Icv cm spez_sept2010_china
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    Icv cm spez_sept2010_china Icv cm spez_sept2010_china Document Transcript

    • Controlling in China? China What are you talking The German word “controlling” is translated into “(Internal) Management Control” ((内部)管理控制) in Chinese. This difference is due to the fact that “controlling” has a negative connotation in the Chinese context. If you take a look in the Chinese standard diction- nearly no lectures about controlling for Chinese ary, you will find “controlling” defined as “forcing students. In the workforce, traditional Chinese an object to act passively within limited bounda- companies do not offer positions for controllers. ries”. This derogatory meaning, to some extent, However, some of their duties are typically carried reduces the acceptance of controlling in China. out by normal accountants. According to dominant classification in the Chi- nese academy, German controlling is primarily There are multiple reasons for this situation, of categorized as a part of the Chinese internal con- which the majority are historical. Furthermore, there trol system, which includes internal accounting is a language barrier and a cultural barrier. When control, internal management control and compli- talking with Chinese academics and practitioners, ance control. you are confronted with, generally speaking, rela- tively weak language abilities – on both sides of the “Controlling emphasizes In China, internal control theories and implications dialogue! This hampers the transfer of Western rationality, efficiency and for research currently focus on internal accounting knowledge. Culturally, the Western concept of con- transparency, which obvi- control, to assure the reliability of accounting in- trolling is not always suitable for businesses with ously conflicts with tradi- tional Chinese society, formation. However, internal management control traditional Chinese norms and values. which values collectivism is very important for the whole internal control and harmony.” system and it is considered a “must” for Chinese To give you an example, “Guan Xi” is a special companies to operate internal management con- phenomenon in Chinese society that carries a trol systems in the future (Zhang Xianzhi, “Internal great deal of importance for the Chinese people. Management Control and Internal Accounting “Guan Xi” describes a personal connection be- Control”, Corporate Finance, 2004). tween two people in which one is able to prevail upon another to perform a favor or service, and applies to all aspects of life, from personal rela- Language and cultural barriers tionships to business management. In contrast, controlling emphasizes rationality, efficiency and “The exponential growth Overall, controlling in China is still considered un- transparency, which obviously conflicts with tradi- might be coming to an end derdeveloped. In academia, there are very few tional Chinese society, which values collectivism and internal control systems professors and little published research. There is and harmony. are now needed.” only one Chinese textbook on the market that cov- ers controlling. A quick glance at the course offer- ings at most universities reveals that there are 20 CONTROLLER Spezial | Controlling International
    • about? Jane Wu, Master of Management, Research Assistant, Institute of Management Accounting and Control (IMC) at WHU – Otto Beisheim School of Management, jane.wu@whu.edu . Is it time for a change? Last but not least, European companies have been recruiting and training local talent that, over time, In 2008, The Chinese Ministry of Finance launched will provide an important source of controlling-re- “the Basic Standard for Enterprise Internal Con- lated knowledge to Chinese professionals. Prof. Dr. Utz Schäffer, trol”, specifying the principles for establishing and Director, Institute of effectively implementing internal controls in enter- Management Accounting prises. Despite considerable implementation prob- WHU-Controller Panel China and Control (IMC) at WHU – Otto Beisheim lems, the government is still pushing forward and School of Management, wants all companies to implement effective inter- Faced with these changes and increasing interest Member of the Board of nal controls by 2012. Even though implementing from European companies to better understand the Trustees, International government-enforced internal control principles is controlling-related challenges in China, Utz Schäffer Controller Association (ICV), utz.schaeffer@whu.edu . quite different from organically developing and and Jürgen Weber have established the WHU- growing a controlling culture, the directive of the Controller Panel China (www.whu.edu/controlling- government is an inception. The change already inchina). Their objective is to observe and promote shows. Many seminars, conferences and training the development of controlling in China. Supported courses featuring internal control systems have re- by the International Controller Association (ICV), cently sprouted up in China. the German Chamber of Commerce in China (AHK) and Tongji University, Shanghai, the China panel In addition, the global economic crisis has been a team brings together both practitioners and aca- cautionary tale. The Chinese government and demics. Controllers, management accountants, and many Chinese companies are now aware that the CFOs are invited to participate. exponential growth they enjoy might be coming to an end and internal control systems are now need- ed. It is probably no coincidence that the idea of controlling gained traction in Germany only after the first oil crises at the beginning of the 1970s. 21