Photo of Kaushik Shaparia, Deutsche Bank and Christian Zeidler, Robert Bosch (SEA) Pte Ltd.

This solution integrates China into a global treasury operation utilising host-to-host connectivity with the bank. A cross-border RMB netting programme also forms part of the solution.

Integrating China into a global treasury operation

The challenge

Bosch is a growing business in China and employs close to 59,000 associates, operates more than 60 legal entities and facilities, with consolidated sales of CNY91.5bn (€12.5bn) in 2016, representing a year-over-year growth of 19%.

With continued business expansion on the agenda, Bosch sought a host of solutions that would better support its liquidity management both locally and globally. In addition, Bosch wanted to minimise its onshore FX exposures, create a smoother workflow, maximise operational efficiency and reduce its transaction costs.

Finally, given that Bosch is multi-banked in China it wanted a solution that would give it visibility over all its accounts through a single window.

The solution

In partnership with Deutsche Bank and Bank of China, Bosch achieved its objectives and more. Firstly, Bosch established host-to-host connectivity with Deutsche Bank and Bank of China, through Deutsche Bank’s newly created host-to-host connection with the Chinese lender. This connectivity allowed Bosch to:

• Execute domestic and cross-border payments in both renminbi and foreign currencies.
• Make account balance and transaction enquiries.
• Maintain only one internet banking platform, based on two banks’ agreed protocol and format.

Bosch also implemented a cross-border renminbi netting programme that integrated with the Group’s global netting centre in Germany for cross-border settlement transactions among intra-group companies. As part of this solution, Bosch and Deutsche Bank created a customised process to consolidate the RMB cross-border transactions of Bosch’s China entities and settle with Bosch’s global netting centre on a pre-defined netting schedule.

Through the first netting transaction executed, Bosch consolidated approximately 2,000 cross-border payments into a single transaction and saved considerable costs and efforts to Bosch entities in China.

Best practice and innovation

Bosch has achieved its objectives by implementing solutions which better support its liquidity management locally and globally. Most notably, by using a pre-defined netting schedule Bosch can manage its global renminbi liquidity more accurately. The solutions have also brought Bosch’s China subsidiaries closer to its global treasury operations.

On the FX side, the Group’s onshore exposures have been minimised. This is because the renminbi netting solution with a pre-defined schedule enables Bosch to process cross-border transactions with a more accurate timeline. It also centralises FX management in its German HQ to further minimise onshore FX exposures.

More broadly speaking, the solutions have helped the Bosch treasury create a smoother process workflow that had led to a more efficient and accurate treasury operation. Transaction costs have also been greatly lowered due to the reduced number of payments that it makes. The solution also reduces manual workload for cross-border transaction processing and multi-bank accounts management, allowing the treasury team to focus on more value-added tasks.