PwC Initiates Layoffs Across China Operations Following Client Loss And Regulatory Pressure: Report

PricewaterhouseCoopers LLP (PwC) has reportedly initiated a significant reduction in its workforce across its China operations, following a substantial loss of corporate clients. The firm is also bracing for a possible record penalty from Chinese regulators.

What Happened: PwC is cutting staff across its China operations, including Beijing and Shanghai, after a mass exodus of corporate clients, reported Bloomberg on Wednesday, citing people familiar with the matter. The layoffs impact at least 100 employees from various teams, with more than half of one team being let go.

"In light of changes to the external environment, we are making some adjustments to better optimize our organizational structure to align with market demand," a PwC spokesperson said, according to the report.

The spokesperson also acknowledged that these changes are a difficult decision and that the firm is ensuring compliance with all relevant labor laws in China.

See Also: After Trump, Biden And Yellen’s Criticism, China Proposes Rules To Cut Down On Solar Panel Overcapacity

These layoffs come in the wake of PwC losing more than 30 publicly listed clients in mainland China, many of which dropped the firm as their auditor following its scrutiny for its role in an alleged accounting fraud at property developer China Evergrande Group.

PwC did not immediately respond to Benzinga's request for comment.

Why It Matters: Regulators have been investigating PwC’s accounting services for Evergrande, which was accused of inflating its revenue by $78 billion from 2019 to 2020. The China Securities Regulatory Commission is considering imposing a record fine of at least 1 billion yuan ($138 million) on PwC and could suspend some of its onshore operations.

These layoffs also reflect broader trends in the Chinese tech industry, where workers face intense pressure and job insecurity. A report in June revealed that Chinese tech workers are often subjected to grueling work conditions amid slow company growth and widespread layoffs.

Despite these challenges, PwC has been making significant strides in the AI space, becoming the largest customer of OpenAI‘s ChatGPT Enterprise and rolling out the product to its employees.

Read Next:

• Will The Magnificent 7 Eclipse China’s Economy In 2024? Here’s What To Look For

Photo courtesy: Wikimedia

This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote