The View from Asia

An understanding of international best practices for the CFO has coincided with the rise of Asia's two new miracle economies: China and India.

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When CFO magazine launched its Asian edition 13 years after it began publication in the United States, Asian finance executives, we thought, were ready for the ideas that were altering the job in America.

The venture was well timed. That year, 1998, marked the low point following the collapse of several Asian economies in 1997. Our first cover story, “Life During Wartime,” told the compelling tale of a CFO trying to work out how to fix or dispose of the various companies in a major conglomerate. As star players in this kind of emergency cleanup operation, financial managers in Asia were suddenly invested with a new kind of clout.

In 1985, as CFO began to roll off the presses in America, the Japanese model was ascendant, and widely held to be the way of the future. This model, which championed the virtues of efficient production and scale, was supported by interlinked shareholding relationships that often included banks. In the 1990s, these cozy relationships with banks underpinned the Miracle-Gro expansion of Southeast Asian economies. CFOs at the time, if they even bore the title, functioned more as pliable accountants than as stewards with an independent brief to safeguard shareholder value.

In the aftermath of 1997, the excesses inherent in this system have vanished. In their place, international best practices for the CFO are starting to be seen as desirable. They help companies differentiate themselves through better internal corporate governance, and thus help them attract global capital. This development has coincided with the rise of Asia’s two new miracle economies: China and India. The hope is that the CFO’s evolution, begun in the difficult year of 1998, has become part of Asia’s corporate DNA and will provide a reasonable check on the failed “models” of the past.

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