Treasury Today Country Profiles in association with Citi

Ctrip China

Ctrip China, Highly Commended, Best Foreign Exchange Solution

Janet Feng, Ctrip China and Amit Sharma, Bank of America Merrill Lynch

Although the majority of this company’s receipts for travel bookings are paid for in RMB, there is also a high volume of foreign currency payments, rebates and refunds made to overseas buyers and partners such as hotels and airlines. This centralised solution leverages the company’s international settlement hub in Hong Kong.

Photo of Janet Feng, Ctrip China and Amit Sharma, Bank of America Merrill Lynch.

Janet Feng

Senior Vice President

Ctrip.com International, Ltd. (CTRP, NASDAQ) is a leading travel service provider of accommodation reservation, transportation ticketing, packaged tours, and corporate travel management in China. It is the largest online consolidator of accommodation and transportation tickets in China in terms of transaction volume and value.

in partnership with

The challenge

Since its inception in 1999, Ctrip has experienced substantial growth and become the best-known travel brand in China. To facilitate its rapid international expansion, Ctrip was seeking an efficient treasury model and solution to deliver on their objectives as follows:

Building an efficient support model for its international expansion:

While the majority of Ctrip’s receipts are travel bookings paid in RMB by Chinese customers, there is also a high volume of foreign currency payments, rebates and refunds made to overseas vendors and partners, such as hotels and airlines.

Integrated FX payments to lower cost.
Enhancing payment efficiency to manage growing volumes:

Ctrip’s rapid expansion meant that they had to manage an increasing volume, especially during peak seasons. This requires not only an efficient solution but also a responsive and client-oriented service team to support its day-to-day operations and transaction enquires.

Improving vendor satisfaction to support expansion.

The solution

Leveraging the international settlement hub in Hong Kong, Ctrip can streamline and centralise payments and receipts for greater efficiency. Through host-to-host connectivity with the bank, Ctrip can enjoy efficient processing and greater visibility and control.

The new structure enables Ctrip to pay its vendors through domestic payments in the designated currencies, instead of international wire, thus lowering the FX and transaction cost.

The solution delivered a centralised process for Ctrip to manage their end-to-end cross-border payments with greater efficiency at a lower cost. This allows them to offer better payment terms and improve vendors’ satisfaction, which in turn enables Ctrip to scale up their vendor base and expand their business.

Best practice and innovation

With the vision to expand internationally, the new account structure was set up to facilitate the establishment of the international settlement hub in Hong Kong. Since the majority of its transactions were in various foreign currencies, it was critical for Ctrip to adopt an efficient and low-cost payment solution to support the rapid international growth. The new structure, consisting of onshore and offshore accounts, allowed Ctrip to centralise its large volume of vendor payments across a wide range of restricted and unrestricted markets across Asia Pacific. Traditionally, these FX payments had to be settled individually through international wire with FX conversion involved. Leveraging the new solution, Ctrip can now manage its FX conversion in bulk and settle vendor payments domestically, thus benefitting from a lower FX and transaction cost.

Janet Feng, Senior Vice President explains: “Our China headquartered company has established a best-in-class treasury process that accommodates our current needs and is scalable to support our international expansion beyond China. The overall solution centralised our end-to-end cross-border payments, offering greater efficiency at a much lower cost. This allowed us to offer better payment terms and improve vendor satisfaction, which in turn has enabled us to scale up our vendor base and expand our business.”

On winning the award Feng commented “Winning an Adam Smith Award is a milestone of Ctrip’s internationalisation, we are proud of leading the market of FX solution as a China company.”

Key benefits

  • Lower FX and transaction costs.

  • Better payment terms.

  • Improved vendor satisfaction.

  • Scalable solution.

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