In my previous articles on the changing role of Finance, there were mentioned about finance’s business partnering with other operating managers, the importance to emulate certain traits of world class finance team, seeking and improving performance metrics like cash conversion cycle and many others.
Today’s article reported in The Star pertained to an actual successful Malaysian, Mr.Tan Wee Seng who was named The Most Outstanding CFO in China last year. He is the CFO of Hong Kong-listed Li Ning Co Ltd, a Chinese sportswear.
 

Before we proceed let’s have a brief background on Li Ning Co Ltd:

“The maker of sporting products, a Beijing –based company was founded by the Olympics gold medal winner Li Ning, is now listed on the Hong Kong Stock Exchange (HKSE) with a market capitalization of HK$7.5bil. Li Ning shares were floated in June 2004. The counter is a component stock of the benchmark Hang Seng Composite Index and a constituent stock of the MSCI China Index Series. The revenue and net profit have grown by leaps and bounds over the last three years. Last year, revenue surged 30% to 2.45 billion yuan (RM1.1bil) while net profit jumped 52% to 186.8 million yuan (RM85.4mil).”

To pursue company’s excellence Tan’s since joining the company in January 2003 has:

• Managed to push through new management concepts and eliminate the “emperor-led” management style that had taken root in the company for years.

• He introduced corporate culture of integrity and the practice of corporate governance and transparency;
  

• Improved cash conversion cycle like inventory control and the shortening of the debt collection period to strengthen the balance sheet and enhance shareholders’ value. One typical example is the clearance of unsold stocks that were gathering dust in the warehouse even at a discount price and hurting the bottom-line. He managed to recover 30 million yuan from the old stocks and reduced the inventory cycle to 86 days from 164 previously.  

• Managed a dividend pay out of 100 million yuan prior to the listing exercise

• Tan kept Li Ning’s net profit margin just between 7% and 8% to pursue spending brand building and research and development. This is to pave the way for future growth. 15% to 16% of the revenue were allocated for brand building and 3.4% of the cost of sales for research and development. Due to the stepping up of product development and brand building, the company’s products gained popularity, was ranked as one of the favourite local brands by national broadcaster China Central Television last year. 

The above bore facts that the role of finance is towards increasing shareholders value. The ability to convince and persuade top management, Board of Directors and fellow operating managers will definitely be part of the ingredient of success of a good CFO.

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