Selections from the Haier Group to see risk management and control

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					Selections: View from the Haier Group risk management and control
Haier has been able to in times of adversity to achieve new heights of
success, largely due to the Asian financial (1.9, -0.03, -1.55%), more
than a decade since the crisis and innovation in strengthening risk
management and control
U.S. subprime-induced financial crisis sweeping the globe, still continue
to spread its influence as a global manufacturing power, China also faces
enormous challenges.
In this context, in Qingdao Haier refrigerator production plant is a
bustling scene. The world's leading consumer market research firm
Euromonitor International (Euromonitor International) released the latest
monitoring data shows that a single brand of dollars, in 2008 Haier
refrigerator brand in the global market share reached 6.3%, more than
Whirlpool, LG and Electrolux and so on, ranked first in the world.
Filled with pessimism in the market, the 2008 global turnover of Haier
Group achieve 122 billion yuan, up by 8%, of which overseas sales rose
9.8%, profits up 20.6%, Haier Group is already the world's fourth largest
white goods manufacturers, China's most valuable brands in the global
manufacturing bases set up in 29, eight comprehensive research and
development centers and 19 overseas trading companies, employs more than
5 million people worldwide, has developed into a large multinational
group. Such a set of data, no doubt outlines the global crisis,
especially the crisis in the domestic manufacturing sector under the
touch of abundant winter spring.
Haier today all thanks to its very focus on lessons of the 1997 Asian
financial crisis, attention to internal control and risk management
system established and improved.
We believe that the source of all the risks can be said that the strategy
to determine when the strategy, they locked all the risk. Enterprises
with the risk of some of the tactics can be effective adoption of such
circumvention: financial management, budget management, personnel
management, effective delegation, investment management and risk control,
risk management Tiji development of the enterprise to Lianghua risk,
developing risk Fangfan approach, lower business risk.
Haier look at the specific risk management measures:
Strategic level risk management
Group and internationalization: Haier in more than 30 countries and
regions have established trading companies and design centers worldwide
more than 10 industrial parks, such a large scale if the internal control
system is not built, the enterprise's risk will be very large.
Risk as the business group, diversification, international expansion and
other new business space, but also has many new issues, new performance,
while developing the same time, need to constantly improve risk
awareness, understanding and control. Risk in case of group control
problems become more complex immediately: first, the Group companies to
achieve coordination, integration, scale advantages and other benefits,
along with the expansion of assets, involved in the industry increased,
their geographical distribution subsidiary trend dispersed enterprises
face a variety of investment, operation, management will significantly
enlarge the risk to the Group risk management and control in particular
internal control system is also put forward higher requirements;
Secondly, because of the group, after the diversification and
internationalization generated multi-level legal issues, risk has become
a cross-level, multi-object system. Thus, with the growth of firm size,
tentacles of the global extension of risk management has naturally become
a necessary and sufficient business proposition.
In the international operation, Haier's philosophy is "export record
card" strategy is divided into three steps: "going out"
and "inside out" and "go to", "going out"
only to exports to overseas; " About to go "is should be
recognized in the local product into a local chain, the local design,
local customer service;" go to "is a local brand. The path of
international expansion, Haier means mainly: the whole merger, investment
holding, brand management and virtual business. Haier Annexation is a
basic principle of "total must be greater than its parts", must
be a merger a success, optimizing allocation of resources, mining
companies after the reorganization of the potential acquisition of risk
aversion as the cornerstone and protection.
The establishment of financial companies: Haier Group, as the country's
leading household appliances company, in 2000 for the establishment of
the People's Bank Group finance companies, and in June 2002 approved the
establishment of the first allowed to operate all of the nation,
"Finance Company Regulations "specified foreign currency
business scope of financial companies.
Yang Mian Mian, president of Haier, said finance is the Haier Group's
business process reengineering boosters, is the financial capital flow
integration vector, also to improve capital efficiency and reduce the
financial cost of financial instruments, and its funds and assets appear
to achieve a two-way value. As of 2008, after six years of development,
Haier finance company has completed initial funding from a simple
centralized management of service providers to a centralized financial
services, group financial management, integrated financial support for
Trinity's Haier features an integrated financial services provider
business transformation, and build the Haier brand impact 500 core
competitiveness, and gradually realized the Group CEO Zhang for their
"industry booster" of the position.
Through the financial company's establishment, to achieve a premise with
industrial ¼¯ÍÅ Jizhong foreign exchange management, foreign exchange
Zaiti Gao Group Yunzuoxiaolv, Jieyue Jiesuanchengben, Jianhua settlement
process, to avoid risks of foreign exchange assets Huishuai achieved good
economic and management effectiveness; the same time, into the Group
Financial Risk Control Model of industry, finance industry, the group
constructed a comprehensive risk control system, and improve the Group's
overall risk prevention.
Based on the Group's risk management strategy: the strategic business
direction determines the direction of the company's development during a
given period. Strategic Management Group, the characteristics and
complexity of the environment, requires the company to continuously
review and assessment strategies in order to make timely adjustment of
local and fundamental. Therefore, the highly complex environment to
increase the company's business risk. In general, the right corporate
strategy with effective risk control, can make the company stable in a
volatile environment, development, and expected performance goals.
For example, Haier's diversification strategy is adopted: "Dongfang
Liang was again light the West." Zhang believes that "the
problem is not engaged in diversified businesses do not need to, but that
enterprises themselves have the ability to engage in diversity."
Clearly, the diversification of the business expansion, Haier is the
attitude of people who: a prerequisite conditions, stress affirmation of
the principle of caution. This is a kind of risk awareness, risk
prevention measures position.
Innovation and change to cope with risks: the risk before, Haier path of
innovation to cope with risks. Zhang believes that the global financial
crisis, companies not only to "winter", but also learn to
"winter swimming" instead of "hibernation." Risks and
opportunities are equal for each enterprise, which are external; can
avoid risks, seize opportunities, depending on the internal factors,
depending on the competitiveness of the enterprises themselves.
Haier specific ideas to address the financial crisis, mainly in three
aspects:
First, business model innovation, implementation of the zero inventory
under the Demand for. Chinese enterprises in the past has been troubled
by accounts receivable and inventory, since 1998, Haier has been
implemented in the Chinese market "spot cash", 2008, Haier
began to explore further "Zero Inventory for Demand under the"
business model. After years of effort, amount of funds used Haier number
of days of inventory remained at about 20 days, well below the industry
average number of days. Since July 2008, Haier made to prevent "more
than 2 Less", which means more to prevent inventory, receivables and
more, fewer profits, and cash less. At present, Haier's stock dropped to
five days, is China's industrial enterprises in the average days of
inventory 1 / 10.
Second, mechanism innovation, and building up self-management body of a
single unity. "People oriented", for enterprises, is to
"person single one" because the company is to "creating
value" to measure the pros and cons of staff, strongly encourage the
advanced, form a core competence, otherwise it would not talk about
business countries, the value to society. Quote economist Yu Guangyuan in
the beginning of reform and opening said: "The rich and powerful
country in the enterprise; enterprise's prosperity in the entrepreneur;
entrepreneurial success lies in their own decisions; and the realization
of their own decisions, is corporate culture." Business in the
mechanism, the culture of innovation, ultimately comes down to
"people first", "operate independently" of
innovation.
Finally, product innovation, to provide users with solutions to the
problem. Haier, the main need to succeed two large markets: one is the
domestic market, an overseas market. "Foreigner to escalation of the
villagers to deepen," the overseas market through high-end products,
high value-added products to capture the mainstream market and the main
channel, while the domestic market as home appliances to the countryside
works, need to rely on marketing network, service network and logistics
and distribution network Deeply China's rural market.
Comprehensive internal control and risk management
Haier built starting in 2006 the internal control system, to extract the
four words, one is "that you do", one is "Do what you
say." Enterprise Group makes more and more companies and corporate
level, each branch of business, the false information, response time,
fraud, systems and processes are not followed, the phenomenon of lack of
compliance with norms more and more, further increase the parent's
control empty, and investors were not in place, internal control and
asymmetric information.
To ensure the safety of investors, so that the safe operation of the
Group, to achieve stable strategy, enterprises need to establish a set of
reasons behind the above phenomenon and to digest and control system, its
core is for the subsidiary's governance, strategy, organization, and
operations of the various systems and processes may exist (defined gaps,
loopholes are not closed, there is human interference, Quefa executable
Xing, system and implementation of the system between departments and
positions Chongtu, the lack of scientific standard path, the system Guo
rough, system of principles or conflicts between the terms) of the
problem, for the digestion, manage or even eliminate these problems the
establishment of a systematic, not dependent on human, system, work
system.
Full internal control: Haier's risk management is the concept of a full
internal control. Risk management is much more than the Finance
Department, legal department, audit department and other departments, but
its penetration into all aspects, both from the leadership to the board
level, to managers, to the staff level, or from the group strategic level
to implementation level, to the various functions of the business layer,
comprehensive risk management awareness has penetrated into every corner
of the enterprise.
Zero Risk: Haier first proposed to guarantee zero risk business, and
clearly recognized that zero risk is the ideal state, in fact impossible,
because there are many risks can avoid many risks can be passed on, there
are many risks to go to bear . Later, a comprehensive management and
control of risk, because Haier need to "zero risk" is set to
the highest goal, although there will be risks, but the risk can not be
turned into a bottomless pit.
The balance of risks: Haier, the relationship between balance and balance
of shareholder risk, balanced business relationships are equally
important. In the United States subprime mortgage crisis, Haier to make
various types of risk measures in a timely manner, such as countries
cancel the warehouse, according to Shan production, such as refrigerators
yield tens of millions a year, inventory is almost zero, so all of a
sudden increase in the cash flow business and reduce the risk. Although
certain period of time will increase the difficulty of management, but
strategically it is essential, and this is a balanced risk.
Conclusion
In crisis, unprecedented in many manufacturing difficulties, Haier bucked
the market trend or steady pace can provide us with a good example. With
the enterprise groups, international financial integration and the
development trend of production, enterprises will face more uncertainty
is more complex, enterprise risk management has become an important and
stable growth in which the necessary content. The establishment of risk
management system is particularly important, it covers and the root of
all aspects of the enterprise, only to establish Le effective protection
wall, the mode and mechanism innovations unceasingly can of danger to An,
the insight into the opportunities in Wei, for the longer-term
development lay a more solid foundation.
The columnist for the CLS Advisory Group Executive Director, Chief parent
company China expert Mr. Bai Wangang control
ontrol

				
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posted:9/13/2010
language:English
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