The challenge
It’s not been an easy path since Build Your Dreams (BYD) determined to set up its green vision back in 2008, but BYD never considered giving up despite numerous challenges. Being a global business, it was imperative that BYD had the expertise of a global bank that could help the company achieve its business goals. For the treasury team, the critical tasks were to diversify funding sources and support the business expansion. As an active advocate for environmental protection, the ‘sustainable’ concept is also in BYD and its treasury team’s DNA.
The solution
To rise to the challenge, BYD implemented the following treasury solutions:
- Recognising its bank’s global network and expertise, BYD has built the global bank account infrastructure with Citi for its global expansion.
- Promote adoption of new energy vehicles (NEVs) through ‘green finance’, BYD Auto Finance has been issuing green retail auto loan asset backed security (ABS), with a vision to support development of energy conservation and emission reduction through finance.
- Provide bank guarantees to support the sales of new energy vehicles, solar energy products and energy storage stations globally, especially when the company enters new markets or deals with new customers.
- Build supply chain resilience through DiLian, BYD’s own supply chain platform, to achieve working capital efficiency and ensure the business resilience.
Best practice and innovation
Best practice is demonstrated as follows:
Global bank account infrastructure – BYD operates 98 accounts with Citi globally in 21 currencies, which has been critical to support its global business. The host-to-host (H2H) solution ensures the seamless connection among the accounts in various countries, making global treasury management more efficient and effective. BYD further launched a treasury management system to gain visibility and control transactions for accounts across the world.
Green ABS – BYD launched the largest green retail auto ABS for China’s interbank bond market to date. It was also China’s first internationally rated green auto ABS, having been assigned AAA rating for the Senior Notes by Fitch.
Bank guarantees (BG) – with the treasury team’s strong and established relationship with banks, BYD can now provide advance payment guarantees and performance guarantees globally with best pricing offer. Leveraging their internal e-platform, the treasury team at HQ now achieves visibility and control of each BG issuance around the globe. BYD is also working with Citi to promote the paperless application of BG issuance.
Building supply chain resilience through the DiLian online platform – different from directly applying the bank’s SCF programme, BYD built their own DiLian SCF platform, and invited the partner banks to join the platform as funding providers to their suppliers. The advantage is the programme can easily scale up by adding banking partners. BYD also offers improved supplier management through the platform, such as the review of whether the suppliers meet the corporate social responsibility requirements in the aspects of labour standards, occupational health and safety, environmental management, trade safety, anti-corruption and anti-commercial bribery.
Key benefits
- Cost savings.
- Process efficiencies.
- Increased automation.
- Risk mitigated.
- Improved visibility.
- Number of banking partners/bank accounts reduced.
- Increased system connectivity.
“In November 2021, BYD was invited to attend the 26th United Nations Climate Conference (COP26). On Transport Day, representatives of governments, businesses and other organisations jointly issued a declaration on accelerating the transition to zero-emission vehicles and trucks, with the goal of achieving 100% of sales of zero-emission vehicles and trucks by 2040 or earlier. BYD signed the Global Memorandum of Understanding,” states Lingmin Zhou, Group Treasurer.
