Management Accounting Practices in the People's Republic of China

Abstract

This chapter surveys the current management accounting and control practices by Chinese companies and factors that affect their adoption. This discussion is placed in the historical context of management accounting practices in China. The Chinese government's open door policy and economic reform beginning in 1978 ushered in a period of increasing receptivity to modern management accounting applications. Since 1997, the pace of application has accelerated because of increased marketization and privatization. As a result, current management accounting practices, as reported by our sample of listed companies and a number of other recent surveys, have at best reached the third stage defined by the International Federation of Accountants (1998), though there are some fourth stage applications. Marketization and privatization, together with China's accession to the World Trade Organization, information technology, accounting education, and research, will continue to drive future development of management accounting in China.