Here’s the Reason Why More Companies Are Using an ERP in China
If you work in finance, accounting or in the business arena in general you may have come across the term ERP, but what does it actually mean?
ERP systems are growing in popularity as they offer many benefits compared to more traditional methods of managing data. In China, more foreign business managers are looking into implementing ERP systems to cope with the continued travel restrictions enforced in the country.
Learn more about the definition of the ERP system, its benefits, and why it is rising in popularity among foreign-owned businesses and SMEs operating in China.
What is an ERP System?
Enterprise Resource Planning (ERP) is a software system that helps businesses manage their day-to-day operations. It can cover anything from accounting to stock management and even human resources. An ERP system likely consists of multiple modules which work together to provide an organization with a complete solution.
However, depending on business size, not every company will need to utilize every module. For example, a small company might only need to use the accounting and stock management modules, while a larger company might need to use modules such as HR and CRM (customer relationship management).
Why More Companies are Using an ERP in China
While China maintains its Zero-COVID strategy, enforcing restrictive travel requirements that continue to impact businesses and the entire economy, businesses need to make adjustments. Because of the strict policy, many foreign companies are considering leaving the Chinese market and going to countries with more relaxed travel restrictions.
Due to limited travel activities, high-level expats and foreign business owners are forced to return to their home countries. This has led to foreign businesses having less managerial presence in China until restrictions are lowered, which is still currently unclear.
To help foreign headquarters and managers continue to monitor their business, there is an increased reliance on technology, especially on ERP platforms, payroll systems and other systems that improve the long-distance working relationship.
ERP systems allow you to monitor business performance online, even when they are not physically present in China. Additionally, ERP systems can help solve the problems of productivity, transparency, and control that many foreign businesses with local counterparts have a hard time monitoring.
Benefits of Using an ERP system in China
One of the main benefits of using an ERP system is that it offers a much higher level of data security when compared to traditional methods. With an ERP system, all your data is stored in one centralized database, which can then be accessed by authorized users from anywhere in the world via a secure login. This is opposed to older methods where data was often stored on individual computers or servers, which made it much more vulnerable to hacking or accidental deletion.
Using an ERP system can also help improve visibility within your business. Authorized users can access the data in one central location wherever they are based.
Even when you are abroad, you have complete visibility of your business operations in China just by using an ERP. It allows you to track performance and make necessary changes quickly and easily, which can help improve overall efficiency within the organization.
Another benefit of using an ERP system is that it offers real-time activity tracking. This means that you can see how your operation in China is doing at any given moment, which can help you resolve issues quickly and efficiently.
It also allows you to see how well employees are performing and identify areas where they may need additional training. Having access to activity reports gives foreign companies a better idea of the current market performance in China with regards to their business.
Ease of use
Another advantage of using an ERP system is that it is much easier for employees to use in comparison to traditional methods. This is because everything they need is stored in one place and is accessible from any device with an internet connection. It makes training employees on how to use the system much quicker and easier, which saves time and money in the long run.
Flexibility and scalability
ERP platforms are created in such a way that they can adapt to the size or shape of the company using them. Modules can be added or removed, depending on the company needs.
Customizable reports and metrics can also be created according to your requirements. ERP systems also have no problems if your business is scaling up because they can accommodate even enterprise-level needs, with thousands of people using the platform simultaneously.
Most ERP systems are now cloud-based, meaning they can be hosted online without having to change anything in your existing system. While it still has to be configured, the process itself eliminates the need to purchase a server where the platform will be hosted.
Usually, ERP systems are sold as Software as a Service (SaaS) to allow you to choose the features that you want to access and pay for.
Compliance with industry regulations is easier because an ERP system can help you track and manage the complex data associated with regulated industries such as healthcare, finance, and manufacturing.
Customizable reporting tools allow for performance to be tracked easily and enabling remote finance audits.
Reduced operational costs
Decreased operational costs are achieved because an ERP system automates many repetitive tasks that would otherwise have to be performed manually. This includes tasks such as generating invoices, tracking inventory levels, and calculating payroll taxes.
Things to Consider When Implementing ERP in China
The effectiveness of an ERP may not be the same when implemented in China due to the following reasons:
Sticking to traditions
Local Chinese enterprises and are used to their ways and systems of doing things, which might not include using an ERP system to track, audit, and report everything happening in the company. Additionally, training is also required, which is also a challenge since many local employees lack the motivation, knowledge, and professional attitude to use the system as expected, especially if they are complex.
Speed in accessing the system
ERP systems hosted outside the country are prone to running slower because they have to cross the Great Firewall of China. This can be counter-intuitive because the reason that the ERP is used in the first place is to be able to monitor real-time the company’s performance even abroad.
ERP vendor lacks local knowledge
There are ERP vendors that lack proficiency not only in speaking the local language but more importantly understanding the local regulations. It can result in non-compliance and incorrect configuration that can cause problems in utilizing the system.
How We Help Companies in China Implement ERP Systems
There are many benefits associated with using an ERP system for your business. It offers improved data security and visibility as well as provides real-time activity tracking, which can help you resolve issues quickly and efficiently. If you want to improve your business operations, then an ERP system could be the perfect solution.
Our ERP solution is designed to help SMEs overcome the challenges commonly faced by companies that are scaling up. It is cost-efficient, easy to operate, and can be customized according to your business needs.
Our ERP system gives clients direct access from their computers abroad to the accounting subsidiary they have in China.
They can access our ERP platform, review and follow up on accounts receivable and accounts payable, authorize sales and purchases, review payments and reimbursement, and verify inventory among other functions, all without worrying about compliance issues with local Chinese regulations.
Installing an ERP system is a complex task that requires the expertise of IT professionals with mastery of ERP platforms. Contact us today to learn more about ERP in China and how MS Advisory can help your business!
Disclaimer: all articles and its related content are the property of Moore Stephens Consulting Company Limited and may not be reproduced either in part or in full without prior consent.
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