The Chinese Institute of CPAs is out with their annual rankings of the Top 100 CPA firms in China. The big news is that KPMG is no longer in the Big Four in China. It has been replaced by Ruihua China CPAs, the firm formed by the merger of Crowe Horwath and RSM, which also pushed E&Y to 4th place. The merger did not take place until April 30th of this year, but the CICPA apparently decided to make it effective for their list as of 2012.
The top 10 firms in China for 2012 are:
The new Ruihua firm have asked to remain members of both RSM and Crowe Horwath, but that seems unlikely to work. I believe they will ultimately have to make a choice, and I expect they will choose RSM, which is the larger network (RSM goes by McGladrey in the United States). The decision may be critical to the future of both the winning and losing network. China appears to be the place where the global dominance of the Big Four has been broken, and the firm that allies with Ruihua will be well positioned to serve Chinese companies as they venture abroad. The loser needs to tie up with one of the unaffiliated firms on this list, and it needs to do fast.
How did the Big Four lose their dominance in the China market? I am going to tell that story in a book on The Big Four in China that will be published by Emerald this fall. I use the theory of hegemony to explain how the Big Four came to dominate China and the related theory of counter-hegemony to explain how the local firms fought back.
The story is illustrated by this table, which shows what has happened to the Big Four over the past decade. They grew faster than local firms until 2007, and then the tables were turned. Since 2008 the Big Four have been growing slower than the economy, and that is not the formula for success.