Research on Problems and Strategies of Financial Management in Foreign-funded enterprises

Serena Chi Shuyu

【Abstract】Chinas economy has been developing fast in recent years， which provided a promising prospective for various businesses and industries， and after long-term development， they have gradually become an important part of Chinas economic system and their lasting and steady development depended on financial management， however there are some problems existing in the practice of financial management. This paper analyzed the problems that foreign-funded enterprises encountered in financial management and pointed out the way to cope with these problems， in order to offer some assistance in the management and development of foreign-funded enterprises.

【Key words】Foreign-funded enterprise; financial management; strategy research

【作者簡介】Serena  Chi Shuyu， Cambridge International Centre-Daqing No.1 Middle School.

Introduction

The foreign-funded enterprises should have a management mode suitable to their special nature in Chinas economic environment. Financial management is a vital part in enterprise management and has significant impact on long-term development of an enterprise， in particular for foreign-funded enterprises， financial management is a decisive factor for its development; therefore， the enterprises should fully understand the problems in financial management and take effective measures to deal with and solve the problems.

1. Importance of financial management in foreign-funded enterprises  

Chinas economic market presents great opportunities and intensive competiveness， and in order to achieve long-term and steady development in China， foreign-funded enterprises need to do a good job in financial management， since financial management directly affects the economic benefits of the enterprise. During the process of development， the enterprises have to face a complicated market environment which is restrained by the macro target of the enterprises and influenced by the situation of industries， and good financial management is a critical means to reduce the enterprise risks. Financial management of an enterprise involves financial budget， financial control and financial summary etc.， by the practice of which， the funds of the enterprise can be reasonably distributed， controlled， and most effectively used to obtain maximum benefits for the enterprise， which is also the main purpose of the enterprise for development.

2. Problems of financial management in foreign-funded enterprises  

2.1 Inadequate financial management regime

Financial management of an enterprise requires good financial management regime， which is a critical premise for implementation and practice of financial management， and financial management regime is even more important for operation of foreign-funded enterprises， however most foreign-funded enterprises are currently lack of financial management regimes. Due to limitation of policies in China， foreign-funded enterprises cannot achieve real-time remittance of funds in China and the flow of capital is restricted， therefore it is difficult for large foreign-funded enterprises to oversee the financial status and funds of their subsidiaries， as a result of which， the funds cannot be effectively used.

2.2 Absence of qualified internal control system

Financial management of foreign-funded enterprises requires a qualified internal control system， which is also the most effective way to achieve higher quality and efficiency of enterprise financial management， however the internal control system in foreign-funded enterprises still need to be improved during the practice of financial management. The financial management of foreign-funded enterprises in China is in a backward mode， the financial budget is not accurate， and the management process is deterred post actions， therefore problems cannot be timely rectified or adjusted， which might lead to loopholes in actual financial management.

3. Strategies of financial management in foreign-funded enterprises 

3.1 Improve financial management regime

In order to achieve long-term and steady development， foreign-funded enterprises must pay attention to their financial management and establish a sound financial management regime according to their respective conditions， thus providing a good institutional guarantee for the financial management to make the financial management more effective. The foreign-funded enterprises can establish an accountability and responsibility system， since financial management involves many complicated aspects， these aspects can be subdivided and implemented by individuals， so that each financial management personnel will have a clear view of their financial management objective and task， and it is convenient for them to carry out and implement their job in a better way.

3.2 Establish scientific financial management system

In financial management of foreign-funded enterprises， the most important part to realize effective management is the financial management process， and enterprises should have a scientific and effective financial management system to facilitate the execution of management and realize effective financial management. The foreign-funded enterprises can establish a control system that integrates pre-action， during-action， and post-action controls， so as to achieve integral and systematic financial management. The pre-action control is mainly carried out through budget control and authorization control， which shall be a kind of prevention and warning of problems in financial management. And the during-action control is mainly through taking a certain control means in the financial management process and pointing out deficiencies in financial control by analysis， in order to improve and adjust in a timely and effective manner. While the post-action control is mainly through the evaluation and assessment of the financial management related activities of the enterprise， timely processing the existing problems， and then summarizing experiences obtained from activities， and providing references and recommendations for future financial management.

4.Conclusion： In summary， foreign-funded enterprises are still facing certain problems in financial management in Chinas economic market， which have great impacts on their development. The foreign-funded enterprises need to fully understand the problems in their financial management and continuously improve and enhance their way of financial management in order to achieve a long-term and steady development in the environment of new era， and this is also what foreign-funded enterprises need to pay special attention to during the development.