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KPMG converts to special group partnership in China

(Xinhua)

08:24, August 01, 2012

BEIJING, July 31 (Xinhua) -- KPMG, one of the world's top four international accounting firms, on Tuesday officially converted its operations in China from a joint venture to a special group partnership, becoming the first of the "Big Four" to start the process of localization in China.

The move came after Chinese authorities in May issued new regulations ordering the "Big Four" -- KPMG, Deloitte Touche Tohmatsu, Ernst & Young and PricewaterhouseCoopers (PwC) -- to practice as local firms after their joint venture agreements expire.

According to the new regulations, the auditing giants should form special group partnerships with limited liability to continue their business in China when their joint venture terms end.

Deloitte, KPMG and Ernst & Young will see their 20-year joint venture arrangements expire later this year, while PwC's joint venture agreement will come to an end in 2017.

The new localized accounting offices should each have at least 25 qualified partners, 100 Chinese certified public accountants and registration capital worth 10 million yuan (1.59 million U.S. dollars).

Yao Jianhua, chief partner of the KPMG, said the converted firm will observe Chinese laws and regulations and practice according to international professional standards.

He said the transformation will not affect the firm's overall operations.

The "Big Four" have retained a dominant role in the sector, with combined revenues on the Chinese mainland totaling 10 billion yuan in 2011, accounting for roughly 35 percent of the earnings of the top 100 firms in the sector, according to the Chinese Institute of Certified Public Accountants.

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