by Rajesh Dash, Regional Manager, Asian Corporations, ING
This is the second of three articles in TMI published by ING that provide in-depth insights into the challenges, opportunities and solutions for corporations expanding from their home market in Europe or Asia into new territories. You can find the first article in this series here.
With many of the world’s fastest growing companies headquartered in Asia, across a wide variety of industries, we are seeing substantial growth in the number of Asian multinationals expanding their business into Europe. Given the geographical and time zone differences between their home markets and Europe, a large proportion of these corporations are establishing regional manufacturing, distribution and sales operations. For European treasurers of these companies, the challenge is how best to support the cash, risk and working capital requirements of these business operations, whilst also satisfying the needs of the business at a group level. Implementing, or expanding a shared services model can be a valuable means of achieving these often conflicting objectives.
The importance of location
While many Asian multinationals, such as Japanese automotive and hi-tech firms, have had a presence in Europe for many years, with mature cash and treasury management infrastructure, others are at an earlier stage in their European expansion. The first issue for corporations to consider is where best to locate their treasury centres. With many companies siting their manufacturing hubs in Central & Eastern Europe (CEE), countries such as Poland are also growing rapidly as shared service centre (SSC) locations, with Czech Republic, Romania, Slovakia, Hungary and to some extent Ukraine also becoming more popular. For example, around five years ago, there were fewer than 50 SSCs in Poland; today, this figure is more than 500.