Crowe Horwath Risk Consulting
Managing Risk in World Markets – China
Audit | Tax | Advisory | Risk | Performance
The Unique Alternative to the Big Four ®
Crowe Horwath LLP
Second only to the United States in economic size, the
People’s Republic of China boasts the fastest-growing
global economy with rates averaging 10 percent over
the last 30 years. Information from political leaders,
governmental agencies, and news media creates a
mix of myth and truths about a country trying to build
a better future from a difficult past.
If conducting business in
China is a consideration
for your organization,
Crowe can help you
evaluate the risks and
develop potential actions
to safely tap into this vast
and fast growing market.
Considering the Risks
If conducting business in China is part
of your organization’s plans for growth,
weighing the risks should include
thorough market research, inquiries
with business chambers or trade
associations, and making personal visits.
Crowe Horwath Risk Consulting can help
global organizations balance risk with
reward through careful consideration of
these seven areas.
1.Establishing the right legal entity.
Deciding to invest in China requires the
establishment of a legal entity through
one of these options:
■■ Setting up a representative office,
■■ Incorporating a wholly foreign-owned
enterprise (WFOE),
■■ Establishing a joint venture
company, or
■■ Acquiring an existing company.
Crowe can help with developing or providing clarity around your entry strategy and
obtaining local support to assist you in
navigating local rules and regulations.
2.Maintaining accurate and
timely documentation.
An enterprise in China is supervised by
various governmental and regulatory
bodies in different ways and is required to
keep proper records and filings including:
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■■ Business or value added tax (VAT)
filings and payments;
■■ Employee income tax and social
security contribution returns
and payments;
■■ Corporate income tax returns with full
financial statements;
■■ Financial statement audits for
submission to the Ministry
of Commerce;
■■ Income tax audits for submission to
the Tax Bureaus; and
■■ State Administration for Foreign
Exchange audits.
Crowe can help execute accurate
and timely accounting, taxation, and
payroll administration to help ensure
documentation for renewal of business
licensing, repatriate taxation, and proof
of entry/exit currency.
3.Mitigating regulatory risk.
Establishing a company in China requires
compliance with the laws and rules and
regulations of both the host country
(China) and the home country (United
States). U.S. laws, rules, and regulating
bodies include the Sarbanes-Oxley
Act (SOX), Foreign Corrupt Practice
Act (FCPA), Anti-money Laundering
(AML), and the Securities and Exchange
Commission (SEC). Since host subsidiary
records are kept in Chinese, the support
of a local professional services firm can
help overcome the language barrier.
Crowe Horwath Risk Consulting
Managing Risk in World Markets –
China
As independent members of Crowe
Horwath International (www.crowehorwath.
net), Ruihua, China member firm (www.
chcncpa.com) professionals share deep
local market knowledge and expertise to
serve the compliance needs of both host
and home country organizations. Through
our highly integrated global network of
member firms, we are able to provide
consistent quality and impeccable service
to diverse clients throughout the world.
4.Preventing fraud.
Fraud is a pervasive problem across the
globe, fueled by a powerful combination
of factors. The risk of fraud is high
when internal control is lacking and
opportunity presents itself through
kickbacks, ghost employees, stolen
inventory, inflated expenses, and
misappropriation of assets.
Crowe can help with a strategy to
establish adequate policies and to detect
fraud in foreign operations through
training, periodic monitoring, internal
audits, and investigations.
5.Protecting intellectual property.
Since joining the World Trade Organization
(WTO), China has developed a regulatory
framework to protect the intellectual
property rights (IPR) of domestic and
foreign patent holders as required by the
WTO agreement on Trade-Related Aspects
of Intellectual Property Rights (TRIPS).
Although China’s IPR enforcement
covers administrative, civil, and criminal
enforcement, Crowe helps enterprises
with research and development facilities
establish appropriate internal policies
and procedures; performs royalty and
license audits; and assists in training
personnel on how to protect IPR. Crowe
can assist with establishing an IPR
control and monitoring framework as well
as performing a royalty/license audit.
www.crowehorwath.com/risk
6.Preserving security and privacy.
Information technology (IT) connects
nearly every corner of the globe.
Securing the storage of vast amounts
of valuable digital data and information
all over the world is an essential part of
daily activities.
Crowe can help with strategies to manage
IT security and privacy including cyber
security, identity and access management,
data leakage and breach protection,
operational resilience and system outage
plans, and application integrity.
7.Understanding Chinese
business governance.
Although the practices of enterprise risk
management and internal control are
converging across the globe, insisting
on the application of a governance
framework adopted in the home country
across world operations can miss
opportunities for learning and absorbing
good international practices.
Crowe can help global organizations
assess and adapt governance
frameworks to fit local conditions while
providing resources to assist in the
management of risks, objective reviews,
and internal audit of key activities.
Preparing for Opportunities
Global Crowe
Consulting Services
■■ Corporate governance
assessments and standards
■■ Internal audits
■■ Enterprise risk management
■■ Internal control and
financial advisory
■■ IT consulting
■■ Fraud/bribery risk management
■■ Setting up a WFOE or
representative office in China
■■ Bookkeeping and accounting
■■ Tax, payroll, and administrative
outsourcing
■■ Financial due diligence
■■ Post M&A integration project
management
We bring together the risk expertise you
need and our consultants’ experience
in risk assessment, internal audit,
enterprise risk management, information
technology, and information security
includes access to benchmarks and best
practices to craft the right solution for
your unique requirements.
Crowe Horwath Risk Consulting, along
with our member firms, is committed to
building lasting relationships with clients,
focusing on understanding each client’s
perspective, needs, and goals. Our close
ties with Ruihua, which has nearly 10,000
personnel operating out of 40 offices in
China, have resulted in the placement
of resources in Beijing and Shanghai
offices making us uniquely qualified
to deliver risk consulting services to
organizations looking to enter or expand
into the Asian marketplace.
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Contact Information
About Crowe Horwath Risk Consulting
For more information, please contact:
Crowe Horwath Risk Consulting is a global professional service firm providing a
singular global delivery methodology to assist multinational businesses meet their
governance, risk, and compliance needs. Crowe Horwath Risk Consulting experienced
professionals have deep subject-matter expertise in risk management, internal audit,
fraud and ethics, security and privacy, and regulatory compliance to keep you advised
of emerging trends, industry benchmarks, and best practices. By combining in-depth
industry skills with practical technologies and innovative processes, Crowe Horwath
member firms can help you improve your corporate governance and manage your risk.
Yangchew Ooi
China Managing Director
Crowe Horwath Risk Consulting
+86 138.1787.2897
yangchew.ooi@crowehorwathgrc.net
William C. Watts
Crowe Horwath LLP Principal
Crowe Horwath Risk Consulting
614.280.5227
william.watts@crowehorwath.com
Crowe Horwath LLP, The Unique Alternative®
Crowe Horwath LLP (www.crowehorwath.com) is one of the largest public accounting
and consulting firms in the United States. Under its core purpose of “Building Value
with Values,®” Crowe uses its deep industry expertise to provide audit services
to public and private entities, while also helping clients reach their goals with tax,
advisory, risk, and performance services. With offices coast to coast and 2,600
personnel, Crowe is recognized by many organizations as one of the country’s best
places to work. Crowe serves clients worldwide as an independent member of Crowe
Horwath International, one of the largest global accounting networks in the world,
consisting of more than 150 independent accounting and advisory services firms in
more than 100 countries around the world.
Ruihua Certified Public Accountants
Ruihua Certified Public Accountants (“Ruihua”) is one of the largest accounting firms
in China. Ruihua is the sole China member of Crowe Horwath International providing
a comprehensive and cohesive range of audit, tax, advisory, risk, and performance
professional services to valued local and international clients in China.
www.crowehorwath.com/risk
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