PricewaterhouseCoopers (PwC), a global professional services firm, is facing a critical decision in its China operations. Sources reveal that PwC is considering slashing up to half of its financial services auditing staff in mainland China.
This move comes amidst regulatory scrutiny and an exodus of clients, casting a shadow over the firm’s business prospects.
Chinese regulators have closely examined PwC’s role as the auditor for troubled property giant China Evergrande Group. Notably, PwC had been Evergrande’s auditor for almost 14 years until it resigned in early 2023.
The scrutiny intensified after Evergrande faced allegations of a $78-billion fraud spanning two years through 2020.
The regulatory investigation triggered an exodus of clients, particularly state-owned or state-backed enterprises and financial institutions. Over 30 listed Chinese firms, including tech giants Alibaba and Tencent, dropped PwC as their auditor in recent months.
PwC’s financial services auditing operation in China employs at least 2,000 people across mainland China, with main hubs in Beijing and Shanghai. The firm is also considering layoffs in other auditing teams and non-auditing business lines.
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In response to these changes, a PwC spokesperson earlier stated, “In light of changes to the external environment, we are making some adjustments to better optimize our organizational structure to align with market demand.”
The spokesperson emphasized compliance with all relevant labor laws in China, acknowledging that these adjustments are difficult decisions.
The firm, with 781 partners and nearly 19,000 employees in mainland China as of last September, according to its website, is also mulling laying off about 20% of the staff in other auditing teams and non-auditing business lines, they added.
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