PwC Responds to Cutting Staff in China

PwC, deeply involved in the financial audit crisis of China Evergrande, is reported to be cutting 50% of its financial services audit staff in China and considering laying off about 20% of other audit teams and non-audit business line employees.

In response to rumors about layoffs, PwC told that: ‘Due to changes in external objective circumstances, we have optimized our organizational structure according to market demand. We have always valued talent and invested heavily in talent development for many years. This adjustment is a difficult decision. We are gradually engaging in full communication with employees and ensuring that the adjustment plan complies with relevant Chinese labor laws.’

Auditor from the former PwC Shanghai office confirmed rumors of layoffs: ‘It is true that there have been layoffs at PwC Shanghai office. I was informed of my layoff in the first week of July.’

Another employee who is about to join PwC Shenzhen office said: ‘Old employees are being laid off first, new hires are not affected for now, and we have not heard any news of offer withdrawals.’

According to the official website of PwC China, as of the end of September 2023, PwC had 781 partners and nearly 19,000 employees in mainland China.

From industry sources, it is understood that before the recent layoffs at PwC, some auditors had already voluntarily changed jobs. EY, Deloitte, and KPMG also successively initiated large-scale recruitment for audit positions around June this year.

According to incomplete statistics, as of June 14th, PwC has lost more than thirty contracts. There have been consecutive cases where listed companies have changed their hiring arrangements with PwC, with 8 companies switching to Ernst & Young (EY), 7 companies switching to KPMG, and 7 companies switching to Deloitte. The audit fees lost by PwC have exceeded 600 million yuan.

SEE ALSO: PwC Denies Rumors of Suspending Business Operations in China

However, on July 10th, the Hong Kong Institute of Certified Public Accountants (HKICPA) responded that in response to the above report content, they conducted a rigorous review of the allegations. The review has now concluded that the evidence collected during the process is not sufficient to support three accusations related to RSM Nelson Wheeler’s quality management system.

Currently, the China Securities Regulatory Commission is still investigating PricewaterhouseCoopers. The CSRC disclosed on May 31 this year that it has recently made an administrative penalty decision against Evergrande Real Estate for fraudulent issuance of bonds and illegal information disclosure, while also stating that it is advancing investigations into relevant intermediary agencies.

It is worth mentioning that in early July this year, there were senior personnel changes at PwC. According to the official website of PwC China on July 3, Li Dan was appointed as Chairman of PwC Asia Pacific and China region, a position previously held by Zhao Baiji.