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KPMG projects more HK, mainland cooperation

(China Daily)
Updated: 2009-09-28 09:02

Editor's note: On the sideline of the Summer Davos held in Dalian Sept 10 to Sept 12, Carlson Tong, chairman of KPMG's Asia Pacific Region, said that he expected Hong Kong auditing firms to focus more on the mainland market to gain a better market share.

In an exclusive interview with China Business Weekly reporter Bi Xiaoning, Tong shared his views on the financial cooperation between Hong Kong and the mainland.

Q: You listened to the speech of Premier Wen Jiabao at the Summer Davos in Dalian. What's your immediate reaction to it?

Carlson Tong

A: I think the Chinese government has done a good job in the past year. China will achieve the goal of 8 percent GDP growth, and I don't think any attendants at the forum doubted it.

Looking ahead, I think the next steps might be to focus more on helping small and medium-sized companies, since the 4 trillion yuan stimulus package mainly benefited large-scale enterprises.

I also fully agree with the Premier's sentiment that it is not just about the growth rate, but the employment and the well-being of the Chinese people. We at KPMG also feel strongly about our corporate social responsibility to the community.

Q: How do you view the internationalization of the A-share market? How can the Shanghai international board become attractive to foreign companies?

A: The internalization of the A-share market is not simply a capital market issue. It also links to many other mechanisms, including related laws and regulations, currency convertibility and so on.

I believe that an international capital market should be active in trading, be well-regulated and abide by the rules and regulations connected to international conventions.

Q: Would you describe the potential opportunities under the pilot cross-border renminbi trade settlement, especially the short-term effects of the policy on a company's operations and financial position?

A: Hong Kong can grasp this opportunity to develop itself as a trading platform for the renminbi and its related products such as yuan insurance and yuan financial products.

On the company level, this can help minimize foreign currency exposure and translation loss, to simplify the foreign currency transaction process and reduce the cross-border transaction cost.

Also, it is expected that with the more mature development of renminbi trade settlement, renminbi-denominated derivatives and financial products will surge. Accountants can, in this aspect, provide advisory services over how such products can generate revenue for the enterprises.

Q: Hong Kong Exchanges and Clearing Ltd (HKEx) is considering accepting financial statements of mainland companies audited by mainland accounting firms, possibly by next year. In your opinion, how is it going to affect accountants in Hong Kong and those working on the Chinese mainland?

A: The acceptance of financial statements audited by the Chinese mainland would certainly create more competitiveness, because at present mainland companies seeking a listing in Hong Kong need to have their financial statement audited by a Hong Kong CPA firm. More audit services would shift from Hong Kong to the mainland.

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