China Company Internal Restructuring

The internal restructuring of a company in China is not as complicated as you might imagine, but you still need to concisely understand your options. Restructuring internal operations, systems, legal frameworks, supply chains, human resources (HR), and even the location of the company to create higher profit margins and greater business integration is what it’s all about.

Any business or company that has optimized internal operations is better prepared to tackle adversity to mitigate any unwanted and unexpected issues. During times of economic uncertainty, having to streamline internal structures and systems can really help to keep you strong and competitive in your market sector.

Before you even attempt to implement an internal restructure, you need to perform reviews and assessments of your current operations, financial status, legal positions, HR department, and even your supply chains. Use these reviews to identify existing issues that can be streamlined and improved.

By using an extensive financial review of your business, you can weed out the flaws and inadequacies of your current operations. And by doing so, you can make the correct changes to ensure that your company’s finances remain stable even in times of economic uncertainty.

Internal restructuring is more than streamlining your financial activities and goes far deeper, so please keep reading to find out what you must do to ensure your business remains at its most competitive and profitable

Restructuring Supply Chains

Supply chains across the world have been dramatically affected by the COVID-19 pandemic and in some cases almost decimated. The challenges moving forward to recover and revive supply chains and the management of them are there for all to see. But even in times of turmoil, the companies that perform best are those who respond to the challenges and can even predict possible supply chain faults and disruptions. Companies can benefit from taking the below issues into consideration regarding supply chain management:

  • Create and implement supply chain risk management strategies.
  • Diversify your supply chains so you do not depend on a single chain or country or region.
  • Adopt new systems and technology that can improve supply chain management that gives you greater visibility and transparency across the said supply network in regards to better risk analysis so you can predict potential issues quicker.

Your company performance can be assessed by using the above principles to give you clearer objectives and any new directions and the restructuring of your current supply chain. However, if your company has already undergone supply chain shocks during COVID, you need to seriously think about reshaping them in the future to better deal with unpredictable circumstances, both domestically and internationally.

Restructuring Human Resources (HR)

Restructuring your human resources (HR) systems and management can help in the overall optimization of your business. Here are some things you need to think about when streamlining your HR:

  • You need to perform routine HR health checks on a more regular basis to identify any practices that might be considered wrongful that could result in labor issues or to highlight any potential improvements.
  • You’ll need to redesign and reshape your HR procedures and policies to ensure that the employer is in control and has the upper hand when dealing with employment disputes or employee negotiations concerning the termination of contracts.
  • Utilizing the technological advancements of HR payroll solutions that can transform your business and completely streamline any mobile operations to enhance accuracy and eliminate potential risks.
  • You need to attempt to mitigate potential labor shortages and in some cases reduce labor costs by using flexible employment forms to dictate your labor policies more clearly and concisely.

Restructuring Cash Flow

Cash flow management plays a vital role for companies in times of financial and economic strain. Survival, growth, and thriving in any market at any time is why you need to optimize cash flow management by using these below recommendations:

  • Utilize liquidity and financial auditing and stress tests to identify potential issues that can cause major financial impacts on your business during times of economic uncertainty.
  • Using flexible and ongoing economic forecasts to track and identify and even counterbalance risk factors that are caused by fluctuating cash conversion rates with customers and suppliers internationally is a must.
  • Streamline all your non-critical uses of cash and implement cost controls.
  • Creating and streamlining new expenditure management procedures that give you greater insights so you can internally control and limit expenditure to what is essential.
  • Implementing innovative high-powered accounting and expense management tech to streamline work processing and increase the speed of management reporting systems.

Compliance and Risk Control Restructuring

During times of economic uncertainty that are brought about by events such as COVID or other natural disasters, the majority of companies struggle to keep afloat, and it’s understandable considering the unpredictability of such events. In these situations, most companies overspend while trying to survive and keep in a stable and competitive position. But if you already have fewer flaws in your systems, you can thrive during these events while your competitors drift away.

Optimize your current compliance and risk control mechanisms now by following these nuggets of advice:

  • Utilize regular and proactive compliance reviews so you can see any potential exposures to risks.
  • Build safe protocols that can tackle and prevent possible scenarios of incompliance.
  • Revise and review company templates for contracts that you can use to adapt to new rules such as force majeure or to counterbalance any possible problems that come from unexpected issues.

Reduce Operations Restructuring

Reducing production temporarily during difficult times that lightens the scope of operations are great strategies to undertake. This is the course of action to take if your customer base has been drastically reduced by a crisis. A good example of this would be the entertainment or travel industry during worldwide COVID lockdowns.

Temporarily reducing operations can massively cut business costs while protecting and reserving your business structure so you can begin operation again once the circumstances improve.

However, do not forget to consider these possible compliance issues below when you are taking this strategy:

  • Companies must still maintain standard tax filings on a monthly, quarterly, and yearly basis with the tax bureau. This is true even if you are not performing business activities on the same level as before and even if you now only have a few employees. And if you are not generating any revenue, the company can even process a zero-tax filing if necessary.
  • Companies need to structure their financial statements to ensure the calculation of certain expenses like office rent, bank interest and charges, office expenses, and so forth in order to keep in line with the accounting regulations in China.
  • Companies still need to perform their annual tax reporting so you are not listed in the Directory of Enterprises with Abnormal Operations.
  • Companies still need to ensure they keep a corporate bank account and a proper office lease to keep their basic operations going.

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