Put 10 accountants from across the globe in a room and ask them "Where is the biggest growth market in terms of capital markets?" and you would probably get 10 different answers. Ask PricewaterhouseCoopers' Partner Assurance Leader (Hong Kong and China) Ernest Ip and his emphatic reply would lead you straight to China, and rightly so. Its booming economy and sizable companies looking to raise funds to fuel the growth puts China at the top of the list in terms of the number of issuers coming to market.

What excites Ip, or any accountant for that matter, about working on China IPOs is the size of the listings. In comparison to the typical Hong Kong company listing, China's state-owned companies are large scale and they bring a different spectrum of diversity to the local exchanges.

Involved in IPOs since the early 1990s, Ip had not planned to specialise in the area, rather he fell into it at a time when a growing number of Hong Kong companies had reached maturity and were raising capital to expand. "I learned about corporate finance and how to prepare small scale companies in Hong Kong for an IPO," says Ip reflecting back on his early days during the IPO boom in early 1990s.

As China's companies started to make their way across the border onto the local exchanges, Ip was surfacing from Hong Kong's IPO boom with a skill set that was in great demand. Riding the momentum he stayed focussed on IPOs - a move he has never regretted.

In the early 1990s, China opened up and auditors flowed in. "With my experience in IPOs I moved to China. It was a logical move," says Ip. "I worked in China for five to six years, and after 10 years with the firm and many white hairs it was clear to me that this was an area I should specialise in. I was determined to spend more time in IPOs so I went fulltime on IPOs in late 1990s."

In early 2000, PwC formed a Capital Market Services group as part of the audit section. Ip was one of the founding partners heading up the initiative and was later appointed as one of the listing committee's members in 2003.

In January, he took on a new role as head of assurance for Hong Kong-China, which comprises more than 4,000 people. A team he's proud of, one memorable account they have had the chance to work on is a Chinese petroleum manufacturing firm with a head count of more than one million people.

Highlighting the common problems he has seen Chinese companies struggle with during IPOs, he notes whereas there was a lot of handholding in the beginning Chinese companies have come a long way since he first started his career. "China has made progress with the company law and accounting standards, which are close to international accounting standards. Handholding is less an issue in recent years.

"The current challenge we have is the privatisation of the state-owned companies. There are a lot of policy issues that need to be sorted out in an IPO of a state-owned firm, issues that are under the control of the government rather than the SOEs. For example, how quickly can they list? What valuation can they get?" he says.

His recommendations for auditors going into China are that they will need critical mass to ensure they have the required human resources to see projects through to the end.

Also, he stresses that people keep in mind that they will be dealing with different types of people: government officials and senior management in China. "Having passion your work will go far in China because you are helping these companies come to market. You'll need to be patient and will have to probably make some investments in time and money as well."

The companies Ip is referring to are all good quality companies in China, according to him. "By helping them, auditors will make significant inroads into the China market," he notes. "Helping the country modernise by making the financial reforms happen and taking a longer term view because you cannot make money over night."

This he knows from experience. Since graduating in 1984 from Polytechnic he has spent 22 years in audit, starting his career with one of the big four as a graduate trainee. "I spent a lot of time in the early years learning about what an auditor does. What an audit is. Audit is seen as the training ground for accounting as it gives you the opportunity to see a lot of companies."

With the right mix of talent, strategic focus and resolve to succeed, Ernest Ip is well positioned to tap into China's growing demand for funds as Hong Kong continues to play a key role as a financial centre for China.

Source: ACCA Hong Kong