Michael Chiao came from a background of providing ERM solutions to businesses in China. In 2014 he co-founded MEGI. This is a company providing online cloud accounting software in China which makes it easier for businesses to manage finances digitally. What sets MEGI apart from competitors is the beautiful and functional design of their platform. They offer their services on a SaaS basis. Currently, they have around 1,000 clients and are growing steadily but slowly.
Listen to the full China Paradigm episode 113 on Youtube, Apple Podcast, Spotify, Soundcloud, or Ximalaya.
Why is MEGI useful to businesses in China?
One of the main features available on their platform is that they offer is bank reconciliation for businesses in China. The process of reconciling the info on the company’s cashflow sheet with the info in its bank account statements can be especially difficult and troublesome for small and medium sized businesses in China. Also, banks in China are less willing to go to the effort to make it easier for small and medium sized businesses to access services like this. This is where MEGI can provide key competitive advantages to companies who use their cloud accounting software in China. Their clients can download bank statements and upload it onto their MEGI platform where it is immediately synchronized. Practices such as cloud accounting allow businesses to take a more scientific approach to management and over time these time savings will allow the business to focus more on the areas that add value to their business.
“Our most popular features depend on the sectors the companies are in. But bank reconciliation for businesses in China is maybe one of the most popular features because it allows businesses to track credit and debit and the money coming in and out of their business. Also, we give them digital fapiaos which are very necessary in China. Banks in China don’t have very good digital infrastructure. We have beautifully designed accounting software platforms and this makes it easier for businesses to deal with Chinese banks. They can upload the excel sheets that banks send them directly onto our system. Sometimes banks will accommodate very big businesses in China with these kinds of solutions but for most small businesses this level of automation is still unaffordable. However, our beautifully designed accounting software platform makes this process very streamlined and easy and you can download and upload your bank statements within 2 minutes. This helps them to be better at tracking their cashflow, making sure they collect money and pay what they owe in time.”
Michael Chiao, the co-founder of Megi Cloud Accounting Software
What is the current state of the market for cloud accounting software in China?
So far, Michael believes that Chinese businesses have been slow to adopt cloud solutions for a number of reasons. One of them is that employing cloud accounting tools means their businesses’ transactions will become more transparent. This is not good for companies who are engaging in tax evasion, something Michael feels is extremely common in China. Another reason why 90% of clients are foreign companies is that he believes the business culture in Western countries is more scientific-based whereas bosses in China prefer to keep the company’s financial details in their heads. Another possible reason Michael believes can explain why Chinese businesses lag behind their Western counterparts in terms of adopting accounting software is that the rapid growth of the Chinese economy has meant that companies focus more on sales, business development, and client acquisition rather than on perfecting their products or smaller processes within the company which lead to greater efficiency.
However, Michael feels this is changing. More and more of his clients are companies managed by Chinese nationals who were born post-1980 and were educated and or have work experience in the Western business culture. These young professionals are represented across almost every kind of industry in China and they are bringing the scientific approach to business management that they learned abroad back to the companies they now manage in China. Another instigator for change has been policies enacted by the Chinese government taken in order to combat the widespread problem of tax evasion. These reforms make it harder for businesses to not declare earnings and when this possibility is removed the lure of accounting software increases for businesses in China.
“Although most of our clients are foreign companies. We have definitely seen a trend of domestically managed and owned businesses adopting our cloud accounting software in China. There are some patterns here, a lot of these young managers now have experience in the Western business culture and environment and they bring back the same culture to China which I think is a good thing. Also, because of government tax reform, it is getting harder and harder to evade tax.”
Michael Chiao, the co-founder of Megi Cloud Accounting Software
Another benefit of adopting his cloud accounting software in China is that the company’s financial information being managed by a recognized software system makes the process of applying for business loans easier a few years down the line.
In the SaaS industry listening to your customers is the main motivator for software updates, however, adopting every single feature your customer wants can also be troublesome when you have hundreds of clients across many different industries. In the case of MEGI, they will not create features that compromise the beauty, simplicity of use, and streamlined nature of their platform. However, they have a network of partners and they can generally find a suitable developer for any solution which can then incorporate its data back into MEGI’s system.
One thing that Michael feels has been holding back the development of cloud accounting software in China and indeed at MEGI is the lack of world-class accountants looking for solutions to problems from a company specific point of view.
Listen to the full China Paradigm episode 113 on Youtube, Apple Podcast, Spotify, Soundcloud, or Ximalaya.
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