Chinese companies are taking advantage of the latest AI tools and automation technology to improve finance’s efficiency and quality.
Han Min, FCMA, CGMA, is CFO of Shanghai Jahwa United Co., Ltd — a China-based company focused on beauty, personal care, cleaning, and maternity products that has a long history dating back to 1898 in Hong Kong.
Min is steering Jahwa’s transformation to a modern business using technology that includes real-time analysis of customer evaluations using ChatGPT, TikTok Live broadcasts to spur sales growth, and robotic process automation (RPA) to improve process efficiency and quality.
In addition, co-operation with academic and professional institutions is facilitating publication of research on the company’s finance digital transformation and marketing investment — as well as providing high-potential talent for the company.
Digital healthcare business Ping An Healthcare and Technology Co., whose products include a mobile platform for medical consultations, is also using RPA — to improve financial closing efficiency and reduce costs. Senior vice-president and CFO, Crystal Zang, FCMA, CGMA, explained that finance uses data for “strong support for the cycle of forming strategy, setting goals, allocating resources, tracking progress, competitive analysis, and strategic adjustment”. She added: “We constantly encourage team members to form insights through their work.”
The finance team led by Marty Zhang, FCMA, CGMA, CFO at technology products distributor Ingram Micro (China) Investment Co. Ltd, is using AI to improve forecasting and predictive modelling capabilities. In addition, AI tools are automating the ordering process, receivables collection, and standard reports production.
In this FM Q&A, Min, Zang, and Zhang discuss their companies’ approaches to using new technology to create value and assess business risks and opportunities. Their responses have been edited for length and clarity.
As a finance leader, what new approaches are you taking to create value for the business?
Han Min: We are currently in a rapidly changing era, where the dual challenges of economic downturn and intensified market competition underscore the growing importance of financial operations. It is imperative to focus on the quality of operations in all aspects, including receivables, payables, and cash flow, while ensuring the sustainable growth of corporate revenue and the continuous improvement of profits. The key to empowering the business through finance lies in improving both quality and efficiency.
At the same time, we need to actively promote the transformation of traditional accounting to provide digital business insights, discover new business opportunities through refined data analysis, and foster the innovative growth of the enterprise. For instance, from our Maxam skincare brand’s “Old Baby” TikTok Live broadcast, precise financial data analysis revealed the immense potential of this nascent social media platform to reach new customers and increase sales and profits.
This insight was relayed to the business, aiding the swift adjustment of strategies and culminating in the rapid establishment of a TikTok Live broadcast room and the formation of a dedicated team. Without any investment in traffic costs, and relying solely on brand-aligned presenters and content, we swiftly captured consumer attention and quickly ascended to the top of TikTok’s popularity list. The live broadcast debut garnered 12.9 million impressions for the Maxam brand and achieved a year-on-year growth in sales through TikTok of up to 1,167% in Q4 of 2023. At the same time, the breakthrough on the TikTok channel also spurred sales growth across all channels. The Q4 total channel business grew by nearly 20%, rejuvenating Maxam, a 62-year legacy brand.
Crystal Zang: In deepening the implementation of Ping An Health’s strategy, the company has innovated in enterprise health management product development, external strategic partnerships, etc.
While supporting the development of new businesses, we continuously enhance resource allocation efficiency and optimise investment. Also, we constantly encourage team members to develop insights from their work.
Marty Zhang: By utilising advanced financial modelling techniques and predictive analytics, we are able to identify and capitalize on emerging opportunities, optimize capital allocation, and maximize shareholder value. Additionally, we are integrating sustainability and ESG factors into our financial planning and reporting to create long-term value for the business. By fostering a culture of innovation and collaboration within the finance function, we are driving continuous improvement and operational efficiency to improve profitability and drive growth.
Effective risk management strategies and proactive communication with key stakeholders ensure financial stability and transparency, ultimately driving value creation across the organisation.
How are emerging technologies, including artificial intelligence, contributing to this value creation?
Min: Emerging technologies, such as AI, have a profound impact on our financial operations. The deployment of RPA robots has greatly reduced repetitive labour and dependence on individuals, thereby enhancing work efficiency and quality.
Automation of cumbersome financial data processing allows us to dedicate more energy to business insights and strategic analysis. For example, by analysing customer evaluations in real time through ChatGPT and conducting financial calculations accordingly, we can achieve more reasonable resource allocation. This enables us to quickly respond to market demands, improve customer satisfaction, increase customer loyalty, drive repurchases, and promote expansion of the brand’s market share.
Zang: We have utilized technologies such as RPA, Python, SQL, etc., to continuously reduce the manpower required for repetitive financial work. This has improved financial closing efficiency, reduced costs, and sparked internal discussions and explorations on redefining finance in the era of ChatGPT.
Zhang: AI is enhancing our forecasting and predictive modelling capabilities, allowing us to anticipate market trends, customer behaviour, and risks more accurately. For example, we are able to triangulate the forecast based on massive historical data and market trending to better deploy our resources. This enables us to proactively adjust our strategies and investments to capitalise on opportunities and mitigate potential threats.
Additionally, AI-powered automation tools are streamlining our processes, reducing manual tasks, and improving efficiency, which ultimately leads to cost savings and increased productivity, such as in the ordering process, receivables collection, standard reports production.
How is finance’s role evolving to ensure the business is sustainable for the long term?
Min: As the economic environment continues to change and market competition intensifies, it is necessary to adjust the job functions of financial personnel, shifting focus from basic accounting to business analysis and system operations. Continual improvement of finance personnel’s analytical capabilities, such as data analysis, is imperative. By delving into the information behind the numbers, we can uncover new business opportunities and potential risks, and adjust resource allocation promptly.
Concurrently, improvement of communication skills is crucial. Only by enabling business personnel to fully comprehend and embrace the insights and suggestions of finance can we jointly advance the sustainable development of the enterprise.
Zang: We provide information to key stakeholders by analysing and showcasing data relating to the organisation’s performance in finance, operations, and market trends. This includes comparative analyses against industry standards or historical data: the “four comparisons” — to targets, to our performance history, to the market, and to benchmarks. We believe that this data can help us provide strong support in the cycle of setting strategy, setting goals, allocating resources, tracking progress, competitive analysis, and strategic adjustment.
Zhang: By aligning financial goals with sustainability objectives, we are able to make more responsible and ethical business decisions that benefit not only our bottom line but also our stakeholders and the environment.
Additionally, I work closely with other business functions to develop and implement sustainable business practices, such as reducing carbon emissions, improving resource efficiency, and promoting diversity and inclusion.
What are the biggest risks your business and sector are facing over the short, medium, and long term?
Min: In the fast-moving consumer goods industry, the most significant risks in the short, medium, and long term are growth pressure, compliance costs, and brand building. In the short term, as consumer confidence gradually recovers, it is crucial to stay abreast of market changes and grasp consumer demand through detailed financial analysis, enabling swift strategic adjustments.
In the medium term, with increasingly stringent regulatory policies, compliance costs emerge as a challenge that must be addressed, such as those related to advertising laws and cosmetic efficacy testing. We must continually control costs while remaining compliant.
In the long term, the success of brand building will directly affect consumer recognition and the sustainable development of the enterprise. Deciding how to allocate resources among products, branding, and customer relationships is a critical challenge that the finance team must address.
Zhang: Short-term risks for the business are:
- Economic downturn or recession.
- Supply chain disruptions.
- Regulatory changes.
- Cybersecurity threats.
- Fluctuating commodity prices.
In the medium term:
- Technological disruptions.
- Shifts in consumer preferences.
- Talent acquisition and retention challenges.
- Geopolitical instability.
- Environmental and climate-related risks.
In the long term:
- Industry consolidation.
- Long-term sustainability and ESG concerns.
- Technological obsolescence.
- Global systemic risks.
What are three areas of opportunity for your business? How is finance identifying those?
Min: The first area is the short-video field. With the continuous expansion of the user base and the continuous innovation of content forms, short videos have emerged as a crucial platform for brand marketing.
The second area is meticulous customer management and data analysis, so we can better fulfil consumer needs and improve customer experience, thereby boosting the repurchase rate.
Finally, industrial integration through merger and acquisition. By acquiring high-quality assets and integrating resources, we can quickly expand our market share and enhance our competitive edge. As with some internationally renowned fast-moving giants, acquisitions facilitate breaking through industry and national barriers, internalising new technologies, enhancing production capacity, and subsequently refining the sales network through integration.
To identify these opportunities and formulate corresponding strategies, it’s essential to establish a sound financial analysis system and market research mechanism. At present, we consider expansion into Southeast Asia as a strategic direction — the young consumer demographic in the Southeast Asian market is replete with potential.
Zang: Three areas of opportunity are:
- Further reducing the total expense ratio by 5% through digital operations. Finance has saved a lot of manpower time by promoting the business online and from RPA, and more time has been applied to benchmarking analysis and operations management.
- Treasury management and capital operation strategies. Finance will further consider a series of strategic decisions such as the company’s market value management, additional issuance and placement of new shares, bond financing, stock repurchase, and investment and M&A from the perspective of capital efficiency.
- Innovating products and optimising operations based on benchmark analysis and stakeholder feedback. The finance department contacted investors and stakeholders from the board meeting and the shareholders’ meeting, and assisted the business’s management to find the benefits in the various suggestions.
Zhang: Three opportunities are:
- Expansion into new markets. Finance can conduct market research and financial analysis to identify lucrative opportunities in untapped markets, drive White Space Analysis to identify product gaps, assess the financial feasibility of expansion plans, and allocate resources effectively to support market entry strategies.
- Innovation and digital transformation. Finance can collaborate with other departments to invest in innovative technologies and digital solutions. By leveraging financial modelling and analytics, finance can evaluate the potential ROI of innovation initiatives and prioritise investments that offer the highest value.
- Strategic partnerships and M&A opportunities. Finance can evaluate potential strategic partnerships, joint ventures, or M&A opportunities that align with the business’s growth objectives.
To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.
