Accounting firms are becoming more dependent on international networks and associations to fully service their clients abroad. In turn, those networks strive to expand their global presence to both serve and attract an expanding membership.

"A lot of international networks are strong in the same places or locales in the world, and are all weaker in some other areas in the world," explained Tom Marino, co-chief executive officer of Top 15 Firm CohnReznick and board member of Nexia International, the global network of independent accounting firms that his firm belongs to. "In major marketplaces like England, Germany, South Africa and Mexico, they are very strong. But for firms in Eastern Europe, even Greece due to its own economics, it gets a lot tougher. China is a problem in itself because accountancy is relatively young compared to the U.S. or U.K., so it's a bit of a wild, wild West out there; language is still a barrier."

As a growing economy, China is naturally on most global association/networks' radars, including global accountancy network Moore Stephens International, which opened a recently expanded office there with an English-speaking employee operating as a gatekeeper for inbound work.

"If any Moore Stephens firm has a client there, it's important to them, from a cultural perspective, to know someone is physically there -- has their feet on the street there to understand the cultural nuances from their perspective," shared Alexandra DeFelice, senior manager of communications and program development for Moore Stephens North America. "Even if they speak English, there's so many different dialects of Chinese, even in a small area -- and then there's the regulatory environment there."

Top 100 Firm Raich Ende Malter & Co. utilizes its membership in independent accounting firm association PrimeGlobal to connect clients looking to expand into China with member firms in the country, according to Neal Kilbane, partner-in-charge of the firm's New York City offices. Specifically, the firm's China presence is leveraged for client referrals and compliance issues.

In addition to the sustained growth in Asia, Rob Tautges, CEO of independent accounting firm and business advisor network HLB International, has identified other emerging regions ripe for increased membership, including the area surrounding the energy-resource-rich Caspian Sea.

"The profession is trying to scramble and catch up, and it's a challenge for a network or alliance to stay a little ahead of the curve," Tautges explained. "For the next hot region or country, you need to get a good representative that can service the clients of the existing members. The Caspian Sea had been pretty sleepy for quite a while, and now there's a lot of discussion about it. The accounting profession is still emerging along with the economies, and one of the challenges is to identify good firms with good young partners that want to meet the international standards."

HLB creates regional lists of potential member firms to target, chosen to meet geographical coverage and other "qualitative measures," via marketing collateral and cold calls. Those in emerging countries, however, are all too eager for the "instant credibility" and inbound referral work of international network membership.

 

GETTING EXCLUSIVE

For firms in those countries, territorial exclusivity is another sought-after distinction, which association/networks must decide if they will grant as a way to appease these member firms, while possibly limiting their reach.

HLB generally relaxes territorial exclusivity in favor of "extraordinary client" strength in numbers.

"If they are great clients to have, it doesn't have to do with the territory," Tautges said. "They might compete with an office in the same city anyway, but go out and win a good client because of [the client's] cross-border needs. U.S. territories are relaxed because some firms have enough offices in other cities. Do you want to eliminate a great firm because they violate a territory provision? For me, it's always no."

In fact, when the chance arose for HLB to recruit Top 25 Firm Eide Bailly, Tautges could have vetoed the membership because of the Fargo, N.D.-headquartered firm's proximity to his Minnesota firm, HLB Tautges Redpath. Instead, his firm offered one of the strongest referrals for their membership.

"Sharing a territory turned out to be great for us ... we call them our friendly cross-town rival," Tautges continued. "We know shared territories can work, though in some places I think it's very important to have exclusive territories. In recruiting, you need to be aware of that."

CohnReznick co-CEO Ken Baggett, whose firm Reznick Group belonged to IGAF Polaris (since renamed PrimeGlobal) prior to its merger with J.H. Cohn to create CohnReznick, would agree that the cache of exclusivity is regionally dependent.

"In the United States, we're not as concerned about two different firms in a geographic area or city in the same network or association; it's not naturally a big deal," he shared. "When [Top 60 Firm] Watkins Meegan joined IGAF, their primary office was right across from the Reznick office ... . It's not a big deal if you don't compete on a regular basis, but if you're looking for referrals you want to be the only game in town ... . There's a big philosophical difference in why [firms] join from region to region."

 

WHAT'S IN A NAME

Another component of exclusive branding is taking on an association's name, which varies from a professional ethics standpoint between associations and networks and is more common for international firms looking to compete with the global recognition of the Big Four's offices abroad.

"One of the big things that's more and more prevalent is the name, like [independent accounting and consulting firm network] Grant Thornton [International], which licenses out the name so firms go to market as Grant Thornton," said Marino. "But if you have your own reputation in the marketplace, you don't want to change your name."

San Ramon, Calif.-based Top 30 Firm Armanino, for example, "wouldn't even think of the Moore Stephens name as a prefix because of the brand equity built up in the marketplace," according to DeFelice, while "in Germany and in some countries they use it as a bargaining tool."

Instead, the trend for U.S. firms has been to increasingly advertise membership in marketing materials like their Web site, business cards and letterhead.

Moore Stephens firms "all use a standardized approach on their business cards," explained MSNA executive director Steven Sacks. "They have the Moore Stephens logo and tagline, 'an independent firm associated with Moore Stephens International Limited.' This way, the more you see it, the more it comes into the mainstream."

 

CULTURAL COMPETENCE

While the importance of brand recognition varies by country, all member firms can benefit from an annual global meeting, as well as more frequent regional meetings.

There, all-important personal relationships are formed and best practices are shared. Those discussions, both formal and familiar, touch on cultural differences, according to Ulrich Britting, managing partner at PrimeGlobal member firm Best Audit in Frankfurt, Germany, who not only frequently conducts business in the U.S. but is a dual citizen.

"For North American clients trying to do business in Europe, the U.S. is one country, one culture, and they have difficulty in understanding that even the European Union isn't all one, but more than 20 different languages and cultures," he said. "People have different solutions for different countries, but [Americans] want to have one solution, because it's cheaper ... . If it doesn't work, it doesn't mean there's no solution, but it just doesn't work this way. If Americans hear it doesn't work, they're somewhat unhappy because they think there's always a solution, and they push for their solution."

An appreciation for Germany's bank holidays is one example, Britting continued. It took some convincing before American clients understood that on-site visits would be futile during those holiday breaks, when offices are empty for days at a time.

During a conference, one Moore Stephens leader, DeFelice recalled, had a conversation with a businesswoman who had accidentally insulted her tablemates when she shoved her chopsticks into a rice bowl - a gesture that she was unaware signified death.

Cultural awareness only increases with cross-border communication and personal connection, an emphasis of every international association/network as member firms collaborate for the ultimate goal of improved client service.

"Firms that are part of a network should create a personal relationship within them - it's no different than the relationship of a firm's offices in L.A. and New York," CohnReznick's Baggett explained. "You shift your mindset of not just being a member, but being able to call someone one day to hope to take care of a client matter. At the regional and world meetings, you get to know the folks you want to know. And for the firms in countries important to your client base, you create those personal relationships."

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