This article was first published in the March 2014 China edition of Accounting and Business magazine.
ACCA Shanghai welcomed more than 400 CFOs and senior finance executives to its CFO Summit, entitled ‘Business partnering: CFOs lead and manage strategy’. An impressive line-up of speakers discussed the skills and knowledge that top finance professionals need, and suggested how CFOs can truly be strategic business partners.
Opening the summit, Chiew Chun Wee, head of policy, Asia Pacific, ACCA, spoke on how CFOs could act as business partners and add strategic value.
Making a breakthrough in your career is all about identifying opportunities, and becoming a partner plays a crucial role, he said.
According to the ACCA report, Global business services: a game changer for the finance organisation?, one trend is towards a global business services (GBS) model – aggregating business support functions across the enterprise, such as finance, human resources, IT and facilities. Managing GBS centres may be a good move for finance professionals looking to extend their skills beyond finance, he said.
Chiew then cited another ACCA report, Digital Darwinism: thriving in the face of technology change, which warns the Chinese and global accountancy profession will feel the effects of trends such as mobile; big data; cyber security; payment systems; and digital service delivery.
On a different note, Chiew stated, ‘We need to develop sustainable business, which is very important to humanity and society, as well as the development of our enterprises.’ He urged CFOs to exert their influence in prioritising sustainability.
Regarding a CFO’s essential qualities (with financial expertise a prerequisite), a key attribute is curiosity, says Chiew. Finance professionals need to question why things are done a certain way. Good social communication skills are also key, he adds, and being able to say no to the CEO when professional ethics are in question. ‘CFOs are the corporate conscience.’
Taking the initiative
A panel session entitled ‘CFO insights: crossing the chasm – from operator to strategist’ was moderated by Peter Liddell, advisory partner at KPMG, with panellists including Ken Lam, vice president, finance of Volvo Car China. They were asked what future CFOs needed to ensure development.
For Anthony Kam FCCA, CFO, HSBC Bank of China, accounting professionals are good analysts, but to be a good CFO, ‘You have to understand why, and analyse how to communicate.’ Sometimes, however, CFOs have to say no. ‘I often say that to say “no” is easy, but not so much if you have to say it with a smile, and to expect others to accept it is even more difficult.’
The business sensitivity issue was echoed by Jin Yan, finance director, Asia Pacific – Hydraulics Asia Pacific at Eaton Corporation. Know what is important to the enterprise, industry trends, how to articulate your values to customers and analyse competitors’ reactions, he advised. ‘You also have to know the changes in macro-economy and policies, and what kind of effect it will have upon your company.’
Yan also made the point that strategically strong companies can fail owing to poorly executed plans. Finally, he stressed, ‘Only with a strong team can we do our job, have good control and management and predictions, as well as internal analysis.’
When asked about the best kind of working relationship with partners, James Loh, executive director, chief accountant, Lenovo Group, warned the audience against making preconceived judgments. ‘If you want to become a business partner, you have to build relationships,’ he said, urging CFOs to see themselves as partners to other corporate leaders.
Loh also felt it was vital for CFOs to communicate with customers, support other departments, and draw up operational and business goals. ‘Once you can understand what others are thinking and their problems, you can better help them succeed. Because with our professional knowledge and expertise, we can help them find a solution,’ he said, adding that such collaboration helps CFOs to build relationships of trust.
Liddell asked the panel how, as CFOs and corporate gatekeepers, they manage strategy alongside risk. Kam suggested streamlining time management and operational strategy was key, citing limited resources as a current challenge. Adjusting financial and operational aspects often means standardising, and extracting rules, he said.
For Kam, trust within a team is paramount. ‘We must abide by the same values and goals… uniting the whole team to serve the same purpose,’ he said. ‘By making sure all team members can have smooth and obstacle-free communication, we can improve team work efficiency and take emergency measures quickly.’
Making the grade
Dominic Seto, managing director, Asia Pacific operations, Delphi Product & Service Solution and Delphi China Operations VP, talked on CEOs’ expectations of CFOs. He advocated the centralisation of finance management. By doing this, he said, ‘we can better understand the expectations of our business, and make some changes’.
One challenge for doing business in China is taxation. A solid foundation must be laid for financial organisations in the future, which includes taxation, he said. ‘You must understand its regulation, so you can best protect your business.’
Another area of focus for the CFO is internal control. ‘Although integrity is in our blood, we must ensure that we have the tools to make our employees understand how we are to carry out internal control,’ he noted, adding that internal control is crucial to the success of a business. The reason Delphi has been doing well for so long, Seto concluded, ‘is not only because we grasped the opportunities, but because we have integrity’.
In a second panel session, entitled ‘Help business growth through financing strategy’, Li Xia FCCA, VP Financial Service, Volvo Car China, moderated an impressive line-up of financial heads of Chinese businesses.
Angela Dong FCCA, VP, CFO, Greater China, Nike China, said a vital role for CFOs is the rational allocation of resources for achieving optimal returns. ‘Over the past two to three decades, Nike Greater China has done a great job in terms of development,’ she said. ‘All of its innovation and growth wouldn’t have been possible without strong and flexible funding management and distribution.’
Nike’s financial people see themselves as ‘businessmen’ who manage risks and performance, and as being able to apply financial experience to management to get optimal return on investment, Dong added.
SAIC Motor Group CFO
Gu Feng noted that there were many ways to balance the allocation of resources. CFOs need to know the business inside out to judge how to assign resources, he said. You also have to be flexible. ‘In general, financial budget is relatively fixed, but this sometimes makes it difficult to cope with the rapidly changing market conditions. SAIC will accelerate the frequency of its rolling forecasts in order to timely adjust its original plan.’
GE Global R&D Center CFO Ng Ian Tyii FCCA revealed: ‘Our approach is to encourage our scientists to communicate more with our sales and customers, enabling more innovations to meet the market needs.’
Reflecting a recurring theme, Tyii added that CFOs also need to communicate regularly with customers to understand urgent problems and market needs, ‘instead of sitting in their office trying to figure out whether their investment is right or not’.
Preparing for uncertainty is essential, according to Feng, who says that while SAIC has adequate cashflow, it faces external uncertainty and business model changes, such as the development of new energy and materials. ‘We have to change our ideas about traditional operation methods. Through its own investment firm, SAIC hopes to try some new models and technologies closely related to the automotive industry, and to make some early investments.’
Li added that companies need to consider how to integrate the ‘advantages and enthusiasm of the upstream and downstream suppliers, distributors and others, to meet the needs of development and realise a win-win situation’.
As Dong explained: ‘In the entire value chain, the growth limit of a company lies in its weakest link. No one can succeed totally on their own: all [contributors] play an important role.’
If a company in your supply chain has a good development plan and great potential but not enough funds, then you can support its long-term development by offering discounts or short-term investments, she said, adding that all four major Chinese state-owned banks actively identify such potential customers.
Zhejiang Supor CFO Xu Bo FCCA supported this point: ‘If your dealers and suppliers are not able to grow fast, how can you?’ Supor’s dealers are SMEs that have weak financing ability, so they need support, says Xu. However, Supor ‘exerts strong control over the credit and capital of its supply chain-related companies’, and makes arrangements such as third-party acceptance, so dealers can have enough working capital without exposing Supor to too many risks.
During the summit, ACCA also welcomed 20 approved employers including MNCs such as Pepsi Food and large state-owned enterprises such as Bao Steel.