Treasury Practice

Problem Solved: Huawei

Published: Nov 2012

Huawei’s business has rapidly expanded internationally over the last decade, not only in terms of volume, but also in the number of countries and currencies they deal with. This growth created the need for Huawei to become a more globally integrated company.

Established in 1987, Huawei has already achieved significant success as a leading telecom solutions provider. Originally a very small company, Huawei now supplies top-quality products and solutions in over 140 countries, serving more than one third of the world’s population. In spite of the global economic difficulties in the last year, Huawei recruited net profits amounted to CNY 11.6 billion for 2011.


Due to the current market uncertainty and increased business volumes internally, the company realised that it needed to improve control, efficiency and transparency.

This changing economic landscape persuaded Huawei to transform its organisation and processes, especially in the areas of liquidity and risk management. The treasury department wished to find more efficient and creative ways to monitor its cash and fund the business expansion in a secure and controlled manner. Meeting these challenges required a solution that could not only handle the current business, but could also position the company to handle future challenges and opportunities as well.

Like many other corporations post-2008, Huawei maintained higher cash reserves to mitigate any volatile market changes. The company keeps an appropriate level of cash to meet day-to-day operational needs but primarily looks to deploy surplus cash to fund research and development (R&D) and business growth. Recognising the need to completely transform its treasury – and seeing that the current processes and systems would eventually anchor the company down – the decision was made to spend the time, resources and cash on a treasury management system (TMS) that has the capacity to handle its growing international complexity for the next 20 years.


Huawei’s transformation included the entire treasury, from balance sheet management down to cash management. Areas including capital structure, balance sheet planning, working capital, credit risk, sales financing, bank relations, trade financing and cash management were addressed in this transformation. Each process was documented, charted and then benchmarked against industry best practices. The project team spent almost as much time on understanding and documenting the business requirements as on the implementation itself, taking care to convey these requirements to the vendor clearly, concisely and with proper detail.

Part of Huawei’s ongoing transformation is to give the middle office more power to perform operational decision making, approvals and oversight that was previously performed by the treasurer. The company also partnered with niche banks to help manage its multi-currency notional pool. The last step for Huawei was to identify the TMS that best met all of its requirements as outlined above. Performing a side-by-side comparison of multiple systems and identifying the gaps between the various third-party treasury systems and the necessary requirements, the company realised that SunGard AvantGard Quantum best met its needs.

Previously, the accounting had been managed at the enterprise level but Huawei learned that the TMS is as much an accounting system as it is a treasury system. Today, the treasury accountants are responsible for the TMS sub-ledger and are partnered with the treasury business to understand and manage the treasury centre financials more effectively.

Obtaining buy-in from the top is a critical success factor for any company embarking on such a project which is why a clear business case is so important. To obtain the guidance and support of its board, Huawei had to point out plainly the importance, necessity, benefits and risk associated with taking no action. Indeed, Huawei found high value in examining case studies of other corporations outside of the technology industry. Case studies not only helped the company build its business case, but also provided valuable lessons learned from those with recent treasury transformation experience. Huawei were then able to verify its sizing, improve its project planning, and set more realistic expectations.

There really is no ‘end result’ of Huawei’s transformation as the company has only taken the first step, intending to continuously and relentlessly optimise. This transformation supports Huawei’s vision of having a global treasury integrated within Huawei, allowing the treasury to proactively support the company goals. There is an old Chinese saying that illustrates this well, ‘the journey of a thousand miles begins with the first step’.

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