How do the Chinese management accountants cope with changes from a planned economy to a market economy

Xu dong ji, W. Lu, M. Aiken

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)


Purpose – Since the Chinese government implemented its reform and open-up policies in 1978 many western management accounting concepts and techniques have been introduced into China. The purpose of this paper is to investigate how Chinese management accountants have coped with the changes in the new economic environment and absorbed new ideas into their own practices. This paper also discusses the differences between the current Chinese management accounting system and the management accounting systems used in the western countries, and the obstacles in implementing western management accounting systems in China. Design/methodology/approach – Both field study and survey approaches were used in this project. Six selected Chinese enterprises were visited. A questionnaire was distributed to all accountants in these companies. Findings – This paper has found that the main obstacle for implementation of western methods is not political sensitivity, but the extent of technical constraints. The management information system (MIS) is under development in most Chinese enterprises, while the essential data for using western techniques, such as activity-based costing, cannot be collected easily in the current situation. Nevertheless, changes in management accounting can be seen in some areas, such as the quality of products being promoted; the use of the responsibility accounting; and profitability as the key criterion for selecting investment projects. Originality/value – This paper provides a comprehensive study about Chinese management accounting systems. The findings in the study will help western investors to be better prepared if they have set up a business in China or are going to enter the Chinese market.

Original languageEnglish
Pages (from-to)45-61
Number of pages17
JournalAsian Review of Accounting
Issue number1
Publication statusPublished - 16 Jan 2007
Externally publishedYes


  • China
  • Economic reform
  • Management accounting
  • Market economy
  • Planned economies


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