Since July of last year, with the removal of licensing requirements for registered asset appraisers and registered tax advisors, the qualifications for asset appraisers and registered tax advisors have been changed from entry-based to competency-based examinations. As a result, issues related to the development of both the asset appraisal industry and the registered tax advisory industry have consistently remained hot topics of discussion within the industry.

    Recently, the State Council issued another notice titled “On Clearing Up and Standardizing Administrative Approval and Intermediary Services Provided by Departments of the State Council” (hereinafter referred to as the “Notice”). The “Notice” stipulates that all intermediary services involved in administrative approval procedures conducted by various departments of the State Council shall be thoroughly reviewed and cleared. The scope of this review covers a wide range of activities, including technical reviews, feasibility studies, assessments, evaluations, inspections, tests, verifications, appraisals, certifications, consultations, and experiments. In response, some industry insiders believe that the development of the asset valuation sector has once again been thrust into the spotlight.

    Not surprisingly, recently, the Ministry of Human Resources and Social Security and the Ministry of Finance jointly issued a notice stating that, in accordance with previous State Council documents calling for the cancellation of the “qualification licensing for registered asset appraisers,” and in order to strengthen the development of the asset appraisal professional workforce and keep pace with the growth of the asset appraisal industry, they have formulated the “Interim Provisions on the Qualification System for Asset Appraisers” (hereinafter referred to as the “Interim Provisions”). and the “Implementation Measures for the Examination of Qualifications for Asset Appraisers” (hereinafter referred to as the “Examination Measures”). The “Interim Provisions” and the “Examination Measures” shall take effect as of May 1, 2015. The issuance of the “Interim Provisions” and the “Examination Measures” represents further alignment and extension by the Ministry of Finance with the “Decision on Cancelling and Adjusting a Batch of Administrative Approval Items and Other Matters,” issued by the State Council on August 12, 2014 (Guofa [2014] No. 27) (hereinafter referred to as the “Document No. 27”).

    So, to what extent is the asset valuation industry affected by the “Notice”? And where do asset valuation firms find their way forward? In what ways will the “Interim Provisions” and the “Examination Measures” regulate the asset valuation industry? To shed light on this issue, our newspaper’s reporter interviewed industry insiders and provided an interpretation of the relevant regulations.

    Can the Focus Assessment Service be included in list-based management? In its “Notice,” the State Council clearly stated that intermediary services that have been streamlined and standardized will be subject to list-based management. Any service not included on the list will no longer serve as a prerequisite for administrative approval procedures. Any newly established entities in the future must undergo rigorous justification and comply with statutory procedures.

    Commentators are skeptical about whether assessment agencies can be included on the list specified in the Notice. However, during interviews with relevant personnel from these assessment agencies, reporters found that most of them remain optimistic.

    Jiang Anyuan, General Manager of the Beijing Branch of Shenzhen Pengxin Asset Appraisal and Land & Real Estate Valuation Co., Ltd., pointed out in an interview with Caihui Xinbao that currently many consulting services lack clear standards and are resolved through mutual negotiation between the parties involved. The issuance of this “Notice” will play a certain role in standardizing the conduct and fee-charging practices of intermediary services, helping to regulate and guide the chaotic state of such services to some extent. Moreover, it will serve as a legal basis for local planning intermediary services over the coming period. However, implementing this document will be extremely challenging due to its lack of specificity and detailed provisions; therefore, local authorities will need to introduce complementary regulations to ensure effective enforcement.

    Regarding the list-based system stipulated in this “Notice,” Jiang Anyuan believes that it is good news for asset valuation agencies, though it will also have certain implications. “After the implementation of the list-based system, the scope of business for valuation agencies will narrow somewhat; however, the scope of services requiring intermediary assistance will become clearer,” said Jiang Anyuan. “Currently, revenue from consulting services generally accounts for a large share of valuation agencies’ income—indeed, for some companies, it’s even their primary source of income. This has inadvertently created certain conveniences for rent-seeking behavior. Once regulations are put in place, intermediary services and administrative approvals will no longer overlap; instead, they’ll complement each other. This is a positive development for businesses, saving them time and effort.”

    In Jiang Anyuan’s view, asset valuation agencies should be included on the list, since asset valuation services also fall under the category of intermediary services. However, even after being added to the list, asset valuation agencies are likely to face a tough future. Currently, competition in the valuation industry is already extremely fierce, and in the future, it will be very difficult for smaller agencies to survive.

    Related to the topic of inclusion in “list-based management” is the issue of legislation governing asset valuation. Industry insiders have pointed out that the valuation industry serves as a third-party economic verification function. Whether it involves real estate valuation, land valuation, mining rights valuation, or general asset valuation, all these activities touch upon the valuation of state-owned assets, national resources, and public interests—functions that are critical to national economic security and the public good. Whether it’s clarifying the obligations and responsibilities borne by appraisers and appraisal institutions in the market or standardizing appraisal practices, such matters all require legislative constraints and protections. It is recommended that all relevant parties, from the perspective of strengthening top-level design and fostering fair market competition, seek common ground while accommodating differences, prioritize the bigger picture, and accelerate the legislative process for asset valuation.

    Hu Liyong, Vice President of the Beijing Asset Appraisal Association and Chairman of Beijing Dexiang Asset Appraisal Co., Ltd., told a reporter from Caihui Xinbao that this is another major initiative following the implementation of list-based management for the approval of intermediary agency qualifications. It represents an important institutional safeguard for putting into practice the principle of streamlining administration and delegating power at the level of intermediary agency conduct—and will undoubtedly have a profound impact on various intermediary service markets, including asset appraisal services.

    Hu Liyong stated that, from the perspective of actual needs, asset valuation services related to administrative approvals should be included in “list-based” management. The key lies in two aspects: first, how to define “asset valuation services related to administrative approvals,” and second, what kind of list should be established.

    Hu Liyong pointed out that currently, the approval process for assessment agencies is already included in the list of administrative approvals. However, as for assessment services themselves, their inclusion is still limited to regulatory and industry-specific requirements—for instance, regulatory mandates related to the management of state-owned enterprises. “Once assessment services are also added to the list-based management system, a critical question will arise: how should the qualifications of assessment agencies be aligned with those of other entities similarly subject to list-based management?” He believes that if these two systems cannot be effectively coordinated, the significance of listing assessment agency qualifications will be greatly diminished: assessment agencies will lose their exclusive status in conducting assessment business. Moreover, the redefinition of the assessment service list—particularly in terms of demand—will inevitably impact the market size of statutorily mandated assessment services.

    When asked about the issue of legislation on asset valuation, Hu Liyong stated frankly that the first step should be to consolidate the numerous existing valuation qualifications and services. “However, putting this into practice might not be easy—mainly because there are too many departments involved,” a situation commonly referred to as “nine dragons governing the water.”

    Hu Liyong believes that since this cleanup and standardization of administrative approval intermediary services is led by the State Council, it should have the capacity to coordinate among various departments. “Therefore, for the asset valuation industry, this presents an opportunity to advance valuation legislation,” he pointed out. “The crux of valuing legislation lies precisely in achieving coordination and standardization across different professional assessment services. If the cleanup process can effectively address cross-departmental issues, it will remove some of the obstacles to valuation legislation. Each reform represents both a challenge and an opportunity for the valuation industry; if we can carefully study these opportunities and seize them, it will accelerate the industry’s development.”

    Following the release of Document No. 27, which signaled a glimmer of hope for the resumption of the asset valuation examination after its “suspension,” the most direct impact on the asset valuation industry is that, in 2014... The annual asset valuation examination has been temporarily “suspended.” Document No. 27 explicitly states that the professional qualification for registered asset appraisers will be adjusted to a competency-based professional qualification; and the asset valuation examination will be changed from an entry-level examination to a competency-based examination.

    “Right now, the excitement around evaluating QQ and WeChat groups has faded—eighty percent of people have shifted their focus entirely to the stock market. Whether they’re making profits or suffering losses, it’s still better than just waiting around for the asset valuation exam. These successive bull markets have at least somewhat eased the despair many felt about the asset valuation exam.” This was said by an ID. A candidate who “sneaks along the path of assessment” shared their thoughts on the asset valuation exam on Sina Weibo. This candidate hopes that the asset valuation exam could have a clearer and more definitive statement. Echoing the aspirations of asset valuation candidates, Zhang Guochun, Vice President and Secretary-General of the China Association of Asset Appraisers, stated that it is necessary to improve the examination system for asset appraisers, select talented professionals for the industry, and ensure a smooth transition between the old and new examination systems.

    Following the release of Document No. 27, the Ministry of Finance and the Ministry of Human Resources and Social Security in 2014... In October, policy alignment and transition arrangements were formulated. The transitional policy clarifies that individuals who have already obtained the Certificate of Qualification for Registered Asset Appraisers may continue to use their existing qualifications as a basis for appointment to corresponding professional and technical positions in the economic series. “The date of the 2014 National Unified Examination has been postponed to the first half of 2015; the specific examination dates will be announced separately.” “All candidates who have already registered for the 2014 Registered Asset Appraiser Examination are eligible to take the exam. The validity period of passing scores for all subjects taken prior to 2014 will be extended accordingly.”

    In the relevant documents, the two ministries also requested that all follow-up tasks related to the cancellation of the entry-level professional qualification for registered asset appraisers be properly carried out; policy alignment should be well managed; policy publicity and explanation efforts should be strengthened; the legitimate rights and interests of candidates must be protected; and social stability must be ensured. According to the transitional policy, the 2014 asset appraisal examination will be “postponed until 2015.” the first half of the year.” However, at present, there is still no definitive news regarding this year’s asset valuation exam.

    Recently, two government departments finally released the “Provisional Regulations” and the “Examination Procedures,” bringing hope for the resumption of the asset appraiser examination, which had been suspended in 2014. The “Examination Procedures” explicitly state that the “examination date for asset appraisers will, in principle, fall in the third quarter of each year.” As for 2014... The registration exam for certified asset appraisers, which has been suspended for a year, will also officially debut under the name “Professional Qualification Exam for Asset Appraisers.”

    The reporter noted that recently, the China Association of Asset Appraisers held a training workshop for industry examination and training staff and a training workshop for industry instructors in Beijing. The workshop for industry examination and training staff summarized and exchanged information on the 2014 industry talent development and examination and training efforts, and discussed plans for 2015. Specific arrangements have been made for this year's key tasks in industry talent development and examination training. At the meeting, Zhang Guochun emphasized that we must closely align with the overarching trends of national reform and development and, in light of the new demands placed on industry talent by socio-economic development, continuously intensify efforts to innovate in talent cultivation.

    With the release of the "Provisional Regulations" and the "Examination Procedures," as well as the holding of training workshops for examination and assessment industry personnel, the asset valuation examination is fast approaching. For specific exam dates, please stay tuned to relevant notices from the Ministry of Finance, the Ministry of Human Resources and Social Security, and the China Association of Asset Appraisers.

    Looking ahead, leveraging the reform of the examination system to promote talent development in the industry, the China Association of Asset Appraisers, following the release of the "Provisional Regulations" and the "Examination Measures," interpreted these two documents as institutional arrangements aimed at strengthening self-regulatory management within the asset appraisal industry and assigning greater management responsibilities to industry associations. These documents also represent an important opportunity for the asset appraisal industry to adapt to the new context of market-oriented reforms, innovate asset appraisal management approaches, enhance the development of professional asset appraisal personnel, and facilitate the industry’s transformation and upgrading.

    The China Association of Asset Appraisers believes that the issuance of the "Provisional Regulations" and the "Examination Measures" marks a new stage in the government's management of asset appraiser professional qualifications, opening a fresh chapter in the management of these qualifications. This development will undoubtedly facilitate the transformation and growth of the asset appraisal industry under the new normal and have a profound and positive impact on the industry as a whole. Guided by these two documents, the self-regulatory functions of industry associations will continue to be strengthened, the industry’s self-regulatory governance system will become increasingly sophisticated, and the quality of the industry’s talent pool will keep improving, ensuring the industry’s sustained and healthy development.

    Zhang Guochun stated that, through reforms in the management of professional qualifications, the government is transferring its regulatory functions—such as the assessment of asset appraisers and their management—to industry associations. The shift in the approval process for appraisal institutions also endows these associations with greater management responsibilities. As a result, industry associations will shoulder even greater accountability. In particular, in areas such as research on new policies, the design of industry regulations—including the assumption of administrative functions, the development of industry management models, personnel examination and training, member registration, and institutional management—industry associations’ self-regulatory functions are continuously being strengthened.

    The “Provisional Regulations” and the “Examination Measures” clearly stipulate that the professional qualification of asset appraisers will be shifted from an entry-based system to a competency-based evaluation system. This move grants the China Association of Asset Appraisers more self-regulatory management functions, changes the registration management of asset appraisers to a filing-based system, extends the rolling cycle for examination results from three years to five years, and clarifies that the previously obtained Certificate of Registered Asset Appraiser Qualification is equivalent in validity to the Asset Appraiser Professional Qualification Certificate obtained under the new system requirements.

    In addition, the “Provisional Regulations” and the “Examination Procedures” have not yet adjusted the eligibility criteria for examination registration or the examination subjects. The primary consideration behind this decision is to ensure that candidates who have already registered can smoothly take the exam this year and to facilitate a smooth and effective transition between the old and new systems. The China Association of Asset Appraisers stated that once the examinations are resumed and the new system is fully implemented, the Association will actively cooperate with the Ministry of Human Resources and Social Security and the Ministry of Finance in conducting thorough studies and deliberations on issues of greatest concern to the industry—such as examination registration requirements and examination subjects. The Association aims to appropriately adjust the examination registration criteria by removing the requirements for work experience and professional qualifications, thereby broadening the pool of eligible candidates and attracting more qualified professionals to join the ranks of asset appraisers. At the same time, the Association will optimize the examination subjects to better meet the evolving demands of economic and social development and the expanding scope of the appraisal field, which place increasing emphasis on the knowledge structure and competencies of asset appraisers. Furthermore, the Association will strive to promptly refine the examination system for asset appraisers through supplementary regulations that are tailored to the industry’s development needs and specific characteristics.

    In fact, China’s asset valuation industry has always evolved and grown in response to market demand and on the basis of an administrative licensing system. The reason why China’s asset valuation industry has managed to carve out a niche for itself and gain a certain degree of influence in the international valuation community is closely linked to the many years of dedicated efforts by the China Association of Asset Appraisers.

    For more than two decades, although both the China Association of Asset Appraisers and practicing firms have treated talent development as a key strategic initiative, factors such as excessively high examination thresholds and unattractive industry salaries have continued to pose significant challenges to the sustainable development of the profession—namely, a shortage of high-level talent, brain drain among young professionals, and an aging workforce. To address these issues, the Beijing Association of Asset Appraisers recommends taking advantage of this reform of the examination system to attract more young talents to join the asset appraisal industry.

    During a keynote speech at the training workshop for examination and training staff in the appraisal industry, Zhang Guochun called for integrating reforms in management practices, strengthening research into industry talent development mechanisms, refining the talent-development system for asset appraisers, and intensifying guidance and evaluation efforts aimed at local associations and appraisal institutions. He also emphasized the need to enhance the updating of industry professionals’ knowledge structures and to foster their professional competence. We need to carry out training programs for high-end industry talent, management talent, faculty members, and key business personnel.

    Countermeasures for Reform: Where Does the Industry Stand? Against the backdrop of streamlining administration and delegating power, as well as reforms in administrative approval and intermediary services, where lies the way forward for the asset valuation industry?

    In Zhang Guochun’s words, it is: “We must strive to adapt to reform, actively promote reform, and comprehensively focus on pioneering and innovating in industry development.”

    Zhang Guochun pointed out that the asset valuation industry—being an important component of the market economy and modern service sector—must firmly grasp the “market” as its lifeline during the course of reform. It should closely monitor the impact of major policies and reforms on the valuation industry, carefully study how the country’s comprehensive deepening of reform initiatives will create new markets and new business opportunities for professional asset valuation services, and thereby provide fresh impetus for the industry’s healthy and sustainable development in the future. For example, asset valuation services are supporting fiscal reform and government procurement of professional services, contributing to the construction of a cultural market system, and serving the development of an ecological civilization institutional framework.

    In fact, In 2013, Minister Lou Jiwei of the Ministry of Finance called for the valuation industry to actively engage in valuing financial derivatives, establish an internal system of corporate appraisers, and build a benchmark database for valuations.

    In addition to the attention from leadership, the China Association of Asset Appraisers is also exploring ways to pave the way forward for the appraisal industry. In fact, they have already outlined several directions for expanding the scope of asset appraisal services:

    First, serve the reform of the mixed-ownership system. We must fully leverage the professional role of appraisal expertise and actively support fiscal reform and the development of a mixed-ownership economy. In the context of mixed-ownership reform, the asset appraisal industry will play an even more significant role. The asset appraisal industry can provide professional support for optimizing the allocation of state-owned resources and safeguarding the rights and interests of state-owned assets; it can also offer a fair and objective valuation benchmark for all types of ownership entities. To provide technical support for strengthening the accounting, statistics, and standardized management of state-owned assets.

    As state-owned capital, collective capital, and non-public capital continue to integrate further, activities such as the transfer of state-owned enterprise assets, corporate restructuring, capital increases and share expansions, and equity transfers are becoming increasingly frequent. The diversification of “mixed ownership” and the complexity of its circulation methods necessitate that asset valuation provide a fair and objective yardstick for various property rights transactions, safeguard the interests of state-owned assets, and facilitate the better alignment of state-owned enterprises’ operations with market dynamics.

    Second, it enhances the valuation of capital market services. For example, asset appraisers can engage more deeply in the pricing stage of IPOs for listed companies, thereby further refining the IPO pricing mechanism. The deep involvement of asset appraisers in the issuance pricing process helps to make more accurate assessments and valuations of the issuer’s capital structure and future profitability, better safeguarding the interests of a broad range of investors and promoting the healthy and orderly development of the capital market.

    Third, reform of the service tax system—especially the real estate tax reform. Currently, legislation and related reforms concerning the real estate tax are under consideration. Serving the real estate tax reform will present a significant opportunity for the development of the asset valuation industry, playing a crucial role in its sustainable growth and holding even greater importance for promoting the country’s comprehensive deepening of reform.

    In addition, the China Association of Asset Appraisers is actively promoting the “going global” initiative for China’s appraisal industry. The CAAP points out that, in alignment with Chinese enterprises’ “going global” strategy, it will foster a favorable institutional and policy environment by taking measures such as creating a supportive policy framework, securing policy backing, establishing service platforms, and strengthening the cultivation of internationally-minded professionals—thereby driving the “going global” and “internationalization” of China’s appraisal industry and enhancing its international image.

    To achieve business expansion in the asset valuation industry, talent is the key. The reporter noted that in its 2015 training plan, the China Association of Asset Appraisers stated that this year’s training will continue to focus on guidance for new business areas and discussions on challenging issues in traditional businesses. The association will remain committed to equally emphasizing professional ethics education and the development of professional competence, comprehensively enhancing the overall quality of industry professionals and providing both talent assurance and intellectual support for the industry’s reform and development.