Research On The Global Expansion Of Domestic Accounting Firms

With economic globalization, our country's foreign direct investment and financing is in an increasing scale these years. In the years 2004 to 2008, our country's foreign direct investment increasing rate reaches 69.6%. Until the end of 2007, China's foreign direct investment stock reached 117.9 billion U.S dollars. In the year 2008, China's foreign direct investment (non-financial part) reached 40.7 billion U.S. Dollars. Transnational merger has become the major method of our enterprises' foreign direct investment. From 2003 to 2007, our country's transnational merger and acquisition investment amounts to approximately 22,000,000,000 US dollars. Also, the financing amount is in a considerable amount. From June,1993 to June,2009, there are more than 120 enterprises being listed in the US stock market, while 50 enterprises being listed in British & France and 153 enterprises being listed in HK. Totally, the financing amount surpass 100 billion US dollars. Neither our enterprises' direct investment or financing abroad, there calls for a demand and challenge on the global expansion of our domestic accounting firms. According to authoritative statistics, only 40 of China's domestic accounting firms have achieved globalization expansion, of which only 12 have a stable income. Based on this situation, on October 3,2009, the State Council General Office has established the Finance Ministry's "a number of opinions on accelerating the development of China's CPA industry" and proposed a "going out" strategy. The domestic accounting firms are required to seize chance to optimize organizational structure, expand service fields, improve internal management, enhance professional competence and finally achieve "going out".The first section of the paper has demonstrate the root cause of our domestic accounting firms' global expansion. The root cause is the close correlation of mutual economic cooperation between China and the world. The external cause is on the basis of the increasing scale of our multinational corporations' foreign direct investment and financing. The protection cause is on the basis of protecting self market share. The development cause is on the basis of current capital flow. The above driving factor together with the theory base and implication of global expansion of accounting firms have demonstrate the conclusion of the irreversible trend of global expansion of the domestic accounting firms.But the strong need of our domestic accounting firms' global expansion does not represent that our countries' accounting firm have the strength and ability for global expansion. The second section of our paper has listed the problems and obstacles domestic accounting firms encountered in the globalization process. Brand is the soul of an enterprise, but our domestic accounting firms does not have complete brand consciousness and brand building strategy. Culture is the internal strength of the continual development of accounting firms, but our domestic accounting firms don't have rules and regulations for culture, even don't mentioned culture. Partnership is the required organizational form of accounting firms, but limited responsibility is the normal organizational structure of accounting firms. The enlargement of size and scale is to form economies of scale, but the signs of size of our domestic accounting firms are far from international "big four". Internal management system is the support for global expansion, but our domestic accounting firm still don't have a systematic,scientific and reasonable internal management system. The service provided by the international "big four" is of variety and high quality, but the service of our domestic accounting firm is of singularity and low quality. What's more, our domestic accounting firm lack the international elites with various skills. Acquisitions and mergers can form synergies for our domestic accounting firms' global expansion, but the strength of our domestic accounting firm is dispersive and can't from synergy strength.With regards of the above problems in the global expansion process of our domestic accounting firm, there exist external reasons and internal reasons. Due to the protectionism and differences in the accounting rules and regulations, our domestic enterprises have encountered obstacles and high expense in the global expansion. Besides, our domestic accounting firms have a short history of 30 years and is in lack of global expansion experiences. The fund support derived from the income of domestic accounting firms is also far from the international "big four". As the subsidiary of government for a long time, our domestic accounting firms lack advanced service culture. The current exam model and training system can also not meet our country's demand for international elites.The third section of the paper has illustrated the strategy and experiences of international "big four" in entering the Chinese market. In the dealing with regional protectionism and policy restrictive, the "big four" break regional barrier by means of enhancing win-win cooperation,absorbing local accounting firms and setting branches in the strategic cities. In the long term development, international "big four" should form long term competitive advantage by means of building unique corporate culture,perfecting training system and raising market share. In the choosing scientific expansion model perspective, international "big four" should choose the cities with large number of listed enterprises and industry with economies of scale.The last section of the paper has raised the detailed strategies of our domestic accounting firm. In confrontation with the external factors, our domestic accounting firms should push the globalization process of relevant laws and regulations, including winning the government support,taking anti-protectionism actions and pushing the convergence with the international accounting standards. In the aspect of pursuing long-term development, our domestic accounting firms should build international brand,form harmonious corporate culture,adopt partnership organizational structure,build scientific internal management system,improve service quality and locate the international elites training strategy. In outlining scientific and reasonable expansion plan, our domestic accounting firms should choose the HK & ASEAN countries as the first expansion objectives,promote merger & resource integration,join the international accounting firms,conduct alliance cooperation with top international accounting firms and set up branches and subsidiaries abroad.