China business
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China business

Let our Chinese CPAs and affiliated local accounting firms support your expansion into China.

In each country, there are differences in corporate culture, business customs and personnel and labor relations, and also in people’s tastes and preferences. For example, it attracted a great deal of attention when soccer player Yuto Nagatomo bowed after scoring a goal while playing in the Italian soccer league. In Japan a deep bow is seen to be the proper thing to do and leaves a sense of good will, but to non-Japanese eyes bowing is seen as giving in to the opposition and, while understood to be part of Japanese culture, it can make those seeing it for the first time feel it is very strange.

In the case of China, the scale of this type of miscommunication is further increased. The reason is that due to the presence of many cultural similarities such as Kanji and Confucianism, the preconception that each other’s ways of thinking must be similar gets in the way. When starting to do business in China it is very important to make a conscious effort to remove all preconceptions from your mind, evaluate your partner calmly, and understand their way of thinking.

Our CPAs, professionals who were born and raised in China and have lived in Japan for over 10 years, offer not only tax services for companies doing business in China for the first time, they also advise on Chinese customs, way of thinking, and also how to interact with employees.

Accounting check of Chinese subsidiaries

Chinese business practices are based on a unique tax code, one aspect of this being the Fapiao(“Official Receipt”) system. As such, things that are common sense in Japan may not be common in China and there are many things that work in the opposite way. In addition, it is hard to manage a company in the same way as in Japan due to the language barrier and different human resources practices.
On the other hand, the fast speed of growth of business in China can cause a situation in which the accounting details of Chinese subsidiaries are prone to be a black box, and you can end up needing to expend a great deal of money and effort to repair the damage later on. The parent company must monitor the accounting details of the Chinese subsidiary constantly to prevent such problems from occuring. Obtaining sales, inventory, and financial data from the Chinese subsidiary monthly, verifying it, and immediately inquiring about anything unclear is a usuful tactic.

Case study

Overview of Company F (Chinese subsidiary of a Japanese publicly listed company)
Industry: Apparel-related
Sales: About One billion Yen

Services provided to Company F
1: Analysis of monthly data from local accounting materials (Chinese) (Watch for abnormalities)
Obtain trial balances, subsidiary ledgers, and data from managerial materials each month, analyze ledgers for accounts receivable, inventory, accounts payable, and expenses, watch for irregularities and find answers

2: Hold monthly meeting to report findings
Hold teleconference with Japanese parent company and Chinese subsidiary

3: Implement internal audit of Chinese subsidiary
Once a year, we spend several days on-site with the accounting department of Company F to conduct an internal audit

Effect of our services
It became easier to reach a mutual understanding with the subsidiary’s accounting manager because our Chinese CPAs spoke with him in Chinese. They also became able to quickly identify problems at the Chinese subsidiary by analyzing the Chinese-language monthly accounting materials in Chinese, and then are able to propose solutions in a timely manner.