Treasury Today Corporate Treasury Benchmarking Study - in association with J.P. Morgan
Treasury Today Country Profiles in association with Citi


Cross border trade settlement was also a key development with the pilot programme to allow direct settlement of RMB transactions for corss-border trade being formally launched in July 2009. This was 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.  

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 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 2011 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 previous 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.  

Treasury Today European Corporate Treasury Benchmarking Study 2011

China Corporate Treasury Benchmarking Study 2011