By coincidence, Alex MacBeath, the member of Grant Thornton International’s global leadership board with responsibility for strategy in Asia Pacific, was in Brazil when CFO Innovation caught up with him. Was he, perchance, out to dinner with Azedo? “I doubt that very much,” MacBeath shot back to gales of laughter.

 

CFO Innovation’s Cesar Bacani spoke to MacBeath to clear up a new kerfuffle, this time arising from reports that BDO, a rival accounting firm, will be absorbing more than 500 partners and staff of Grant Thornton Hong Kong. It is true that the original firm has been asked to leave the Grant Thornton network, MacBeath confirms, but Grant Thornton is definitely not withdrawing from Hong Kong. A new Hong Kong firm has been set up, one that will be closely integrated with Grant Thornton’s member firm in China – and that new firm has been getting feelers from partners and staff that are supposedly all set to jump over to BDO.

 

Below are excerpts of the interview where MacBeath discussed the firm’s new strategy in China, why the firm formerly led by Azedo was asked to leave, and other issues.

Our clients are increasingly regarding China as a single market and they are driving us, and I think will drive other firms, to an integrated approach to the China market. It’s not about one firm controlling another firm. It’s really about firms working together closely, being strategically aligned and serving the client seamlessly across the market.

 

Whether or not they are separate legal entities is not as important as the fact that they work together in a seamless way. They must cooperate. Even though they may be separate legal entities, they must be integrated strategically and they must work in a very seamless way with clients. We think that is what is going to be successful in China. That’s what our clients are expecting of us, and we expect that many other firms will end up going in that direction in the fullness of time.

 

I think a number of the senior partners in the [previous Grant Thornton Hong Kong] understood that. A number of senior partners believed [integration] was the right strategy to go forward. But as a group the firm [in Hong Kong] was unable to agree, unable to work in a cooperative way with the firm in PRC.

 

We [at Grant Thornton International] will make the decision [on whether to retain a member firm in the network]. Sometimes it’s a tough decision, sometimes they cause some short-term losses, but our focus is on long-term strategic growth, on meeting the needs of our clients in the long term. So we made the difficult decision to ask the firm [in Hong Kong] to leave and we established a new firm in Hong Kong, which includes a group of staff from the former firm.

 

Yes, it was. At the end of the day it came down to the partners in the firm not being able to agree on how to work with the firm in PRC. And because it was so important, we needed to make a change and that’s why we [asked the old Hong Kong firm to go].

JINGDU TIANHUA

It’s a separate legal entity because that is required for administration purposes. CPAs must be licensed in Hong Kong. But it will be integrated strategically and will have a similar overall governance structure and so on [as Grant Thornton China]. They [Hong Kong and China firms] will act and operate and practice as if they were a single firm, although for legal requirements, for professional requirements, there needs to be a separate legal entity in Hong Kong.

 

This new firm will have an audit practice, a tax practice, an advisory practice, and it will be strategically aligned and work very closely with our PRC firm. The overall board will include partners in Hong Kong and partners in PRC. In total, we will have over 65 partners, over 1,500 staff serving [the China] market and we think we have established a very strong platform going forward.