Chinese companies should employ professional consultants to
improve quality, business models and processes, and reduce internal
and external risks, according to an expert.
"Chinese firms, especially small and medium-sized enterprises
(SMEs), lack the awareness to use consulting firms to sharpen their
competitive edge," said Joseph Fu, founding partner and executive
director of JFU Consultants, which offers services across
governance and operating platforms for sustainable growth.
Fu has worked in the industry advising multinationals and
government agencies for over 25 years and was named one of China's
top advisors by the International Tax Review and Euromoney.
Fu said despite rapid and aggressive growth by Chinese SMEs in
the past few decades, risks still exist in their financial systems,
business modeling, internal controls and human resources
systems.
"For instance, building a modern financial system is exceedingly
important for a company's sustainable development. But many Chinese
SMEs neglect it and even have an aversion to professional financial
operations," said Fu.
He added that it's a common practice for SMEs in developed
countries to hire consultants to design financial systems.
Fu said as China increasingly merges into the global system,
Chinese SMEs will have to compete with foreign counterparts, and
thus they should learn to seek help from professional consulting
firms.
"Professional consulting firms could help SMEs boost business
operation efficiency, reduce operating costs, and systematically
shape their core competencies through business restructuring,
service sharing and outsourcing," Fu said.
Fu also said China's unified corporate income tax law, which
will take effect on January 1, 2008, would not have a serious
effect on China's ability to absorb foreign investment.
The new corporate income tax law, which unifies the income tax
levied on domestic and foreign enterprises to create a level
playing field, will introduce a single tax rate of 25 percent,
replacing the existing two-system tax. The new tax rate is lower
than the average tax rates of neighboring countries in an effort to
increase companies' competitiveness and to enhance China's
attraction to foreign investors.
"The law provides all market players with a more transparent,
stable and predictable tax system," Fu said.
For foreign investors, the loss of a broad incentive system and
preferential tax rate will urge a new approach to their business
models, investment structures, site selection and financing
strategies, according to Fu.
(China Daily October 15, 2007)
