SAIC - State Administration of Industry and Commerce.
Recently, there is a lot of discussions regarding SAIC and financial reporting.
SAIC is primarily a bureau for business licenses and license enforcement. It has a few other responsibilities, all are derived from this core. Many ordinary Chinese become aware of SAIC when its inspectors, in police style uniform, parade into a busy market to confiscate the properties of unlicensed street peddlers, or inspect stores for counterfeited goods. SAIC also has joint responsibilities with other agencies on enforcing food safety law, and advertising law. Manufacturing and selling counterfeited goods and unsafe food, and as well as false advertisement are considered violating the spirit and terms of one's business license, and could result in fines, and even termination of the license.
SAIC, however, is not responsible for financial reporting. State Administration of Taxation is responsible for taxes, and State Security Regulatory Commission is responsible for financial reporting and compliances of publicly traded companies. State Administration of Statistics are responsible for macro economic reporting. Those three are different agencies from SAIC.
SAIC is not ran by accountant, and therefore does not check into the financial numbers of a company. However, companies file their numbers there to show they have a viable business so business license can be renewed. Since license requirement is pretty low, a lot of companies file some minimal, or a subset of their numbers, using independent filing agents in many cases. This has been common practices in China. This practice is not encouraged but is tolerated. In addition, a company's filing is not consolidated, nor does it need to, since each location needs its own license from local SAIC authority to operate.
I had one personal experience dealing with SAIC. Once I helped establishing a company in China. When registering for business license, we were required to report a "registering capital" of the new company to SAIC. Registering capital is basically another term for committed initial investment. It should be certifiable, for example, by checking into new company's bank account at the time of certification. Since it may takes months for SAIC administrator to visit the company, we decided to report a much smaller number (1/5 of the total investment) to SAIC. Reasons: 1) The smaller number is more than sufficient for the type of company we were registering, 2) SAIC administrator could come anytime to "certify" the capital, using the full amount means that we can not use or move money around, essentially freeze our cashflow for months, 3) Business license could be denied for insufficient "registering" fund but there is no harm when actual amount is larger.
Downside of this approach - Just imaging that the CEO of the company talks to a group of potential clients, and states that the company is financially viable because of the $xx millions of investment. A competitor raised its hand and said: "I checked into your SAIC number, your investment is just 1/5 of what you said. You would bankrupt in 8 months."
