Treasury Today Country Profiles in association with Citi

China Corporate Treasury Benchmarking Study 2011

China Benchmarking Study 2011


We continue to witness tremendous change in China since we established Treasury Today in China in 2005. We strive for excellence and to provide unbiased insight and analysis of treasury trends and best practices. As such, we are delighted to publish this report on the findings of the 2011 China Corporate Treasury Benchmarking Study in association with Bank of America Merrill Lynch. It provides further insight into the community we serve.

This, our third Study, builds upon those we conducted in 2009 and 2010 among corporates operating in China. The findings of this Study are important as it was undertaken as the world still attempts to recover from the worst financial crisis and global recession since the 1930s depression. Economic growth remains the big story in China as it overtook Japan to become the world’s second largest economy in 2010; some commentators are suggesting it could overtake the US as early as 2030, but recent global events suggest it will not be entirely plain sailing.

The results of this Study are particularly pertinent because it was conducted during a period of continued regulatory change in the country. Renminbi (RMB) deregulation continues apace and the internationalisation of the yuan brings with it the need to understand a new and complex currency market as well as the exciting opportunities this provides.

Cross-border trade settlement has also been a key development with the pilot programme to allow direct settlement of RMB transactions for cross-border trade being formally launched in July 2009. This is the first step allowing 365 corporations, Mainland Designated Enterprises (MDE), in five cities to transact in RMB with counterparties in ten countries. This allowed a limited number of foreign corporations to settle their China-related sales or purchases directly in RMB, but limited the number of counterparties and also forced all transactions to be two-way flows with the mainland: currency flowed out but then back in through the trade settlement route. The pilot was expanded in June 2010 to 20 areas (from the original five cities) which are entitled to receive payments in RMB under the scheme.

As of today, over 67,000 mainland exporters (MDE) from all over China are allowed to participate in cross-border RMB settlement with any non-Chinese corporate regardless of domicile. At the end of 2010, it was estimated that cumulative trade settlement volumes had reached around RMB500 billion.

In addition, foreign corporations are now allowed to accumulate RMB offshore and can transfer it to other entities outside China as well. Now treasurers can actually do something with the currency that they are earning from China, which is why trade settlement has been the main driver of the build-up of CNH deposits in Hong Kong.

Notwithstanding the above opportunities, it is fair to say that cash management as a treasury function remains at an early stage of development in China. Many multinational companies (MNCs) that have located a treasury operation in China are still in the first phase of developing a systematic approach to cash management, with locally managed payments and collections and a basic reporting and cash flow forecasting system. Many are still facing issues surrounding trapped cash.

While cash management techniques like physical cash pooling can be achieved in China, it is important for treasurers to understand the restrictions that exist and the unique structures that have been developed in response to these. In other cases, some traditional cash management techniques practiced elsewhere, such as notional pooling, are simply not yet permitted in China.

China is indeed facing an interesting future and these findings provide a basis for us to try and define best practice in certain areas. This Study digs deeper into some of the areas covered previously, such as the performance metrics being deployed in treasury, whether electronic reporting has actually improved over the past 12 months, access to and pricing of credit and the impact of the provision of credit on cash management partner bank decisions.

Service providers targeting this universe should also be very interested in these findings. They will be able to see how companies assess them and this should assist the decision making process of where to invest product development budget. It should help drive the product development pipelines. It will also help to build the business cases for such investment and provide some feedback on the effectiveness of recent investment decisions.

We would like to extend our sincere thanks to all the corporates who responded to this Study and we would, of course, welcome any feedback. It is as a result of the number of responses received that we have been able to publish such a comprehensive and valuable report.


  • Foreword

  • Introduction

  • Executive summary

  • Respondent profile

    • Internal reporting and benchmarking

  • Cash and liquidity management

  • Reporting

  • Cash pooling

  • Corporate access to SWIFT

  • Investments

  • Borrowing

  • Risk management

  • Supply chain

  • Technology

  • Bank relationships

  • The future

  • Conclusions

To find out more, order your copy of the findings today.