by Helen Sanders, Editor, TMI
One of the most significant outcomes of globalisation and the development of markets in Asia is the emergence of Asian multinationals as companies with a strong domestic presence pursue growth opportunities both across other parts of the region, and beyond. While many North American and European corporations measure their international growth journey in decades, many of their Asian counterparts can use the fingers of one or both hands to demonstrate comparable expansion. Not only are companies experiencing organic growth, but M&A in Asia is rapidly approaching levels more familiar in the west: in 2015, M&A by Asian corporations across a range of industries grew by 60% compared with 2014.
Key to the longer-term success of an international strategy is effective cash and treasury management to manage liquidity and risk across markets. Consequently, given the pace of change, treasurers of Asian multinationals need to focus on how they create treasury functions that will support their international growth strategy today, and in the future. These treasurers do not have the comparative luxury of years of incremental change, but need to react quickly to maintain visibility and control over cash, avoid exposure to liquidity and market risk across the countries in which they operate, optimise working capital and preserve operating margins.
Building efficient treasury functions has been a lower priority for many Asian multinationals in the past compared with pursuing growth. Today, this has changed. Unprecedented volatility in both financial and commodity markets, regulatory change, and the emergence of new business models in which the ability to harness innovation quickly creates competitive advantage are converging at the same time, with the result that treasury has never been more important. So what should treasurers of Asian multinationals be doing to position their business for further international growth, whilst also preparing for the inevitable challenges that doing business internationally brings?