In this undated photo, Li Dong, CFO of Ximalaya FM, shares insights on his journey as a CFO at a sharing session at CFO Salon. (PHOTO PROVIDED TO CHINA DAILY)
Li Dong’s story is one of steely resolve and success.
He worked at KPMG for seven years, completing his MBA at Northwestern University’s Kellogg School of Business, before spending more than 5 years in the investment banking department of Merrill Lynch. In early 2015, he left the investment bank and began his journey as a CFO.
At the second season of CFO Salon in February last year, Li, CFO of Ximalaya FM, was the first guest invited to share insights into personal growth, group development, capital operations and hands-on experience.
CFO Salon began in August 2014 with the publication of the book CFO in China. In the first season, it held 12 sessions, inviting CFOs from leading companies such as State Development and Investment Group, Three Gorges Group, Shenhua Group and Didi Chuxing to share their views on industry trends and investment opportunities. The second season focused more on chief financial officers in new economy.
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A CFO needs to have a profound understanding of the industry and to be able to predict and detect problems in the company's operations, said Li Dong, CFO of Ximalaya FM
PERSONAL EXPERIENCE
At the salon attended by third-party professionals as well as executives of listed corporations, Li's personal experience was a typical case of a CFO in the new economy.
While working with KPMG Beijing, he participated in KPMG's first US stock listing project and went through the whole process of listing. He worked with three CFOs of the client company in the project, and started to feel that a CFO's career is very exciting.
Li was later assigned to KPMG's Silicon Valley office. While working overseas, the Tsinghua Institute of Management required him to study Canadian certified public accountancy in English, so that he can handle professional work in the United States. He also deeply felt the lack of profound understanding of Western business culture while working overseas. Eventually, he made up his mind and applied for an MBA degree at Northwestern University in Chicago.
After completing his MBA studies, Li joined Merrill Lynch in Hong Kong, where he worked for about six years and gathered extensive experience in capital operations and public offerings. The year 2015 was the booming period of China’s new economy. Driven by capital and technology, a large number of startups grew rapidly and actively sought investors in the capital market. To take the opportunity, Li left the investment bank and started a career as a CFO.
On March 2, 2018, when Elite Education was listed in the US, Li was the company’s CFO. To him, it is an unforgettable experience to serve as an executive of a company, especially a CFO, playing a key role in the IPO process. And Li has a vivid metaphor for it: an IPO is more like a wedding to the founder, and a CFO, who promotes the integration of capital and enterprise, needs to fully prepare it for the wedding.
After leaving the investment bank, Li served as CFO for Coworth Robotics, Beijing Paige Media and Shanghai Elite Education before joining Ximalaya FM as CFO in September 2019. His profession as a certified public accountant, as well as his experience in investment banking, have undoubtedly laid a solid foundation for his CFO work. The complexity of a CFO’s work has brought him new challenges and exciting moments as well.
EXPERIENCE & ADVICE
From his five-year experience as a CFO, Li summed up five insights:
Industry understanding: A CFO could better combine the company's business and capital market only if he or she has a deep insight and forward-looking judgments in the industry. Recalling his days at Coworth Robotics, he said Chairman Qian Dongqi used to emphasize that a CFO should focus on understanding the industry and market, the trend of technological development, and offer timely recommendations in line with the latest developments in the capital market and about competitors. By analyzing what products are pivotal, the company can determine its technical strategy and combine it with capital operations. The core technology can be developed by the company itself while others can be obtained through mergers and acquisitions.
A CFO must prepare multiple solutions for each important event and should not be over optimistic, no matter whether it’s financing or other important decisions, said Li
Understanding the firm’s business: A CFO needs a profound understanding of the industry, and to stay alert to its business and financial data is essential. While working in elite education, he and the CEO had to review financial data every week, not only to grasp the changes and business trends but also to analyze the reasons behind changes. The CFO needs to find the quantitative relationship between causes and performance for more granular management in the future, according to him.
Data-based solutions: A CFO has to be able to predict and detect problems in the company's operations. As a member of the core management team, the CFO has to retain and manage certain corporate resources, while keeping a close focus on financial data. He or she not only has to identify problems and review analysis, but also possess stronger leadership to propose solutions and implement programs to drive change.
Management and communication skills: Internally, the expectations of the CEO and his team need to be managed. Externally, the expectations management of shareholders and potential investors are required. Management during mergers and acquisitions is also critical. The same facts have to be communicated differently with different stakeholders.
Mobilizing internal and external resources: From long-term cooperation with third parties, a CFO has access to a lot of core resources, such as investment banks, accountants and lawyers, shareholders and investors. He/she has to mobilize and coordinate the relevant resources effectively from the perspective of business development. In addition, a CFO has to learn continuously. A CFO’s job responsibilities refer to accounting, financial analysis, budget management, tax planning, internal audit and internal control, investment and financing, investor relations management etc.
BECOMING A GOOD CFO
Li has several advices for becoming a good CFO. While choosing a company, pick a good business, a leading company in a niche industry – preferably the top three industries – and, more importantly, a good team, he said. A CFO generally reports to the chairman or CEO. Having similar values and interests to that of CEO will help build up fundamental trust and make long-term cooperation more efficient.
A CFO must prepare multiple solutions for each important event and should not be over optimistic, no matter whether it’s financing or other important decisions, he said.
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According to Li, a CFO has to take a deep look into a company's operation to have a good understanding of the business. Financial statements sent to executives might be relatively distorted and only with a deeper understanding of the business one can identify gaps and problems between data and real business, which may possibly cause risks.
No matter how bullish a company is, how high the market value it has, if the cash flow is cut off, there will be a crisis. In particular, while a company is developing, the CEO has a strong incentive to expand continuously. The CFO has to act as a good gatekeeper, ensuring that the company has adequate cash reserves, he said.
It is very important for a CFO to coach the team and build a talent ladder. It is impossible for an individual to do everything perfect, without effective support of an excellent team, according to him.
In a company, whether it is based on accounting standards or auditing standards, there is a certain degree of flexibility with financial reports. While the company has to present the best side of its business, it must stick to the bottom line, ensuring its cash balance and cash flow statement – at the same time. This is crucial for a CFO and a company's success, said Li.
