Guiding the GE Asia treasury into a new era has been the challenge of a lifetime for Vincent Liu, Asia Commercial Treasury Leader at GE. In this article he details how he has redefined the role of treasury within the organisation – and why a combination of people and technology has been key to his success.
Asia Commercial Treasury Leader
Operating in approximately 180 countries, General Electric (GE) is a diversified infrastructure and financial services company well on its way to transforming into a digital industrial company. The company’s products and services range from aircraft engines, power generation and oil and gas production equipment to medical imaging, business financing and other industrial products.
When Vincent Liu, Asia Commercial Treasury Leader at GE, is riding his motorbike on the dirt roads of Vietnam or through the foothills of Nepal, his mind is far from the world of corporate treasury. Travelling on the unkempt roads and taking in all the sights and sounds requires a complete focus on the road ahead.
Back in the office, Liu approaches corporate treasury with a similar focus. For Liu, treasury should be a business enabler which supports the organisation in reaching its strategic objectives. To achieve this, he believes that treasury professionals must approach the role with a sense of adventure and a willingness to explore all available routes.
Liu has certainly required a sense of adventure since taking the helm at GE Capital treasury in Asia in 2013. The company has undergone a monumental shift, pivoting away from financial services to become a digital industrial company.
This shift is not just redefining the company; it is also redefining the role of treasury. As a result, Liu’s role has changed considerably in recent years. As he observes: “Today I am a change manager as much as a treasurer.”
Indeed, right from the first day he joined GE, Liu was tasked with spearheading the regional treasury transformation journey. The objective, he explains, is to create a “smaller, nimbler and more impactful treasury that can better support the organisation and its customers as it enters a new era”.
To achieve this goal, the team has completed many significant projects under Liu’s watch. These include the creation of a pioneering cross-border liquidity structure, implementing a single platform solution for all FX payments, enhancing working capital efficiency and creating a centralised transaction processing centre.
In isolation, each project is impressive. But for Liu, it is the collective value of these projects that really makes the difference. “These changes have forged a contemporary treasury organisation that is integrated into the core of GE’s business operations,” he says.
Linking up and down
In addition to working on projects to give GE treasury the tools needed to support the business, Liu has also adjusted the organisational structure of the treasury so that it better matches GE’s regional commercial aspirations. “We have taken steps to localise the treasury in the region,” explains Liu. “This includes putting treasury staff on the ground in our high-growth markets of China, India and the ASEAN region. They can then work closely on the ground with the businesses, moving at the speed required to win deals.”
These individuals also help elevate the profile of treasury amongst GE’s business units, something Liu has been keen to do since taking leadership of the team. This has proved vital in ensuring that the role of treasury is not just understood but appreciated, as well as helping to align the department with the goals of the business.
“One of the challenges of corporate treasurers is managing the downstream impact from banks as they need to invest to meet their regulatory requirements.”
“It is vitally important for businesses to understand the interlinkage between margins, cash flows and balance sheet usage, but how to convey that understanding is the key. Merely throwing around jargon on capital, liquidity and risk management may put business leaders to sleep,” Liu says. “A much more productive way is to understand their business objectives and explain how treasury can deliver the desired commercial outcome.”
Along with keeping his finger on the pulse of what is happening across all regional markets, Liu is equally keen for Asia treasury to be close to the head office in Connecticut in the US with daily phone calls and email exchanges. “It is just as vital to be linked up with the head office as it is to be in tune with local markets as they guide the overall strategic direction of the group,” he says. “We must remain a unified organisation around the world.”
Gearing up for the challenge
Liu admits that the transformation project has been – and continues to be – challenging, not least because the changes are taking place while the company continues to operate at full capacity. “It is a bit like fixing a car whilst it is travelling at 70kmph,” notes Liu. He is not complaining though. Liu thrives on challenges like these, which is one of the reasons why he decided to pursue a career in treasury.
Like many treasurers, Liu began his career as an accountant. “This was an easy decision for me,” he says. “I wasn’t very good at arts or science so there were not too many choices left.” In his first role, Liu primarily focused on tax, business consultancy and some auditing. “This gave me a very strong foundation in finance, in understanding balance sheets and how different businesses make and lose money,” he adds.
After learning the ropes, Liu says he came to a crossroads in his career. When evaluating his options, he decided to pursue a career in treasury. “I picked treasury because it leverages the accounting knowledge,” he says. “But unlike accounting, treasury also matched my desire to play a significant role in governing the direction of the business.”
Prior to joining GE, Liu spent just under 20 years working in the banking treasury, primarily at Morgan Stanley as a regional treasurer. When quizzed on the main difference between working in a bank treasury compared with corporate treasury, Liu chuckles with one key difference. “I don’t wear a tie at GE,” he jokes. “And we can see with our very eyes what we are financing since we manufacture them.”
Attire aside, Liu notes that there are some subtle differences between corporate and bank treasury though. One is the pace of work, due to relatively shorter business cycles in banking. Another is the time spent in bank treasury, focusing on regulatory compliance with rules such as Dodd-Frank and Basel III. “Corporate treasurers deal with these regulations as well, but it is less onerous on this side of the fence,” says Liu. “In fact, one of the challenges of corporate treasurers is managing the downstream impact from banks as they need to invest to meet their regulatory requirements.”
Other regulatory activities can be more arduous, as they have a direct impact on corporate treasury operations. Increasingly complex international trade relationships and protectionism are driving many regulatory changes. Despite the challenges that these can sometimes pose, he takes a pragmatic view. “These challenges are the entrance fee for operating in Asia’s high-growth markets,” he says. “They also keep the job interesting.”
Although he appreciates a challenge, Liu says that he is less fond of surprises where regulation is involved. He has therefore done all that he can to make sure that regulatory changes do not come as a complete surprise. To achieve this, he follows a three-step approach.
First, Liu’s team tracks relevant market and global political developments. “It is these factors that lead to regulatory change,” he says. “Tracking them paints a picture and can give some indication as to what may come next in terms of regulation.”
When regulatory change does occur, Liu claims that the biggest challenge is to stay focused and ascertain what the change means for GE’s operations, customers and supply chain. “This requires us to work with our regulatory experts and banking partners to judge the impact and then make changes to our operations if necessary,” he notes.
The third and final element of Liu’s approach relates to GE’s localisation strategy. “We’d like to think we have the best in-country experts,” he says. “We strive to obtain the listening ears of the regulators and in so doing, participate indirectly in the rule-formulation.”
At the same time, Liu sees having a strong, talented team as crucial to the success of any treasury team. “A diversified workforce is more important than more people. Having competent and commercial-minded people in the team is vital,” he says. “Having the right people in place can solve 80% of the challenges that you face.”
Well-honed soft skills are something that Liu is especially keen to see in his staff. “Skills that enable one to be a better leader, cope with adversaries and communicate effectively are critically important for the modern treasurer,” he says. “These are attributes I look for when hiring and I would advise any aspiring treasurer to focus on soft skills just as much as the technical skills.”
In addition to having a talented team, Liu is also keen to leverage innovative technology in order to ramp up the effectiveness of the treasury department. “The pace of the technological change is unrelenting and is having an immense impact,” he says. “The issue, however, is that technology is developing much faster than it takes for universal adaptation.”
For example, Liu bemoans the legacy cross-border payment processes. “As I understand it, digital currencies and the blockchain have the potential to revolutionise trade settlement, bringing lower costs, faster speed, greater visibility and certainty,” he says. “There are, of course, some regulatory and legal issues that need to be ironed out, but I am excited by the prospects and hope this is something that the banks can bring to fruition sooner rather than later.”
“If new technology is to have the desired impact there needs to be some harmonisation in its development.”
As well as solving legacy challenges like cross-border payments, technology can also help solve newer challenges like financing the supply chain. “The landscape of financing has changed and corporates are now expected to take up some of the slack, supporting both customers and the supply chain with finance,” says Liu. “As a result, we can no longer just be concerned with managing our own balance sheets – we must also be mindful of those of our suppliers and customers.”
Despite all the excitement around new technology, Liu offers a word of caution and says that it is crucial that the industry work together. “If new technology is to have the desired impact there needs to be some harmonisation in its development,” says Liu. “Banks and fintechs are striving to be pioneers and this is great, but without a common set of standards the technology landscape will become increasingly disparate. This will create all manner of complexity for the end users like ourselves.”
Eyes on the road ahead
Just as he does when touring the world on his motorbike, Liu has his eyes firmly on the road ahead in his career. And Liu is reading all the signs that point to the continued prominence of corporate treasury within corporations around the world.
“I foresee a bright future for the profession, especially here in Hong Kong,” says Liu. “The territory is already a key global financing centre and is well positioned as the super-connector for China’s One Belt One Road project. This will bring more providers and users of capital to the territory, building up the knowledge base and skill set in Hong Kong.”
This development will also help Liu pursue another passion of his: coaching. “I enjoy people development and have invested time and effort in becoming a certified corporate coach,” says Liu. “It is something that I love doing and I hope that I contribute to making a difference as China’s new Silk Road plans takes off.”