Customer overview
China Merchants Group (CMG) is a key and major state-owned enterprise directly managed by the Central Government, with its operational headquarters in Hong Kong and ranked as one of the top four Chinese-owned enterprises in Hong Kong. In 2017, CMG achieved record-high economic indicators: revenue of RMB584.4 billion, increased by 18% year-on-year; total profit of RMB127.1 billion, increased by 14.3% year-on-year, ranking second among central enterprises; total assets of the Group were RMB7.3 trillion by the end of 2017, increased by 7.8% year-on-year, ranking first among central enterprises in terms of scale. CMG became one of the eight central enterprises that have been accredited class A enterprises for business performance appraisal by the SASAC for 14 consecutive years and an “Outstanding Enterprise in Performance” for four consecutive terms. In the Global Fortune 500 list released in 2018, CMG was listed for the first time, setting a record for the longevity of Chinese enterprises in the Fortune 500 with a history of 146 years. At the same time, China Merchants Bank, a subsidiary of the Group, was also included in the 2018 Global Fortune 500, making CMG a well-deserved group of top 500 carriers.
Business Challenges
As the Group diversifies and expands its business, its business continues to grow stronger and larger, and under the call of “going global”, the future development of each segment’s domestic and overseas mergers and acquisitions requires finance to provide more diversified decision-making support and efficient services. However, at present, the financial resources and functions of the Group’s headquarters and each segment are constrained by a large amount of transactional and operational work, and the financial support for business strategies and in-depth business development lacks strength. The core value of finance hasn’t been fully leveraged. The financial management system cannot satisfy the Group’s strategic requirements and the rapidly changing market landscape. In this regard, the Financial Shared Service Center is the key to the rapid completion of CMG’s ambitious transformation from a control headquarters to a platform headquarters, and the only way to break through the bottleneck in the Group’s transformation is to establish a Financial Shared Service Center.
Solutions
CMG has formulated a strategic plan for financial sharing based on its diversified industries and multi-regional management. With the aim of giving full play to the enthusiasm of each segment, the financial sharing construction was used as a means to build a multi-level shared center according to business areas. On the unified financial sharing platform, each segment establishes a unified financial accounting system and a unified business process for funds and debts, so that the group’s unified accounting system policies could be implemented. As a result, the group’s funds and debts could be monitored and strengthened, accounting could be normalized, standardized and detailed, and the financial transformation and upgrading could be promoted. At present, through two years of shared center construction, CMSK is set as the pilot unit for the construction of the shared center, and the shared center of CMSK and China Merchants Shipping have been put into operation, while the shared centers of other sectors, such as China Merchants Port and Logistics, are also promoting the construction of the financial sharing center step by step.
The construction of CMG’s financial multi-level shared center realizes the top-level design concept of one set of management mechanism, two regional layouts, three major types of sectors in an orderly manner, two principles of construction within the two sectors, and one shared operation platform. Applying unified management of the three major keys of processes, systems and performance to shared operation, the Group’s standardized management in each operation center is realized.
Standardized financial data to provide a reliable basis for corporate decision-making
Through the construction of the shared center, the Group unifies the handling of basic accounting operations such as review, bookkeeping, payment and reporting. Independent and automated account processing reduces the risk of errors and human reconciliation and improves the timeliness and accuracy of financial data delivery. Financial reports provide timely and accurate responses to front-line operations, providing a more accurate and reliable basis for formulating financial and operational policies and preparing budgets.
Shared process of industry and finance integration to provide high-quality and high-efficiency services
Through the construction of the financial sharing center, the Group has standardized its front-end automatic billing process during the monthly closing process. The operation data are all entered uniformly in the system by the Business Operations Department. If the billing staff find any incorrect data leading to incorrect bills in the course of auditing, they return them to the Business Operations Department for adjustment and then re-examine the bills after adjustment. The AR billing management staff collates the paper documents provided by the Operations Department according to the customers and distributes them to the billing staff for use, who then carry out billing audits in accordance with customers. The planning of this process achieves a unified operation between business and finance and opens up the interface between business and finance systems.
Optimized finance team structure to leverage the core value of finance
Through the construction of the Finance Sharing Center, the Group has specialized the division of labor among finance staff, enabling more senior finance staff to focus less on accounting and payments but more on budget analysis, performance management, cost management, tax planning and exchange rate risk management. This requires the integration of finance and business, the involvement in business operations, strategic planning, and the implementation of strategy, achieving the transformation to management-oriented accounting.
Value of Customer
By establishing a shared center, China Merchants Port Holdings Limited, with Kingdee EAS system, has gradually unified nearly 2,380 accounts and accounting items, unified nearly 53 financial policies and systems and a number of front-end business systems, and realized the decentralized financial management. It not only managed financial accounting but also standardized the Port’s contract management, billing rules, accounts receivable management, commercial management, operational cost management and terminal operation billing system through the EAS shared platform, making the shared center a key to integrated financial and business management of the enterprise. In addition, through the financial sharing transformation, the proportion of management accounting has been increased, raising the status of the accounting department in the group and forming value-creating finance.