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Best in Class Treasury Solution in China Highly Commended: Adient (China) Investment Co Ltd

Published: Jan 2020

 

Photo of Erik Emilsson, Citi and Steve Wong, Adient (China) Investment Co Ltd.

Steve Wong

Executive Director and APAC Treasurer

Shanghai, China

Adient is the global leader in automotive seating. With 84,000 employees operating in 214 manufacturing/ assembly plants in 32 countries worldwide, the company produces and delivers automotive seating for all vehicle classes and all major OEMs. From complete seating systems to individual components, Adient’s expertise spans every step of the automotive seat-making process. It’s integrated, in-house skills allow the company to take its products from research and design all the way to engineering and manufacturing – and into more than 25 million cars every year.

in partnership with

Driving forward with a multi-bank working capital and liquidity solution

The challenge

Adient was looking for options to manage its idle cash maintained in China and optimise its global non-restricted liquidity efficiently and cost effectively.

The solution

To address the challenge, Adient collaborated with Citi on a pilot multi-currency RMB cross-border pooling programme in China. Adient China – the header is not a Shanghai Free Trade Zone (SFTZ) registered entity that other options would require. The structure features flexibility to convert foreign currencies as needed with the centralised overseas non-resident account while providing cross-border two-way sweeping. The solution also involves an automated earmarking of funds across participant accounts on a real-time basis to facilitate funds flow and visibility.

“At its core, the solution needed to recognise the importance for us to maintain relationships with local banks that are crucial to facilitate the functioning of cross-border pooling and multibank set-up across various countries that ultimately enhance our non-restricted global liquidity positions.”

Steve Wong, Executive Director and APAC Treasurer

A link is also being built for Adient between different processing systems, leveraging the SWIFT network for a multi-bank solution. A host-to-host connection has been set up between Adient’s treasury management system (TMS) and its cash management banks.

“At its core, the solution needed to recognise the importance for us to maintain relationships with local banks that is crucial to facilitate the functioning of cross-border pooling and multi-bank set-up across various countries that ultimately enhance our non-restricted global liquidity positions,” says Steve Wong, Executive Director and APAC Treasurer.

Best practice and innovation

Adient’s decision to pilot the SFTZ cross-border pool, one of the first MNCs, demonstrated its leadership to address treasury challenges in a restricted market.

The cash management projects prioritise automation, visibility and control, while maintaining important relationships with third-party banks via a SWIFTNet-based host-to-host set up.

Key benefits

  • Enhanced non-restricted global liquidity efficiently.
  • Reduced idle trapped cash.
  • Reduced entrusted loan costs and avoided FX costs from other options.
  • Simplified inter-company settlement.
  • Increased STP and visibility.
  • Improved working capital efficiency.

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