EY’s Chinese business has been refusing to pay fees owed to the Big Four firm’s global headquarters for more than a year in a dispute over IT services that it says cannot be fully used in China, according to people familiar with the matter, reports the Financial Times. The tussle is playing out just as stringent new laws from Beijing require that more data considered of importance to national security be kept inside the country, prompting some western companies to examine the option of hiving off their Chinese IT operations.
Expanding in China has long been a priority for global accounting and consulting firms, but in recent months authorities have stepped up scrutiny of the industry. In May, regulators told companies that they needed to check their auditors’ ability “to safeguard information security” and “strengthen controls of sensitive information.”
“Greater China is able to use less of the tech stack than expected, given that the regulatory environment has changed,” said one person familiar with the negotiations.