now loading...
Wealth Asia Connect Middle East Treasury & Capital Markets Europe ESG Forum TechTalk
Rising Asian corporates champion treasury optimization
The Asset 31 Mar 2015

As the world's fastest growing region, Asia is only expected to in time produce its share of world-class corporate champions. China, by the sheer size of its economy, is where a number of these champions reside. In the past years, as these corporate titans break out of the home market, they also are streamlining their treasury and finance activity to optimize their working capital.

 

In 2014, these corporates enjoyed an added fillip when China decided to further liberalize two-way movement of the renminbi marking the start of integrating the once isolated China treasury into offshore cash pools. It is no wonder Hong Kong is pushing to reinforce its position as a corporate treasury centre especially targetting Chinese companies as they build their international activity.

 

Among these champions Huawei, the Shenzhen-based telecoms company with global sales in excess of US$46 billion, was quick off the mark. Realizing the market opening moves would continue into the future, it worked with Standard Chartered to migrate its treasury centre from Singapore to Hong Kong and to customize a multiple currency notional pool structure for its new operations in Hong Kong.

 

Global logistics and supply chain conglomerate Li & Fung, which reported 2014 sales of US$19.3 billion, also tapped Standard Chartered to help it set-up a Pan-China renminbi cash pool and renminbi cross-border two-way sweeping solution through the group's entity registered in the Shanghai Free Trade Zone (SFTZ). The goal was to improve cash efficiency and reduce transaction costs.

 

Multinationals were of course also in the renminbi picture as well. Citi for example advised Pentair in establishing an automated renminbi sweep through the SFTZ. It was the world's first automated renminbi sweep between China and a global multi-currency notional pooling structure in London. Roche also worked with Citi to implement a cross border renminbi liquidity management solution including automated pooling, pay on behalf of/receipt on behalf of (POBO/ROBO) and netting structures.

 

Nokia China sought the services of Standard Chartered to centralize the payments and collections of their Chinese entities by using the bank's e-channel. The end result was significant cost savings for the company which previously had to pay expensive account maintenance and MT940 fees.

 

The increasing acceptance of the renminbi is underscored by the decision of the Bosch Group, one the world's largest supplier of technology and services with about 281,000 employees, to establish a renminbi platform. Working with Deutsche Bank, Robert Bosch GmbH decided to switch its inter-company payments from US dollars to renminbi starting with selected subsidiaries. It eventually should be able to invoice in renminbi including outside China. Bosch is then able to enjoy a natural currency hedge.

 

Even lesser known Chinese corporates were part of the renminbi action. Zhejiang Longsheng and Baoxin Auto Group established renminbi cross-border two-way sweeping structures last year. Shanghai Electric Group partnered with Citi in establishing an automated two-way cross-border foreign currency cash pool. Chinese state-owned company Wuhan Iron and Steel established the first domestic US dollar physical pooling scheme in Hubei Province working with Standard Chartered.

 

On the trade side, what was notable was the rise of insurance-backed supply chain finance. Beijing Construction Engineering Group, working with Deutsche Bank, established a Sinosure-backed cross-border receivables purchase programme.

 

DBS, capitalizing on the growth of intra-Asian trade flows and its business in China/Hong Kong, helped Xing Ye Group, a Chinese commodities trader, to structure a flexible back-to-back L/C in the offshore market, which led to financing cost reduction while extending the loan tenor.

 

The Asset will host an Oscar-style gala awards dinner on April 30 2015 at the Four Seasons in Hong Kong to honour the best transaction service providers and the solutions they jointly crafted with their corporate clients.

 

View the winners of The Asset Triple A Best in Treasury, Trade and Risk Management in North Asia by clicking here.

 

Overview of The Asset Triple A Treasury, Trade and Risk Management Awards 2015

 

 

To attend the gala dinner, please contact:
 
Winnie Cheung
[email protected]
Telephone +852 2165 1616
Conversation
Lucita Jasmin
Lucita Jasmin
director for sustainability & external affairs
APRIL Group
- JOINED THE EVENT -
5th ESG Summit
Swinging into action
View Highlights
Conversation
Alex Kim
Alex Kim
CEO
Upbit APAC
- JOINED THE EVENT -
Webinar
The future of digital assets
View Highlights