PwC halts development of $140 million business campus in China

Global accounting and consulting firm PwC has halted work on a new $140 million business campus in China, following a major blow to the company’s financials in the country.

The ambitious project, located at Haitang Bay in the southern island province of Hainan, was intended to be a training facility for “building trust in leadership,” but recent regulatory action has forced the firm to suspend work on the site.

Designed by the architectural firm Gensler, the Reimagine Park campus spanned 16 acres and was set to be a zero-carbon facility comprising nine buildings connected by autonomous electric shuttles. The facility was planned to host the firm’s Trust Leadership Institute in Asia Pacific and aimed to be a symbol of sustainable and innovative leadership in the region.

The project, part-financed by the local municipality, began construction last year and was expected to be completed towards the end of this year.

However, the project was put under ‘strategic review’ after PwC China was handed a six-month suspension and a record fine of $62 million by Chinese authorities.

Reporting from the Financial Times suggests that three of the planned buildings were partially completed before construction stopped in July. A local worker told the Financial Times that the site has been largely deserted since, attributing the halt to financial difficulties linked to PwC’s involvement with Evergrande, China’s most indebted property developer.

In December 2022, PwC had announced plans to partner with prestigious institutions such as France’s INSEAD Business School, America’s Thunderbird School of Global Management, and the Danish Design Centre to create the curriculum for its Trust Leadership Institute. However, following the regulatory fallout, these partners have since withdrawn from the project.

The Evergrande saga

PwC’s suspension comes in the wake of its audit of Evergrande’s financial accounts. Evergrande collapsed under $300 billion in debt, and Chinese regulators have accused PwC of ignoring and even condoning the company’s fraudulent activities. Investigations revealed that PwC approved Evergrande’s financial statements, which falsely inflated revenues by nearly $80 billion between 2019 and 2020, contributing to the property developer’s default in 2021.

The Ministry of Finance’s sanctions on PwC have sent ripples through the firm’s operations in China. Officially known as PwC Zhong Tian in China, the company was until recently the country’s largest accounting and advisory firm, but has now lost so many clients that it has already slipped down the tables.

PwC’s global management team has meanwhile taken several steps to mitigate the damage. The firm has issued a statement acknowledging that its Evergrande work “fell unacceptably below” the standards expected of the PwC network. In response, PwC dismissed 11 staff members and appointed a new leadership team to oversee its China operations.