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Foreign investors with subsidiaries in China may be concerned about the efficiency, compliance, and overall direction their overseas companies are heading towards. Therefore, conducting an internal audit and performance review can provide the necessary tools for foreign investors to better understand their business in China.
Internal auditing can be effectively defined as an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. Unlike an annual external audit, which attempts to ensure the statutory compliance of a company, an internal audit is generally not compulsory for small, private companies. Nevertheless, analyzing and improving the specific management processes within a firm and other functions of a company can significantly enhance both its financial and non-financial performance, as well as ensuring compliance with the local (ever-changing) tax and accounting laws and regulations.
An internal audit conducted by third party professionals can add more value for the company operations compared with attempts to conduct a self-conducted internal audit. Internal auditors possess the set of skills and experience and are in an independent position to issue opinions about a business.
Businesses that often face the following circumstances are especially advised to hire professional internal auditors:
– Consistent overhead costs, irregularities in the financial reports, and unsatisfactory performance;
– Difficulties in communication between the parent company abroad and its subsidiary in China;
– M&A deals that require the assessment of the company;
– Key personnel changes;
– Fraudulent activities have been identified.
An internal audit adds value for both SMEs and large multinational companies by identifying weak areas in their early stages through the experience of a professional internal auditing firm. At PHC Advisory, our experts can provide the necessary support in the provision of such services. Please, feel free to contact us at info@phcadvisory.com to know more about us and how we can assist you.
Recent court rulings in China have established that artificial intelligence replacement is not a legitimate reason to terminate employees, thus imposing a critical balance between technological advancement and labor rights protection. The legal principle emerging from such cases sends a clear signal to both domestic and foreign enterprises: automation cannot become a shortcut to bypass
China's economy delivered a robust start to 2026, with gross domestic product expanding 5.0% year-on-year in the first quarter to 33.42 trillion CNY (approximately US$4.9 trillion), according to data released by the National Bureau of Statistics (NBS) on April 16. The growth excedeed market expectations of 4.8% and accelerated from 4.5% in the previous quarter.
China's economy in 2025 achieved its official growth target of around 5%, but the underlying trajectory showed clear deceleration and structural imbalance. Quarterly GDP growth slowed from 5.4% year-on-year in Q1 to 4.5% in Q4, reflecting weakening domestic demand even as external and industrial sectors remained relatively resilient. Across the year, a consistent pattern emerged:
