Management Accounting Guanxi

Question: Discuss about the Management Accounting for Guanxi. Answer: In the recent years, several researchers have examined traits that influence the management accounting approaches in China and variations in its market-oriented economy. In relation to Chinas management accounting approach, it has been observed that the structure of ownership like Joint Venture, etc, is the most relevant determinant for adoption level of such practice in a particular firm, while the effect of management accounting strategies is less relevant as compared to the ownership type (Tian, 2007). Further, level and size of knowledge of senior managers in China can highly affect changes in management accounting approach, and the government possesses little influence on such changes. In relation to Australasian firms, more reliance is exerted upon historical accounting statements, budgeting, and standard costing in the approach of management accounting. This depicts that Australasian firms pay higher attention to measures that are utilized for planning and controlling expenses, thereby assisting in preparing financial statements. In general, guanxi is about establishing a network of mutually advantageous relationships that can be utilized for business as well as personal purposes. Therefore, it is not very distinct than the relevance of having a powerful network while doing business in any country. Besides, in relation to Chinese business, guanxi plays a far more relevant role (So Walker, 2006). This is because, in other parts of the world, businesspersons can break a deal through formal business meetings, in China it is significant to spend some time in order to get to know about the Chinese correlatives outside the meeting room during dinner banquets or tea sessions (Goh Sullivan, 2011). Hence, it has become a medium of establishing trust, that law cannot offer for Chinese businesspersons and they can feel more comfortable doing business with companies having strong guanxi, as they can trust them easily. Guanxi can easily fit into the western ethical approach to accounting because it relates to a favor-seeking representation of a wider ideology of social networking. It can prove to be a beneficial tool while investigating the interactive sessions of a group accommodating western professionals and can assist in establishing differences in the moral constructions based on types of employment (Gao, 2006). Furthermore, various studies state that guanxi can be utilized in the examination of western attitudes towards interpersonal connections within the context of business based on commonalities betwixt western ethical approach and guanxi. However, many studies contrast this viewpoint and regard guanxi as unethical in relation to western approach to accounting. In reality, it can offer relevant benefits for all the business parties (western accounting) who identify the cultural relevance of its attempt to implement them during negotiations in business transactions (Yang, 2011). Power distance is a cultural phenomenon, which is the method that people consider the power distribution and how they even define power, are subject to each cultures biases. Whilst some cultures are happier to accept inequality, some are not. Therefore, the extent to which a low ranking person of a society expect and accept that power is unequally distributed, is called power distance (Madlock, 2012). Moreover, people with a higher power distance are more likely to align with a hierarchy wherein everyone has a place and that needs no additional justification. Although leadership styles betwixt Australia and Chinese cultures are quite different, yet both have been developing and indications of convergence are emerging. Hence, the prospect of leadership has enhanced over time and can be viewed as a holistic measure rather than dependence on cultural settings. In relation to Australian/New Zealand managers, they focus on aspects of the long-term planning of future, strategic planning, human relationships, and profit generation. Moreover, recent approaches have exerted importance on the value of respecting employees, promoting their enhancement of career, and valuing their contribution. However, Chinese managers focus on improving employees by personal development. Further, they expect to consider ethical considerations in contrast to the procurement of profit (Madlock, 2012). Other aspects of their approaches include the assumption of a role of an inspirational character, thereby leading to promote harmony, equality, and simple living with o thers and nature as a whole. References Gao, Y. Q. (2006). Building Guanxi with Government for Foreign Companies in China: A Case Study on the Application of Commitment Instrument. The Business Review, 6(2), 119-125. Goh, A Sullivan, M. (2011). The Most Misunderstood Business Concept In China, Retrieved April 11, 2017 from https://www.businessinsider.com/the-most-misunderstood-business-concept-in-china-2011-2?IR=T Madlock P. E. (2012).The influence of power distance and communication on Mexican workers.International Journal of Business Communication, 49, 169184. So, Y. L., Walker, A. (2006). Explaining Guanxi: the Chinese business network. London: Eoutledge. Tian, X. W. (2007). Managing International Business in China. Cambridge: Cambridge University Press Yang, F. (2011). The Importance of Guanxi to Multinational Companies in China. Asian Social Science, 7(7), 163-166