Five tips for ERP projects in China
Are you planning an ERP implementation or rollout for a location in China, existing or still to be opened? Experience has shown that companies often have very similar questions in this context. What do I have to watch out for? – This is often the first question, since most companies have hardly considered or thought about the subject of an ERP implementation or rollout in China ahead of time. There are of course a few details one should watch out for, but aside from the language difference and cultural aspects, some of these are really mundane things.
1. Internet availability as a location factor – seemingly obvious
Often the location question has not been answered yet before we are contacted as an IT service provider. This is actually an advantage, because you should pay special attention to Internet availability when choosing the future location – and we can help you with that. Not only does the Internet connection speed in China vary greatly between regions, but also within an urban area, often even from one city block to the next. So making the right choice is critical for success from this perspective alone. The Internet connection speed also depends on the provider. Very detailed advance comparisons are worthwhile here. In regards to Internet use, you also have to consider the Great Firewall of China that blocks some of the common Internet sites and services. YouTube and Facebook among others do not work in China. Do you want to use instant messaging functionality with your employees in China? In this case we recommend WeChat, the Chinese instant messenger that is increasingly gaining popularity in day-to-day business. You cannot use WhatsApp in China.
2. The hardware aspect
There is another peculiarity in China that needs to be considered in order to avoid unpleasant surprises: Some hardware components are not allowed in the Middle Kingdom. This can apply for example to devices for establishing VPN connections. If you want to use a company-wide standard for your hardware, you should first check in detail whether the corresponding equipment is permitted in China. Otherwise you may soon be confronted with unplanned additional costs for other devices.
3. Golden Audit in Shanghai
If your location is in Shanghai, you need a certificate confirming that you are able to prepare your financial reports according to the local legal requirements of the Golden Audit. The Golden Audit encompasses a number of reports, with binding contents and formats that have been established. With some experience, implementing these requirements does not constitute a problem. Some other cities have similar requirements by the way. No matter where you locate your company in China, you do of course have to adhere to the generally accepted accounting principles as they apply in China (China GAAP) even if your company headquarters operate according to the HGB, IAS, IFRS, or US GAAP.
4. Golden Tax system
Implementing the Golden Tax requirements is another challenge. Valid invoices can only be prepared using the Golden Tax procedure in China. You receive pre-printed forms for this template-based process from the applicable tax authorities, with an invoice number already printed on them. Subsequently the Golden Tax system does the following when an invoice is printed: It calculates the often very complex taxes and prints the invoice data (invoice recipient including tax number, invoice total, taxes) onto the pre-printed form in the format specified by the authorities. A string similar to a digital signature is also printed on the invoice. This confirms that the invoice is genuine. The printed invoices are generally known as "Fapiao". By the way, the invoice format can only be printed using a special printer that is also obtained from the applicable tax authorities. A new option was recently implemented, allowing you to contact a server of the tax authorities online via an interface and submit the invoice data. A digitally signed PDF file is then sent to you.
5. Change in the sales process
In conclusion, I would like to briefly explain a minor but essential change in the sales process. While we are used to issuing an invoice after shipping the goods in Europe, business in China is usually conducted with advance payment. This means the process has to be changed in the ERP system. If you consider this detail from the outset, you will be ready for takeoff sooner when commencing business activities in China.
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