Financial Controls: When China Offices Go Wrong

Friday, July 11, 2008 11:03
Posted in category Uncategorized

During my time in China, I have heard more than a few stories of where one partner/ manager lost control of their finances in a way that was company/ project killing.

Perhaps it was an underling that figured out a loophole, a business development manager spending too much time at the KTV, a purchasing manager kicking back, or something more creative …

It is something that few spend enough time on, and fortunately there are people like my good friend Jay Boyle who have spent time in China working with firms in understanding the risks, and planning for them.

and fortunately, our good friends will publish an article that I can link to as a way to serve up the subject.

When China Offices Go Wrong – How to Implement Effective Financial Controls was written by Jay and one of his colleagues Julie Yang, and for managers who actually manage money, I would suggest spending the time reading the article as the advice Jay and Julie are giving is based on a long track record of due diling in China.

In their mind, implementing a program is:

  • a team effort
  • requires understanding process
  • requires understanding risk/ controls
  • must be managed holistically

and if you are in need of something more substantial, I suggest you contact him directly.

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2 Responses to “Financial Controls: When China Offices Go Wrong”

  1. Bill says:

    July 11th, 2008 at 6:48 pm

    There is one more step: Kill a chicken to warn the monkeys. You must show people you mean business. Catch somebody at it, either trying to fool around, or not paying attention to catching those fooling around, and do the justice stuff. People are willing to play “going along” and nod at the right time, but not really doing anything about it. They may spend a lot of time studying the rules and regulations, and spend most of the time figuring out how to defeat them, or get around them, or come up with excuses when one of their staff did the no-no. You’ve got to catch one or two and make them an example.

  2. Jay Boyle says:

    July 15th, 2008 at 12:52 am

    Thanks for the comment Bill.

    I find it more constructive to build ownership in the organization and make the controls the company’s and create and mentor “Champions” inside the company to enforce the controls.

    “Killing the chicken to warn the monkeys” can often backfire in an organization. Anytime a Chinese person is caught and shamed in public by a foreigner, the chances of re-fighting the opium war become very real and an all out mutiny can ensue.

    I know one GM who caught his sales people selling the name plate of his branded machine to a competitor. He also learned his salesmen were selling his competitor’s machines. When he fired the guilty employees in public his employees mutinied and his company effectively stopped working. He was also sued by his former employees and lost the law suit for breaking a labor contract and other damages.

    Let the champions take ownership and dole out the the punishment by committee. Make the shame on them that they could not control their own people. Things have a way of getting taken care of very rapidly and staff believes that the punishment is fair as it is doled out by their peers.