BNP Paribas Connects Webasto Korea to the Global Family

When Germany-headquartered international automotive supplier Webasto Group decided to acquire its long-standing Korean joint venture partner Donghee, some major changes were needed within the local finance function. International banking partner BNP Paribas helped deliver a globally standardised, efficient, and secure cash management operation.

Sometimes in business it makes perfect sense to bring a close partner even closer. Webasto has had its own locations in Asia since the 1970s, targeting continuous expansion of its business in the region. From 1987 onwards, Korean joint venture partner Donghee has been helping it meet this broad goal, supplying regionally based automobile manufacturer clients with innovative roof systems. But Webasto has been intensifying and developing its activities throughout Asia in the past few years.

As part of its strategic plan, the group is expanding its product range to include systems for electromobility, such as batteries and vehicle chargers. Its vision for growth presented a clear case for significant investment in Donghee. In doing so, it has helped fortify the group’s position as a systems partner, not just in the automotive industry in the growth market of Asia but across the rest of the world too.

Fulfilment of global ambition demands serious efficiency, however, and for that to be realised the Webasto team knew that standardisation of operations was essential. Within the finance function of its Korean acquisition – operating as Webasto Korea since the deal closed in April 2019 – this led to some major changes.

Webasto Group is among the top 100 suppliers in the automotive industry with core business areas of sunroofs, electric-car chargers and air-conditioning systems. Headquartered in Germany, the firm has more than 50 locations around the world.

Local to global

Webasto Korea’s earlier life as part of the joint venture had naturally seen heavy localisation of processes and procedures. It had accumulated multiple domestic banking partners, for example, and its IT infrastructure had naturally developed along independent lines. The result for its new owner was an unacceptable level of manual work, particularly within its accounts payable (AP) and accounts receivable (AR) processes. What’s more, with little or no exposure to global banking and operations, its default was to prioritise local cultural values.

While this served the business well on a regional footing, its fractured approach to cash management and finance functionality was acting as an anchor on expected global progress. Reformatting and uploading payment files and manual downloads of transaction data from multiple e-banking systems was needed just to see cash positions. Foreign exchange (FX) deals, overseas payments and the sweeping of funds into the main operating account were all similarly labour intensive. And with minimal visibility and control across its regional banking activities, Webasto Korea was being unnecessarily exposed to liquidity- and security risks.

Strong vision

Three words characterised the rapid response of incoming Webasto Asia Pacific CFO, Sascha Jovanovic: efficiency, digitalisation, automation. In the first instance, he knew that the adaptation, integration and standardisation of local practices required a bespoke banking connection into a streamlined and secure global infrastructure. With five country operations under his watch – Korea, Japan, India, Thailand and Indonesia (China is managed as a separate region) – there was a clear choice of partner for this significant undertaking, and that was Webasto’s long-term global banking partner, BNP Paribas.

Sascha Jovanovic
CFO, Webasto Asia Pacific

Although locally the relationship between BNP Paribas and Webasto had been limited to some exchange-rate business, the possibilities for collaboration took off once the Donghee acquisition had closed and that entity’s integration into the global Webasto network began.

At this stage, Jovanovic’s goal was clear: establish full control-tower-like visibility and command across all banks, accounts and reporting activities. Only this would enable the acquired entity’s full internationalisation and absorption into the Webasto Group. Given the importance of the banking partner, the project was co-driven locally by BNP Paribas’ trusted Head of Cash Management Services Korea, Steven Kim, who wholly understood that the region’s fragmented historical cash management operations demanded a robust and long-term fix.

In essence, the project had to achieve operational efficiency through digitisation. This meant automation of Webasto’s payments, reconciliations and FX processes, and it absolutely demanded compliance with Webasto’s global standards, with all local ops aligning with HQ’s IT, security, and cash management service standards.

The adoption of BNP Paribas’ proposed services for Webasto Korea would begin with the full regional roll-out of Webasto Group’s SAP enterprise resource planning (ERP) system. While not completed until January 2021, Jovanovic notes that the roll-out had from the outset provided “a real automation boost” to regional payments, collections, reconciliations, FX transactions and wider liquidity management.

The solution that BNP Paribas implemented covers three core elements:

Payments: integrating seamless SWIFTNet channels; establishing full automated and standard payment processes in XML files; setting up an e-banking channel as a back-up and for reporting purposes

Collections: automating reconciliation processes of AR through Multi-Bank Reporting (MBR); delivering MT940 messages collectively for BNP Paribas and third-party bank accounts with no service charge

Liquidity: automating flexible cash concentration via Multi-Bank Sweeping (MBS); setting up a flexible sweeping schedule covering e.g. zero balance account (ZBA), target balance account (TBA), per account/specific date etc

Steven Kim
Head of Cash Management Services Korea, BNP Paribas

One partner, one approach

The long-standing professional relationship between the treasury function in Webasto’s HQ and BNP Paribas Germany had clearly demonstrated how well aligned the two allies already were. In addition to teaming up with “one trusted partner, worldwide”, Jovanovic comments that the Webasto Korea project felt “strongly supported by the treasury team in Germany”.

This gave the local team confidence that it was establishing the same core processes and approaches that are experienced across the business, regardless of geography. With corporate treasury’s full support for the idea that “everything that could be transferred to BNP Paribas was transferred to BNP Paribas”, he was satisfied that the risk previously created by using a web of local banks and disparate manual processing would be mitigated.

As the project progressed, basic transactional processes – “low-hanging fruit”– such as payments were quickly brought under control, says Kim. “This is where a lot of the risk existed, so it’s where we felt we could gain most immediate benefit, automating and linking processes to the single instance of SAP and Webasto’s global standardised IT infrastructure.”

That enterprise-wide user experience is something most multinational corporations strive for, but many are yet to deliver. Webasto can now confirm strong progress in this direction, with Jovanovic stating that since the second half of 2019 “whether you are in Korea, Mexico, France or any of our other finance offices around the world, you’ll see the same interface between BNP Paribas and SAP, and the same processes”.

Driving progress

The delivery of consistency may have been rapid but it was not without issue, most notably that of change management. For local teams to be told that decisions would now be coming from a new HQ, and that they would be switching to a major European bank inevitably tested the resolve of some, especially where loyalty had been built over many years with certain domestic banks.

“We had to explain that now they were part of a global company, that there was a shared vision, and that there were many merits in working with BNP Paribas and the globally standardised infrastructure that this new approach could bring,” recalls Jovanovic.

Overcoming cultural resistance to the ‘four-eyes’ principle of security was a notable struggle at first. Not being common practice in Korea, it was viewed with a certain uneasiness, he notes. But with the strengthening of internal controls part of an enterprise-wide programme, such measures are now being willingly adopted. For Jovanovic: “The great thing is that once onboard with an idea, Korean people are super-flexible, and can change fast”.

It helps that some aspects of the project have driven immediately obvious improvements. The ease of booking a payment into SAP and having it automatically released, in alignment with certain rules, is removing considerable effort and risk.

But while Webasto Korea is enjoying the benefits of order-to-pay automation, driving the same advantages within the order-to-cash process is a more sensitive matter for the firm, says Jovanovic. One of Webasto’s biggest customers in Korea is a major automotive manufacturer. It would be considered contrary to local market practice for Webasto’s AR team to attempt to influence the way in which important customers execute payments.

To this end, Kim explains that BNP Paribas has remodelled an existing technical framework to facilitate the automatic sweeping of funds from this customer’s bank into BNP Paribas. “Ultimately, we’re achieving the same goal in terms of automating the cash collection flow, but without having to implement a lot of changes at the customer end, or even disrupt the existing relationship and payment flows.”

The roll-out of intelligent solutions such as this only serves to complement what is a remarkable achievement within Webasto Korea. “Currently, we are in a highly stable phase of our project and our work with BNP Paribas,” comments Jovanovic. Indeed, such is the level of standardisation across the whole Webasto Group now, he adds, that any major developments will mostly likely be directed by the leadership of the headquarters team.

Accomplishing this level of visibility and reach in a global business is impressive. It also demonstrates that the partnership between Webasto Group and BNP Paribas is built on solid foundations. With a new factory dedicated to meeting the needs of the global electromobility market now being constructed in Korea, the business is driving forward its future vison. For Jovanovic, it means the enduring relationship with BNP Paribas “is likely to become even stronger”.