This includes Country Garden, once China’s largest developer that is currently audited by PwC, whose shares were suspended from trading on Hong Kong’s stock exchange earlier this month after missing the deadline to release its accounts.
Demand for international auditors could change as China’s debt-ridden private developers give way to the increasing dominance of state-owned and state-backed developers, says Magnus.
“In some ways, China’s property market is reverting to what it was before it became a fully privatised market. In other words, where the state basically built and allocated housing,” he adds.
As Chinese state institutions take on more of the role of private property developers, the narrower the role that international auditing companies will play, Magnus argues.
The prospect of a reduced role for foreign-linked firms plays into recent calls by Beijing for Chinese companies to switch to homegrown auditors once their contracts with Big Four firms end.
It forms part of the Government’s efforts to restrict who has access to Chinese companies’ data, after last year ordering state-owned enterprises and domestically listed companies to increase security checks on their auditors.
Although the Big Four’s global brand recognition and sophisticated reporting has made them more attractive than smaller Chinese rivals, the property crisis and tightening regulation could change this.
Yvette To, an assistant professor at the Hong Kong Polytechnic University, says: “The reputation of PwC (and the other three) might be undermined depending on how the PwC-Evergrande scandal unfolds.”
Yan was contacted for comment.