Centralisation in China

An interview with Lisa Robins of J.P. Morgan

We are delighted to return to our new series of interviews with key individuals in the banking sector. This month, we are pleased to introduce Lisa Robins, Managing Director, J.P. Morgan Treasury Services China Executive and Beijing Branch Manager, who talks about the challenges and benefits of centralisation in China.

To what extent are companies centralising their treasury activities relating to China – either within China or as part of a regional treasury centre including China?

China – known in Chinese as the Middle Kingdom – has always considered itself a natural hub for global business activity. Many multinational companies are now trying to enter the market to take advantage of the growth, consumer market size and innovation.

But many people forget how large China is – the land mass is roughly equivalent to Europe. Like Europe, China has one currency, the RMB (Chinese Yuan), – but unlike Europe, which aims to standardise rules and regulations across the European Union, – companies operating in China must deal with many different regulations – local, provincial, and central, and the sometimes varying interpretations of all these regulations. Corporates need to navigate the regulatory environment carefully, thereby making centralisation more complicated; nonetheless, we are seeing an increasing number of companies looking to centralise some or all of their treasury activities in China

An example of a company’s efforts towards centralisation is the use of concentration accounts or entrust loan structures, that allow corporations to pool and lend cash from cash rich entities to cash poor ones, within the same organisation.

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