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This case study examines whether an activity-based costing technique can be successfully implemented in a Chinese organisational setting and how such information can be used effectively to support Chinese management decision making.

Key findings:

• This ABC model is used to capture direct costs and variable overheads, which were lacking in the SOE’s traditional costing systems.
• The ABC experience has successfully induced standardisation in their working practices and processes. Standardisation was not a common notion in Chinese culture or in place in many Chinese companies.
• ABC also acts as a catalyst to Xu Ji’s IT developments – first accounting and office computerisation, and later the ERP implementation.
• The common ‘top-down’ management style and organisational culture among SOEs worked well when instigating innovative ideas and inducing corporate-wide  learning.
• Top management’s commitment to trying out new management ideas and investing in new technology has been the unique feature in this research organisation.

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