Strategic Treasury

Connecting Regions, Creating Competitive Advantage As growth rates continue to be fitful and sluggish in many established markets, European and North American companies in all industries are turning their attention to the fast-growing, emerging economies of Asia.

Connecting Regions, Creating Competitive Advantage

by Mark Newman, Chief Executive Officer, ING Commercial Banking Asia

As growth rates continue to be fitful and sluggish in many established markets, European and North American companies in all industries are turning their attention to the fast-growing, emerging economies of Asia. At the same time, an increasing number of Asian corporations are expanding their business in Europe, through both organic growth and acquisitions.

Expansion into new markets brings a variety of challenges, not least the complexity of managing different regulatory environments, currencies, payment instruments and culture. Working with trusted business partners that have the cultural, regulatory and market appreciation of both a company’s home market, and its target growth region is essential to overcoming these challenges, but it can be difficult to identify the right partners in less familiar regions. To address this, the banking partner should have a network that extends across the different regions. This allows corporates to extend their trusted relationships into new regions, avoiding the uncertainty and risk of building new, untested relationships. Working with a single partner across both new and established markets is valuable for companies of all sizes and levels of maturity by enabling a cohesive cash, treasury and working capital management strategy. By doing so, they can optimise liquidity across markets, identify and manage risks, streamline cash management structures and increase transaction efficiency and cost-effectiveness.

Despite discussing Asian and European corporations in general terms, it is important to recognise the diversity of requirements and expectations that exists. For example, many Japanese companies have had a long-standing presence in Europe; therefore, many of the challenges they face are typical of mature businesses, such as the need to reduce costs and streamline banking structures. Chinese companies are typically at an earlier stage of European expansion, but are looking to achieve more rapid growth than an organic growth strategy would allow. Consequently, they are focusing more on M&A to develop their portfolio of European assets. Meanwhile, Korean companies and in some cases companies headquartered in India are often part of a larger conglomerate, with different business interests run via different entities. Their strategy for Europe depends on the vintage and industry. Irrespective of the country of origin corporates are looking towards optimising their working capital structures and leveraging post SEPA efficiencies.

We recognise that every company needs specialist support that is specific to its needs, whether expanding into a new market or consolidating an existing presence. Many customers particularly value our local teams in Asia who provide the language, cultural, regulatory and market knowledge to help them optimise their activities in each country, whilst also appreciating the wider needs of multinational businesses. Our Asian customers in Europe have the benefit of our Asia desk that combines commercial banking and treasury management expertise with Asian language skills. This dedicated personalised relationship is particularly valuable for companies headquartered in Korea, Japan, China and India, helping to overcome language and cultural barriers. It ensures that the needs of both the local business in Europe and Asian headquarters are being met.

Today, around 2,200 institutional clients headquartered across Europe and United States also rely on ING to facilitate their activities in Asia, from M&A through to cash, trade and working capital management.  As each one of these companies has unique challenges and opportunities, we have developed an innovative way of working with customers. This involves bringing together advisory services and holistic solutions to identify, analyse and address clients’ working capital and financial supply chain challenges. We are finding that this integrated solution approach is already bringing considerable value to both European companies operating in countries such as India and China, and Asian companies with an expanding presence in Western, Central & Eastern Europe.

In the two editions of TMI that follow, ING will be providing in-depth insights into the challenges, opportunities and solutions for corporations expanding from their home market in Europe or Asia into new territories. These include exploring the increasingly important trade links between Central & Eastern Europe and Asia, in which we have particular expertise. International expansion is becoming an essential element in almost every company’s strategic growth plan.  With new competitive pressures, the ability to achieve a cohesive cash, treasury and working capital management strategy will increasingly become critical to success both at home and overseas.

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