A strong supply chain is essential for every manufacturer. Here’s how China’s Haier Group is using technology to help protect this vital resource.
When Chinese multinational home appliances and consumer electronics company, Haier Group, wanted to increase its focus on domestic growth, it sought to attract more distributors to enhance its domestic distribution channel and supply chain.
However, it was concerned that its SME distributors might struggle to obtain financing due to the ongoing trade war with the US and the lingering impact of the COVID-19 pandemic. Treasury Today spoke to the company’s Head of Global Supply Chain Business Department, Yang Hong Xing, about its tech-driven solution.
What were the main drivers for the implementation of this solution?
A more competitive landscape has forced large enterprises to enhance their supply chain networks to unlock operational and cost efficiencies. Our focus is to tap into China’s domestic growth and grow our distributor base on our supply chain platform to enhance our local distribution channels.
Digitalisation helps enhance the network effect between organisations in a supply chain ecosystem more efficiently and seamlessly. It also helps break down cost and geographical barriers, allowing us to serve customers across more markets globally.
How did you decide upon the solution?
As a multinational company, we look to partners with international financial institutions to tap into their network and market expertise in regions beyond China. We believe having a diversity of culture and thinking models can lead to extraordinary outcomes, especially in the area of supply chain finance, which can be seen from our digital financing facility with DBS.
There was a large amount of system development and integration required to provide a seamless experience on both the upstream and downstream legs of our supply chain. With DBS, we leveraged each other’s digital expertise to provide our distributors a one-stop shop for their business and financing needs.
We have to cater to a broad spectrum of needs as our distributors range from small-to-medium sized enterprises to large corporates across multiple markets globally. Key qualities of the solution that have proven to be beneficial to our distributors include easy connectivity and onboarding onto the platform, sufficient debt headroom from the digital financing facility, and competitive pricing.
Has that solution lived up to expectations?
Having access to ample liquidity helps all parties in the supply chain ecosystem to not just survive, but to thrive despite the adversarial conditions. With our distributors able to gain quick financing through the digital financing facility, they have been able to continue expanding their businesses. Overall financing cost has also been greatly reduced, resulting in savings which can be allocated towards other strategic ambitions.
Are you planning any enhancements to your digitalisation programme?
The epidemic has brought unprecedented headwinds, but at the same time highlighted how digital trade finance can be harnessed as an innovative liquidity tool to circumvent challenges.
We continue to focus on collaborative efforts with Chinese and foreign financial institutions with the ambition to fully digitalise global supply chains and unlock operational and cost efficiencies. This is not only a response to the challenges arising from the pandemic, but a necessary measure for Haier Group to bolster our competitive edge, and we look forward to working with likeminded partners on our journey.
