Philips Adopts HSBC’s Treasury Solution to Consolidate Transactions in China

HSBC introduced a new treasury solution for a multinational technology company Philips in mainland China, which aims to simplify the company’s management of financial transactions.

This solution combines multiple intra-group, multi-currency transactions into a single transaction using yuan (RMB), China’s official currency.

Philips operates nine entities in mainland China and handles over 4,000 intra-group cross-border transactions annually in seven different currencies. Before this solution, Philips treasury teams were manually processing many transactions because the global netting structure could not accommodate them.

Yvonne YiuHSBC’s co-head of global payments solutions, Asia Pacific, discussed the benefits of the new system: “Multinationals’ need for centralized and optimized treasury processes will increase as their businesses in mainland China grow. .

“By adopting our industry-leading solution, companies can reduce the manual processing of their cross-currency transactions, materially lower the cost of each transaction, and significantly improve visibility and controlling their cash flow.

“In addition, this solution creates opportunities for overseas entities to transact in RMB, allowing them to achieve better FX risk management.”

HSBC and Philips have reached this development after extensive discussions with People’s Bank of Chinawhich resulted in allowing the implementation of a live cross-currency netting solution under China’s free trade enterprise framework.

Benefits

Each month, Philips consolidates cross-border foreign currency payments and receipts from its mainland entities. China to a RMB transaction, calculated using its in-house bank exchange rate. These transactions are settled between Philips’ domestic netting center (FTE) and the Group’s overseas netting center, streamlining the process for each division with a single RMB settlement.

Kathy Yuhead of treasury for Asia Pacific at Philips, also noted the strategic benefits: “HSBC has been our long-standing trusted advisor as we expand our business in mainland China.

“This groundbreaking netting solution removes many treasury-related pain points, unlocks our offshore working capital, reduces the volume and cost of our cross-border transactions, and improves our governance on FX risk.”