Page 306 - 2017 White Paper
P. 306
7 White Paper on the Business Environment in China
2.8 Other Professional Services
Introduction The Vice Minister further reported that “the number
of accounting professionals has constantly increased.
The service sector often denoted as tertiary By the end of 2005, over 10 million people have got the
industry and involving the trade of non- Accounting Qualification Certificate, more than 140,000
tangible goods such as accountancy, advertising, people have had CPA qualification, and around 5,700
financial, legal and information technology services, is accounting firms have been established in China. The
enjoying greater emphasis from both the government service provided by CPAs in China has been extended
and the private sector as China moves gradually away from foreign-invested companies at the beginning of
from the manufacturing that has characterized its first 30 reform and opening-up period to all the areas at present
years since “opening up”. including SOEs and listed companies” (Wang 2006).
Despite of the fact that service sector in China More recently, it was reported that by 2009 there were
accounted for 43% of output in 2012, compared with in excess of 15 million holders of Accounting Qualification
well over 70% in Western countries (Reuters 2012). 2013’s certificates (Edu.ce.cn 2009) and 155,000 CPAs (Ibid.).
figures saw a modest gain of 2 percent to reach 45 percent
of output; services moreover “overtook manufacturing as A more recent account of CPA numbers on the
the country’s biggest employer in 2011” and “weathered Mainland provided by China Daily shows 80,000 working
the global slowdown much better than the factory for accounting firms and an additional 80,000 working in
sector” (Reuters 2013). government agencies (Yip 2011).
This lack of movement on a critical metric suggests Further steps are being taken to bring the Chinese
only limited success for an earlier strategy of tax increases Accounting Standards (CAS), released in early 2006, more
for manufacturing enterprises being offset with tax breaks in line with International Financial Reporting Standards
for the service industry in order to further promote a shift (IFRS). The Chinese standards, which became effective
in the Mainland economy’s composition (Phillips 2010). January 1, 2007, for companies listed on exchanges,
are encouraged for private firms also, according to
Accounting Director General Liu Yuting of the Accounting Regulatory
Department of the Ministry of Finance, and ongoing
Illustrative of the service sector’s continuing progress efforts are being made to achieve greater equivalence
is the recent history of accountancy in China. As related between the CASs and United States and European Union
by Vice Minister of Finance Jun Wang in 2006 to the 17th standard practices (Liu 2008).
World Congress of Accountants, “to meet the demand
of reform and opening up, China recovered its certified Nevertheless, some inconsistencies remain, and in
public accountant (CPA) system in the early 1980s. In the an environment in which mergers and acquisitions are
early 1990s, China opened its accounting market. And becoming more strategically lucrative, foreign investors
in the new century, the country is actively promoting are generally advised that Chinese financial statements
international convergence of accounting and auditing (especially for private companies) “usually do not provide
standards in accordance with the development trend as much information as [investors] might be used to
of global economy and international standards” (Wang receiving” and so it is therefore “important that buyers
2006). perform their own financial and tax due diligence review
before acquiring a Chinese target” (Swire 2007).
306
2.8 Other Professional Services
Introduction The Vice Minister further reported that “the number
of accounting professionals has constantly increased.
The service sector often denoted as tertiary By the end of 2005, over 10 million people have got the
industry and involving the trade of non- Accounting Qualification Certificate, more than 140,000
tangible goods such as accountancy, advertising, people have had CPA qualification, and around 5,700
financial, legal and information technology services, is accounting firms have been established in China. The
enjoying greater emphasis from both the government service provided by CPAs in China has been extended
and the private sector as China moves gradually away from foreign-invested companies at the beginning of
from the manufacturing that has characterized its first 30 reform and opening-up period to all the areas at present
years since “opening up”. including SOEs and listed companies” (Wang 2006).
Despite of the fact that service sector in China More recently, it was reported that by 2009 there were
accounted for 43% of output in 2012, compared with in excess of 15 million holders of Accounting Qualification
well over 70% in Western countries (Reuters 2012). 2013’s certificates (Edu.ce.cn 2009) and 155,000 CPAs (Ibid.).
figures saw a modest gain of 2 percent to reach 45 percent
of output; services moreover “overtook manufacturing as A more recent account of CPA numbers on the
the country’s biggest employer in 2011” and “weathered Mainland provided by China Daily shows 80,000 working
the global slowdown much better than the factory for accounting firms and an additional 80,000 working in
sector” (Reuters 2013). government agencies (Yip 2011).
This lack of movement on a critical metric suggests Further steps are being taken to bring the Chinese
only limited success for an earlier strategy of tax increases Accounting Standards (CAS), released in early 2006, more
for manufacturing enterprises being offset with tax breaks in line with International Financial Reporting Standards
for the service industry in order to further promote a shift (IFRS). The Chinese standards, which became effective
in the Mainland economy’s composition (Phillips 2010). January 1, 2007, for companies listed on exchanges,
are encouraged for private firms also, according to
Accounting Director General Liu Yuting of the Accounting Regulatory
Department of the Ministry of Finance, and ongoing
Illustrative of the service sector’s continuing progress efforts are being made to achieve greater equivalence
is the recent history of accountancy in China. As related between the CASs and United States and European Union
by Vice Minister of Finance Jun Wang in 2006 to the 17th standard practices (Liu 2008).
World Congress of Accountants, “to meet the demand
of reform and opening up, China recovered its certified Nevertheless, some inconsistencies remain, and in
public accountant (CPA) system in the early 1980s. In the an environment in which mergers and acquisitions are
early 1990s, China opened its accounting market. And becoming more strategically lucrative, foreign investors
in the new century, the country is actively promoting are generally advised that Chinese financial statements
international convergence of accounting and auditing (especially for private companies) “usually do not provide
standards in accordance with the development trend as much information as [investors] might be used to
of global economy and international standards” (Wang receiving” and so it is therefore “important that buyers
2006). perform their own financial and tax due diligence review
before acquiring a Chinese target” (Swire 2007).
306
