Issue Five 2008
Despite the introduction of new antitrust laws on 1st August this year (which have caused some anxiety among large multinationals looking to expand into China), the Chinese government seems set to continue its reform and opening-up policy by supporting foreign companies to develop their businesses in China. Meanwhile, one of the biggest challenges facing treasurers of multinational companies already operating in China is the repatriation of company cash. In this issue’s Cash Management article we examine how new measures recently introduced by the State Administration of Foreign Exchange affect the remittance of service fees for MNCs.
Another key challenge facing the corporate treasurer is growing the business going forward without significantly impacting working capital requirements. This is particularly tough in China as “the strategies that have helped China grow from poverty to its current levels will not yield the same dividends in the future” (Homi Kharas, the World Bank’s former Chief economist for Asia). Although this is a largely macroeconomic comment, businesses should be focusing on the microeconomic implications and in this issue’s Treasury Management article we discuss how the reinvention of the profit centre treasury model could help treasurers to add value to their business through driving efficiency from the bottom up.
As China’s banking industry continues to develop, the range of products and solutions on offer is also increasing. One such offering is corporate access to SWIFT. In this issue’s Finance A-Z we follow the evolution of SWIFT from the 1970s to the present day and outline the messaging services available.
It is no longer a prerequisite for corporate treasurers to conduct all their financial business through banks however. Indeed group finance companies can often provide financial services at preferential rates. In response to a question from one of our readers regarding group finance companies, two industry experts discuss the benefits and logistics of setting up a group finance company, such as the centralisation of cash management, settlement of intragroup transactions and of course, risk management – see this issue’s Question Answered.
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