74749102 a Comprehensive Guide SAP Solutions for China Localization

20
Rolling SAP out to China: A Comprehensive Guide to SAP Solutions for China Localization Stefanie Schuetz-Tschiersky and Yan (Johnny) Zhao SAP AG Additional legal considerations Wrap-up Overview – Rolling out SAP in China Localizing your system for China _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________

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SAP China Localization

Transcript of 74749102 a Comprehensive Guide SAP Solutions for China Localization

Rolling SAP out to China: A Comprehensive Guide to SAP Solutions for China LocalizationStefanie Schuetz-Tschiersky and Yan (Johnny) ZhaoSAP AG

Additional legal considerations

Wrap-up

Overview – Rolling out SAP in China

Localizing your system for China

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©SAP AG 2007, 3

Overview – Rolling out SAP in China

What are the unique challenges SAP customers face with respect to rolling out SAP in China?

Your local employees, business partners, and authorities expect communication to be in Chinese, with Chinese script– Be prepared to set up your system accordingly, define local forms, etc.

Your local business transactions are subject to China’s tax and customs systemLegal reporting of your Chinese subsidiary must comply with various requirements depending on its location, legal status, and industryChinese authorities have created ‘checking’ software for tax, legal reports, and customsPayroll and employee master data must consider specific insurances, plus central and regional rules for income tax and party affiliation

SAP has provided standard Country Version for China since SAP R/3 release 3.1

©SAP AG 2007, 4

SAP Provides a Country Version for China

SAP Country Version for China includes a template for configuration, consisting of:

Organization Structure (Company Code CN01)Global Settings (regions, CNY as currency, holiday calendar)Chart of Accounts and Account determinationChart of DepreciationTax Calculation ProcedureBalance Sheet and Profit and Loss Structure

Additional functionality:Chinese Figures and Numbers: Function module SPELL_AMOUNT also covers Chinese numbering system (i.e., Chinese characters expressing the Chinese amount units “wan” and “yi”)

©SAP AG 2007, 5

Example: China Company Code

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©SAP AG 2007, 6

Example: China Regions

©SAP AG 2007, 7

Example: Financial Statement Version for China

©SAP AG 2007, 8

What Might I Have to Customize?

While the SAP configuration template will get you the majority of the way there, you will have to review, copy, and adapt the following:

Cross-application:Organization structure

In Financials:Chart of accounts and account determinationBalance sheet and profit and loss structureChart of depreciation

In SD:Tax calculation procedure

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©SAP AG 2007, 9

Key Planning Questions

Which language will my employees expect in the system?

Do I have to implement official checking software?

Will I have to comply with central/regional regulations?

How do China’s legal requirements (e.g., chart of account regulations) fit into my global template?

Where do I place my servers (in China vs. outside)?

Additional legal considerations

Wrap-up

Overview – Rolling out SAP in China

Localizing your system for China

©SAP AG 2007, 11

Localizing for China – Top 6 Planning Considerations

1. China GAAP

2. Legal Reporting

3. Golden Tax System

4. Golden Audit System

5. HCM Localization

6. Chinese Language Support

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©SAP AG 2007, 12

1 – China GAAP

Updated by the Ministry on Finance February, 2006Mandatory for all registered companies as of January 01, 2007Planned to be effective for all registered companies until the end of 2008Chart of account update in SAP ERP

China Generally Accepted Accounting Principles (GAAP)

©SAP AG 2007, 13

1 – China GAAP (cont.)

Account Category Account Number Account Name (CN) AccountName(EN)Assets

1001 库存现金 Cash1002 银行存款 Cash in bank1003 存放中央银行款项 Cash for central bank (Banking)1011 存放同业银行专用 Cash for Other banks (Banking)1012 其他货币资金 Other cash equivalents 1102 短期投资跌价准备 Provision for short-term investment1021 结算备付金 Settlement reserve (Stock Agent)1031 存出保证金 Refundable deposits (FSI)1101 交易性金融资产 Trading financial asset 1111 买入返售金融资产 Repo asset purchased1121 应收票据 Notes receivable1122 应收账款 Account receivable 1123 预付账款 Prepayment to supplier1131 应收股利 Dividend receivable1132 应收利息 Interests receivable

Cha

rt of

Acc

ount

©SAP AG 2007, 14

2 – Legal Reporting (National Reporting)

Balance Sheet

Profit & Loss Statement

Legal Reports (China – General):

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©SAP AG 2007, 15

2 – Legal Reporting (National Reporting) (cont.)

©SAP AG 2007, 16

Legal Reports (China – General):

2 – Legal Reporting (Regional Reporting)

Legal Reports in Shanghai for foreign companies (2006):

1. Balance sheet1-1 Provision for Devaluation of Company Assets1-2 Shareholder’s equity change statement1-3 Value-added tax payable detail

2. Income statement and profit distribution2-1 Segment report (by line of business)2-2 Segment report (by territory)

3. Cash flow statement

4. Financial indicator statement

©SAP AG 2007, 17

Legal Reports (China – General):

Legal Reports in Shanghai for foreign companies (2006):

2 – Legal Reporting – Additional Reports

Foreign Currency Statement

Inventory Statement

Fixed Asset and Depreciation Report

Bank Accounts Balance Report

Accounting document journal

Additional Reports based on company requirements:

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©SAP AG 2007, 18

3 – Golden Tax System

The Golden Tax System is a stand-alone system provided by the Chinese Tax Authority

Developed as part of a nationwide computerized monitoring system called the “Golden Tax Project”

The goal: Improve tax declaration control, reduce fraud

All enterprises must pay value-added tax as of the end of 2002

The Golden Tax System can be installed on your company’s premises or at the office of the Chinese tax authority:

Invoices need to be issued, printed, and numbered through the Golden Tax System

A declaration of invoices must be issued by Golden Tax System

SAP covers storage of invoice numbers by default

SAP provides a text file-based interface to the Golden Tax System (as of SAP ERP 2005 EHP3)

Golden Tax: System to crack down on tax fraud and evasion

©SAP AG 2007, 19

3 – Golden Tax System (cont.)

Standard Solution for Golden Tax System (as of SAP ERP 2005 EHP3)

R/3Billing in SAP ERPBilling in SAP ERP

Golden Tax

System

VAT Invoice printing (with a 16-bit character string as a cryptogram)

SAP ERP Golden Tax SystemBilling data (customer, VAT registration number, billing date, invoice amount, etc.) Golden Tax System SAP ERP

VAT invoice number, data export status

©SAP AG 2007, 20

3 – Golden Tax System (cont.)

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©SAP AG 2007, 21

4 – Golden Audit System

One of China’s Government Key Information System Projects, recognized by the China State Department, and a key component of the E-Government project

Project goal:Set up an effective information system to track and audit the finance system, leveraging electronic finance data from key enterprises, banks, custom houses, finance and tax departments, and other organizations

A Golden Audit Interface standard has been in effect since January 1st, 2005:“GB/T 19581-2004 information technology – data interface of accounting software”Provides a standardized mechanism for data exchange between corporate accounting software and the Golden Audit SystemThe China Audit Bureau requires that all accounting software released afterDecember 31st, 2004 be certified for Golden Audit Interface support/compliance

The Golden Audit System is an initiative of the China Audit Bureau

©SAP AG 2007, 22

Golden Audit Interface Details

The interface standard specifies: All data elements of the required data file and its descriptionTwo recognized output data file formats: TXT and XML file 18 data files to be provided (once, monthly or yearly)

500007"其他应收款""元"“20020331”"****公司""会企01表"

29910006"应收账款""元"“20020331”"****公司""会企01表"

900003"应收票据""元"“20020331”"****公司""会企01表"

140630001"货币资金""元"“20020331”"****公司""会企01表"

TXT

File

XML

File

<期末数 gssm:locID="065">300000.00</期末数>

<年初数 gssm:locID="064">0.00</年初数>

<行次 gssm:locID="063">69</行次>

<项目 gssm:locID="062">短期借款</项目>

<货币单位 gssm:locID="061">元</货币单位>

<报告期 gssm:locID="060">20020331</报告期>

<编制单位 locID="059">****公司</编制单位>

<报表编号 gssm:locID="058">会企01表</报表编号>

©SAP AG 2007, 23

SAP’s Golden Audit Interface Solution

DB

SAP Authorities

Data Files predefined according to Chinese GovernmentStandard

RFIDCN18

RFIDCN01

RFCNGAISGolden Audit Frame Report

18

01…

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©SAP AG 2007, 24

SAP’s Golden Audit Interface Solution (cont.)

MonthlyRFIDCN03GL Account Balance Record

MonthlyRFIDCN18Operation Expenditure Detail Report for Non-Profit Undertakings

MonthlyRFIDCN17Undertaking Expenditure Detail Report for Non-Profit Undertakings

MonthlyRFIDCN16Income and Expenditure for Non-Profit Undertakings

MonthlyRFIDCN15Balance Sheet for Non-Profit Undertakings

RFIDCN12-14External Company, Department, and Project Information Files

YearlyRFIDCN11Enterprise's Profit Distribution Form

YearlyRFIDCN10Form of Shareholder's Rights and Interests Changing

YearlyRFIDCN09Devalue Provision of Enterprise Assets

MonthlyRFIDCN08Enterprise's VAT Payable Detail Report

MonthlyRFIDCN07Enterprise's Cash Flow Statement

MonthlyRFIDCN06Enterprise's Income Statement

MonthlyRFIDCN05Enterprise's Balance Sheet

OnceRFIDCN04Accounting Vouchers

OnceRFIDCN02GL Account Master Record

OnceRFIDCN01Electronic Account Book

Output Frequency

Data FilesReports

©SAP AG 2007, 25

SAP Golden Audit Interface Screens

©SAP AG 2007, 26

SAP Golden Audit Interface Screens (cont.)

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©SAP AG 2007, 27

SAP Golden Audit Interface – Product Certification

Requirement: “The Golden Audit Interface of the individual accounting software must be certified by the Conformance Test Center for Information Technology Standards”

SAP is the first foreign software certifiedby the Chinese Electronics Standardization Institute (CESI), a unit under China National Audit Office (CNAO)

©SAP AG 2007, 28

5 – HCM Localization

Project and achievement management

Party affiliation/administration information

Personal file management/business trips abroad

Passport and visa application process handling

Handling central and provincial legal requirements

HR Master Data:

©SAP AG 2007, 29

5 – HCM Localization (cont.)

Social insurance– Pension insurance

– Unemployment insurance

– Medical care insurance

– On-job injury insurance

– Maternity insurance

Public housing funds

Income tax withholding

Off-cycle payroll

HR Payroll:

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©SAP AG 2007, 30

5 – HCM Localization (cont.)

Monthly tax withholding report

PHF contribution

Pension insurance contribution

Medical care insurance contribution

Unemployment insurance contribution

On-job injury insurance contribution

Maternity insurance contribution

HR Reporting:

©SAP AG 2007, 31

6 – Chinese Language Support

GB-18030

New Chinese code page standard that extends GB 2312-1980 and GBK

Encoded using 1-byte, 2-bytes, or 4-bytes Created as an update of GBK for Unicode 3.0

Mandatory for software released on or after September 1, 2001

Unicode-based SAP components fulfill the GB18030 requirements

SAP ERP is translated into Simplified Chinese

Recommendation:Maintain English and Simplified Chinese as system languages to ensure access to information by local and central users

Additional legal considerations

Wrap-up

Overview – Rolling out SAP in China

Localizing your system for China

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©SAP AG 2007, 33

In China, Your Accounting System Must Be Approved

Used to be required based on regulation from the Ministry of Finance (MOF)

The approval shall apply to all companies in China who use computer-aided accounting software to replace the manual bookkeeping

The criteria for approval varies from your registering location

Approval of computer-based accounting system:

©SAP AG 2007, 34

How to Get Approved …

Check with your local tax/finance advisor whether you need the approval process or not

If yes, get the checklist from local tax/finance authorities

Send a message to SAP under XX-CSC-CN if there is a technical limitation in your SAP system that must be addressed to completethe approval process

©SAP AG 2007, 35

According to article 8 in “Accounting archive retention regulation,” effective for all registered companies in China:(“Accounting archive retention regulation” 1998[32] release 08/21/1998 effective 01/01/1999 )

5Bank Clearing record

5Bank Journal balance adjustment

ForeverArchiving deletion record

ForeverArchiving record

15Accounting hand-over record

Others

Including comments ForeverYear-end report

Including comments3Monthly/Quarterly reports

Including consolidation reports in different levelLegal reports

15Supplemental ledger (Controlling)

5 years after disposalAsset record

25 years for Cash and Bank Journal15Journal

15Sub ledger

Including journal ledger15General ledger

Accounting book

15Collective documents

15Financial documents

15Original documents

RemarkStorage (year)Accounting documents

Document Storage: Retention Requirements

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©SAP AG 2007, 36

Is It Necessary to Keep Your SAP Server in China?

Although this is frequently suggested by local advisors, you do not have to locate your application server(s) in China

However the original documents and financial records should be printed in Chinese and archived on premises in China

Additional legal considerations

Wrap-up

Overview – Rolling out SAP in China

Localizing your system for China

©SAP AG 2007, 38

Resources

Country pagehttp://service.sap.com/globalization *– You are here → country information → China– You are here → country information → Global knowledge base

http://service.sap.com/hrcn *

Country version documentationhelp.sap.com → drill down into SAP ERP ECC → Cross-Application Components → Country versions → Asia Pacific → China

Country-specific noteshttp://service.sap.com/notes * Components: XX-CSC-CN, PY-CN

SAP China Web sitewww.sapchina.com/

* Requires login credentials to the SAP Service Marketplace

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©SAP AG 2007, 39

China Country Version Documentation

©SAP AG 2007, 40

China Country Version Documentation (cont.)

©SAP AG 2007, 41

China-Specific SAP Notes

Note 192898 Invoice management and printing in ChinaNote 841618 China Golden Audit Interface: New legal requirementNote 878499 China Golden Audit Interface: Required customizingNote 903320 Accounting Data Check in Shanghai, China

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©SAP AG 2007, 42

China-Specific SAP Notes (cont.)

Note 807595 China individual income tax legal changeNote 989777 China PHF (public housing fund) Taxable Amount CalculationNote 922135 China Stock Options Income Tax Calculation

©SAP AG 2007, 43

http://service.sap.com/globalization *

* Requires login credentials to the SAP Service Marketplace

©SAP AG 2007, 44

http://service.sap.com/globalization * (cont.)

* Requires login credentials to the SAP Service Marketplace

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©SAP AG 2007, 45

http://service.sap.com/globalization * (cont.)

* Requires login credentials to the SAP Service Marketplace

©SAP AG 2007, 46

http://service.sap.com/globalization * (cont.)

* Requires login credentials to the SAP Service Marketplace

©SAP AG 2007, 47

http://service.sap.com/globalization * (cont.)

* Requires login credentials to the SAP Service Marketplace

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©SAP AG 2007, 48

http://service.sap.com/globalization * (cont.)

* Requires login credentials to the SAP Service Marketplace

©SAP AG 2007, 49

7 Key Points to Take Home

SAP has delivered a standard Country Version for China since SAP R/3 3.1, covering country-wide legal requirements

Plan to have to install Simplified Chinese, and to spend most of your time customizing your invoicing to interoperate with the Golden Tax System

Another big implementation item is preparing to print documents and financial reports in Chinese for use by employees and auditors

Your SAP system is certified to be compliant with the Golden Audit Interface, but your specific interface requirements will depend on your business scope, industry, and type of company

– Check with your local legal and tax offices for provincial differences in legal requirements

If you have operations in Hong Kong (SAR) or Taiwan, consider using SAP’s localized versions for Hong Kong, Taiwan, as well as ‘Traditional Chinese’

©SAP AG 2007, 50

7 Key Points to Take Home (cont.)

You do not have to locate your application servers in China, butoriginal documents and financial records should be printed in Chinese and archived on premises in China

SAP is monitoring China legal standards, and changes will be supported as new laws are issued that affect existing functionality

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©SAP AG 2007, 51

Your Turn

Yan Zhao

Globalization ServicesT +49 6227 7-46897F +49 6227 78-48020mailto: [email protected]

Stefanie Schuetz-Tschiersky

Globalization ServicesSAP AGT +49-(0)6227-7-41751F +49-(0)6227-78-36736mailto:[email protected]://service.sap.com/globalization

Any further Questions?

©SAP AG 2007, 52

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