Reports suggest Big Four firm PwC plans to supply its beleaguered business in China with a fire-fighting executive from the UK. Senior Partner Hemione Hudson is set to lead the business, according to sources close to the story.
PwC has been in hot water with China’s market regulators for some time now, due to its connection with the collapse of Evergrande. In a pattern which may sound familiar to followers of the UK audit market, Evergrande was previously one of China’s largest developers – but had overstated revenue at its main Hengda unit by ¥564 billion in the two years through 2020.
After an investigation into the case, China’s Ministry of Finance eventually announced it would be suspending PwC from the country for six months. The Big Four audit and advisory firm was also stung with a ¥443 billion (£47 million) fine, after authorities found that it had helped cover up fraud at Evergrande.
The long-term impacts of the case may be even more dire for PwC than that, though. Over the past year, around 20 mainland-listed companies have switched from PwC to rival firms, including heavyweight accounts state-owned China Life Insurance and China Railway Group. The downward spiral has seen PwC preparing for lean times, and it has already laid off hundreds of staff in offices including Guangzhou, Shenyang, and Shanghai. At the same time, China-based partners have been asked to take a pay cut of up to 50%.
Into this mix, The Financial Times now reports that PwC, desperate to overt more damage, is willing to take a chance on a “highly unusual step”. According to the newspaper, while PwC usually operates as a network of independent, locally owned partnerships, the firm will now parachute a senior partner into the Chinese wing to take charge.
According to people familiar with the source, The Financial Times said that PwC’s global leaders have tasked Hemione Hudson with leading the Chinese firm at this difficult time. She will arrive just months into Daniel Li’s four-year term.
Li is the former head of the audit business, and was only elected as PwC China’s current boss by partners late last year. While he only took on the role officially in July, it is now unclear what position he will hold following Hudson’s arrival, and according to The Financial Times, PwC declined to comment on that.
Hudson is no stranger to fighting fires relating to the audit responsibilities of PwC. She previously led the UK audit division for five years, during which time the firm was fined nearly £15 million by the country’s accounting regulator – though mostly for audits that had been carried out before she became head of the division. Looking ahead, Hudson is viewed by competitors and colleagues as “highly able and a good communicator” – and while this still saw recently her miss out on the CEO role in the UK, it seems PwC views her as a safe pair of hands to steady its operations in China.
While this is rare, meanwhile, there is recent precedent for PwC’s move. The firm’s international leadership also imposed Kevin Burrowes – another UK executive – as the leader of its Australian business in 2023, following a similarly damaging tax scandal there.