Treasury Today Country Profiles in association with Citi
Treasury Today in China Issue 3 2008 Buy print copy button

June 2008


Treasury Management
Foreign investment vehicles in China
The Corporate View
Corporate View: 
Baudouin Courau, Alcatel-Lucent
Cash Management
Mobile payments
Finance A-Z
Herstatt risk
Calculator Corner
Yield measurements


Issue Three 2008

Asia has been leading the way in the development of m-payments (mobile payments), giving consumers and potentially corporates a versatile and easier way to make payments from portable devices including PDAs and mobile phones. This issue, we take a detailed look at m-payments and the latest technological advances in this area.

Security is of course an important consideration with m-payments and both consumers and corporates will be keen to ensure that any mobile solution used is suitably secure. However, even in the traditional banking world, disaster can strike and in this month’s Finance A-Z we look at Herstatt risk. This is one of the most dramatic manifestations of financial counterparty risk. Nearly 35 years have passed since the German bank set in motion three days of worldwide disruption to FX settlement. We explain why this type of risk arises and consider the role of CLS Bank in avoiding any such catastrophic events.

Meanwhile, regulatory changes continue to affect the ways in which companies can operate in China. In Issue 1 this year, we reported on China’s new Enterprise Income Tax law, which was introduced on 1st January 2008. Under the new law, foreign and domestic companies in China are now taxed at the same rate, abolishing a range of incentives previously enjoyed by foreign invested enterprises (FIEs).

Although the new law has removed the competitive advantage that FIEs previously enjoyed over domestic companies, China continues to attract significant foreign investment, with many multinational companies choosing to set up subsidiaries in China. We discuss the options available to MNCs looking to establish a presence in China, focusing in particular on the option of establishing regional headquarters as well as the benefits and drawbacks associated with this structure.

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