Managing the treasury for a company with operations in China is challenging for many reasons. These include the size, unfamiliarity, diversity and heterogeneity of the country. Unfortunately there are no simple templates for treasury management in China and it is not a wise idea to outsource this task. What is required is basic homework in three areas:

1. building a picture of how, where and why the company operates in China. This includes information about strategies, business models and legal structure. 
2. understanding of the financial environment in the country
3. how to interpret the guidelines and suggestions which “sometimes lack explicit rules and can therefore be subject to interpretation”.

The objective of this report is to provide background information and basic guidelines in each of these areas to help corporate treasury departments carryout effective cash and treasury management in China.

Topics covered

The main topics covered are:

• company formation: legal structure(s) to be used in China
• banking environment: role of PBOC and the main banks; MNC’s key criteria in selecting banks and the services required
• bank accounts: types of accounts and how used
• funding operations: onshore and offshore
• payment systems: non-cash systems and usage; the payment systems
• trade finance: products and services
• global integration and putting it together: how to integrate China into global cash and treasury management structures and systems.

Conclusions

The report which was co-developed by DBS and Treasury Alliance concludes there are:

1. “two facts that confront every treasury responsible for managing financial operations in China. First, the financial environment is complex and changing. Second, the business opportunity is so great that treasurers have no alternative but to find a way to manage their treasury operations.”
2. “no shortcuts to developing an excellent treasury structure in China. As with other key parts of the world, the keys to success are information, hard work and persistence.”

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CTMfile take: For many companies starting to look at how to tackle cash and treasury management in China this will be welcome background. It is available from the Treasury Alliance, see here.