Global Expansion Pain: How can foreign companies find balance and solve management conflicts in China?

Faced with China’s vast consumer market, more and more foreign companies are considering it as one of their important strategic locations. However, in the face of globalization, the pain points in foreign enterprise business management are very obvious, which makes managers in China very anxious. For example, foreign headquarters need to cope with complex global environments and industry specific functions, while foreign subsidiaries in China pursue simplified operations, standard practices, agile transformation, easy expansion, and integration with headquarters. The demand for differentiation often leads to huge conflicts. The headquarters emphasizes neat and unified standardized management, and foreign subsidiary companies in China need agility and high flexibility to significantly improve business efficiency. How to coordinate and balance the contradictions between foreign headquarters and subsidiary companies in China? Today we are seeking a dual tier ERP solution for balanced management of foreign enterprises entering China.

Common pain points in the development of foreign enterprises entering China

Foreign enterprises have significant pain points in their global expansion. There are frequent conflicts between the headquarters of foreign enterprises and subsidiary companies, such as data standardization and customization requirements, control and autonomy, process complexity and simplified operations, etc. For example, foreign headquarters pursue data standardization to maintain global consistency, while subsidiary companies require localized data customization to adapt to market differences; The headquarters of foreign enterprises hold control, while subsidiaries crave greater autonomy, leading to decision-making conflicts; The subsidiary needs to quickly implement the plan and integrate with the headquarters system to form a compromise between speed and completeness. These conflicts reveal the conflicting needs of foreign enterprises at different levels and require targeted solutions.

How to Solve the Anxiety of Foreign Enterprise Managers Entering China? Double layered ERP strategy

In response to the contradiction between the headquarters and branches of foreign enterprises, many foreign and global enterprises generally adopt a dual ERP strategy to address management anxiety. The dual tier ERP strategy is to adopt a standard enterprise system provided by suppliers at the headquarters of foreign enterprises, while foreign subsidiaries implement personalized ERP systems that are tailored to their own needs, in order to establish a dual tier ERP environment.

However, with the emergence of the digital wave, the limitations of traditional double-layer ERP architecture have gradually become apparent. This architecture limits the flexibility of the enterprise and hinders innovation, cost control, and operational efficiency improvement. Foreign subsidiaries are increasingly in need of higher level functionality and innovation support, while the limitations of traditional double-layer ERP architecture become apparent. In this context, finding a more suitable strategic path in the development of globalization has become an urgent task.

SAP S/4HANA Cloud is the most advantageous solution to the pain points of dual tier ERP for foreign enterprises

Nowadays, whether it is the entry of foreign enterprises into China or the process of enterprise globalization, more and more enterprises are choosing SAP S/4HANA Cloud as a significant solution for solving the pain points of traditional double-layer ERP architecture. Compared to traditional single operator dual tier ERP architecture, SAP S/4HANA Cloud brings significant dual tier ERP advantages:

● Cloud growth engine: SAP S/4HANA Cloud is easy to implement, does not require expensive infrastructure, and reduces IT costs. Its excellent user experience and regular updates keep the enterprise ahead;

● Support for subsidiary growth: SAP’s dual tier ERP solution provides comprehensive business functions, flexible digital platforms and technologies, helping subsidiaries better compete in the local market. System-driven insights guide decision-making, leveraging SAP best practices to drive process consistency and operational efficiency.

● Leveraged competitive advantage: Through the dual tier architecture of SAP S/4HANA Cloud, enterprises can provide cost-effective and consistent company services to their subsidiaries. The manufacturing and distribution strategies of central branch offices reduce costs, and implement company wide digital models and strategies in subsidiary companies;

● Strengthen governance and control: SAP’s dual tier ERP architecture solution enhances subsidiary management transparency, provides profitability and cash flow visibility, supports standardized financial and business processes, and ensures company control, governance, and compliance with local tax regulations.

In the context of sustained globalization, foreign enterprises entering China must be prepared for growth. The dual layer ERP architecture of SAP S/4HANA Cloud provides excellent support for complex business processes of foreign enterprises, including other globalized enterprises, and is a powerful choice for enterprise transformation.

I would like to learn more about how foreign enterprises can effectively address pain points such as entering China, achieve a balance between headquarters and subsidiary companies, and how to help our enterprise achieve efficient cluster management through leading dual tier ERP strategies, such as the dual tier ERP architecture solution brought by SAP S/4HANA Cloud, which is conducive to the independent flexibility and local compliance of subsidiary companies. Click on the link below for more dry goods and professional support.

SAP S/4 HANA Cloud

This article "Global Expansion Pain: How can foreign companies find balance and solve management conflicts in China?" by AcloudEAR. We focus on business applications such as cloud ERP.

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