PwC cuts China staff after client exodus

PricewaterhouseCoopers is cutting staff across its China operations after an exodus of corporate clients diminished the accounting firm's revenue prospects in the country.

At least 100 staffers from different teams at PwC China's offices in Beijing, Shanghai and other locations are being let go, according to people familiar with the matter who requested not to be identified. The final tally of firmwide cuts has not been made clear.

"In light of changes to the external environment, we are making some adjustments to better optimize our organizational structure to align with market demand," a spokesperson said. The firm did not provide the exact number of staffers let go.

"These adjustments are a difficult decision. We are actively communicating with our people and will ensure that the plan is in compliance with all relevant labor laws in China."

More than 30 publicly listed companies based in the mainland have dropped PwC as their auditor this year. Many of the changes took place after the firm came under scrutiny for involvement in alleged accounting fraud with property developer China Evergrande Group.

Regulators have been examining PwC's role in its accounting services for Evergrande, after the developer was accused of inflating its revenue by US$78 billion (HK$608.4 billion) from 2019 to 2020. The China Securities Regulatory Commission had vowed further probes into "intermediary agencies" involved in the case.

Authorities are weighing a record fine of at least 1 billion yuan (HK$1.07 billion) on PwC and could suspend some of its onshore operations, Bloomberg News reported in May.

PwC's onshore arm, PricewaterhouseCoopers Zhong Tian, had 291 partners and more than 1,700 accountants in the mainland at the end of last year, according to regulatory filings. The firm was the top earner among accounting firms in the mainland in 2022, auditing roughly 400 listed companies. It reported 7.9 billion yuan of revenue that year, according to official data.

PwC earlier this month appointed Daniel Li, a Shanghai-based partner, as its new Asia Pacific and China chair. It said he is the first leader from the mainland to hold that position.

Separately, the Accounting and Financial Reporting Council said yesterday the evidence gathered during its review process does not support the three allegations regarding PwC's quality management systems from a whistle-blower report earlier.

Regarding the allegation on PwC's audit quality of China Evergrande, it is under a separate investigation by the AFRC which is still ongoing, the council added.

BLOOMBERG and STAFF REPORTER