The development of quality management accounting practices in China

• Published in: Managerial auditing journal 2005-01, Vol.20 (7), p.707-724
• Main Authors: Islam, Majidul, Kantor, Jeffrey
• Format: Article
• Language: English
• Subjects: Accounting procedures; Accounting systems; Capital budgeting; China; Competition; Competitive advantage; Culture; Culture sociology; Decision making; Direct labor costs; Foreign investment; Globalization; Information dissemination; Management accountants; Management accounting; Manufacturing; Market economies; Market economy; Organizational change; Progress; Quality; Quality improvement; Quality management; Strategic management; Studies; Technological change; Values
• ISSN: 0268-6902; 1758-7735
• DOI: 10.1108/02686900510611249

Purpose - The concept of the market economy is gaining ground in China. So also, with the growth of international business partnerships and collaboration with the West, is the significance of management accounting. The purpose of this paper is to provide some background for the development of management accounting practices in China.Design methodology approach - As enterprises gain more autonomy, management accounting techniques such as capital budgeting, cost of capital concept, just-in-time inventory, inventory model concept, cost-volume-profit analysis, total quality management and others will become more important. This paper examines the development of management accounting practices in China from the perspective of transitional economies.Findings - Evidence suggests that the national culture and values practiced for centuries by Chinese business influence the concerted efforts for information dissemination and developing management accounting practices. Because of the lack of understanding of western management accounting practices, the pace of development of Chinese management accounting practices might be slow for now.Research limitations implications - The paper attempts to analyze the development of management accounting practices in Chinese business by looking at the background and contemporary thoughts; however, the value of the paper could be raised if the results were tested empirically, though discussion was aligned to empirics from other research and existing literature.Practical implications - This paper argues the necessity of recognizing the significance of culture-based management accounting systems and practices, but also of realizing that, since the Chinese government opened its doors to foreign investment, international standards and practices have a major role to play.Originality value - This paper attempts to analyze the challenges that China, a transitional economy, faces and what factors it seriously needs to consider for developing much needed management accounting practices. It also examines the evolution of management accounting systems in China, with their distinctive features, in order to provide a better understanding of their development.