makes sense. Firstly, Zang points out that the domestic accounting talent pool is now larger and more mature, so it should make up a larger percentage of big four headcounts. Having locals at the top instead of foreigners could also make sense for the government, especially when it comes to handling classified information, she adds.
Changes are coming
Wendy Wu, consultant, finance and accountancy, Antal International, says some foreigners could potentially lose their jobs, especially those in more junior and less specialised positions. Senior expats could also see their roles shifting after the regulations kick in. Zang says: “They could move into training and development, or to back office or consulting roles.” Others may choose to return to their home country or head to other emerging economies like Russia, Brazil and India, she adds.
On the flip side, this is good news for the local talent pool. Wu says: “Getting the top job of partner isn’t easy; you need someone with the right leadership and management skills, but the new rules means Chinese nationals will have a better chance of rising to the top.”
Despite the probable rise in demand for local expertise, Zang does not anticipate compensation to jump drastically. She says: “Perhaps there could be more return and reward for junior staff, but there’s not much difference in salaries between local and foreign partners currently – apart from some taxation benefits for the expats.”