As the Big Four worldwide accounting companies – EY, Deloitte, PwC and KPMG – look to make greater inroads into Asian markets, Hong Kong is their next port of call. However, amid worries about maintaining independence in its legal sector, the special administrative region has voiced additional concerns about how it can manage potential encroachment.
Moves have already taken place to prevent Chinese companies operating worldwide, with Huawei coming under particularly serious scrutiny. The ways in which Huawei was originally planning to implement various telecommunications structures in Australia, New Zealand and the UK before home security measures vetoed this has left a somewhat bitter diplomatic taste between some countries.
This means that the Big Four accounting companies entering Hong Kong’s legal sector are generating some precautions. The island is in an interesting position, being close to China without quite falling under the same rules and expectations.
With EY, Deloitte, PwC and KPMG now operating there, calls have occurred for the introduction of new measures to effectively measure and govern how these companies go about their business so that the state can retain executive control over the sector if it feels that it needs to.
One of the issues in this regard is that companies already have dispensation to set up independent businesses that can operate on behalf of another entity, such as an umbrella organization. The Big Four already have permission to operate under these rules, and this has led to fears that they could be circumventing current safeguards to protect legal independence in Hong Kong, which is one of the key flashpoints in the Asia Pacific region.
As China seeks to exert more control over much of the region, clashing with Australia as they both look to assert some dominance and influence, the perception of countries such as Hong Kong could well pave the way for how other nations and autonomous states maintain control over potential outside interference in the future.
Some companies, such as Deloitte China, have already moved to allay some of these fears. Chairman Philip Tsai Wing-chung said that the company has ‘no intention of competing against other law firms in town’ and is simply following procedures in order to have a bigger team to enhance its professional services.
It is still unclear how other companies are going to respond to these changes next year, but there are not yet any legal developments on the horizon from the Hong Kong government. That said, there is a growing sentiment that the Big Four are choosing to set up their presence ahead of time so that when legislative changes arise, they will be appropriately prepared to react to them. For some time, there has been a clear trend of accounting companies moving into high-volume and low-cost legal work that they are able to blend into current operations.
If Hong Kong’s legal market does feel that it needs to safeguard against competition, then it is likely that there could be some changes to legislation later down the line.