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Cash & Liquidity Management
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Executive Interview: Meeting the New Demands of Chinese Corporates

During the course of 2008 and 2009, how did the financial crisis affect your clients’ business, both domestic and international?               

The global financial crisis has had adverse effects on many aspects of business operations, in both internal and external business environments. On one hand, market demands have shrunk to some extent, which led to a substantial decline in sales, increases in companies’ inventory levels, and more operational challenges. On the other hand, the liquidity shortage is very severe, and the absence of effective capital operation may well give rise to problems with the ‘capital chain’. Changes in the external environment have made it more difficult for companies to sustain healthy operations for some time, and if a business fails to take effective measures accordingly to meet the challenge, it is highly probable that these operational difficulties could threaten its very viability.

What is the impact today?

For businesses, the toughest period of the financial crisis has passed, and the issue facing each company is how to recover from this crisis quickly. With the introduction of an economic stimulus package from the central government, the demand in some market segments is on its way to recovery. How to capitalise on the opportunities the recovering economy has to offer is a major concern in current business operations. From another perspective, in the aftermath of the financial crisis, the damaged financial capability is unlikely to be able to meet the needs of company development. As a result, how to restore  healthy operations, especially capital operations, and improve operational efficiency, are among the most urgent issues that a company has to address.

How have your clients’ cash management needs changed, both during the worst of the crisis and today?

At present, more and more companies agree with the concept that ‘business management should focus on financial management, while financial management should have treasury management as its core’. As the business environment improves, an increasing number of Chinese corporations are beginning to attach more importance to enhancing treasury management. China’s cash management market is developing rapidly. On one hand, large corporations are speeding up the upgrading of their own treasury management system, and strengthening their co-operation with large commercial banks in the area of cash management; on the other hand, a large number of small and medium enterprises (SMEs) are also beginning to leverage the cash management products provided by banks to improve their capital management and capital utilisation efficiency, in order to guard against external environment risks more effectively. Therefore, payment and collection management, and liquidity management will become the priority tasks in corporate treasury management.