Treasury's evolving role in Asia

As Asia becomes increasingly important for companies around the world, should treasury operations change to reflect the new dynamic?

Asia matters to almost every multinational company (MNC) in the world today, whether they are conducting business or dealing with local partners in the region. As this two-way relationship develops, should the way companies run their treasury operations change too?

“Asia is meaningful. It’s not longer small or insignificant and companies are investing a lot into the region,” said Robert Vettoretti, associate director of consulting at PricewaterhouseCoopers in China. “As the region changes, treasury also needs to change. It’s not just about processing more efficiently or quicker, it’s about who you are hiring to support the businesses in the region.”

There are many external factors that can affect how a company operates its treasury in Asia. For example, the role of the renminbi will play a pivotal role for businesses that deal with or are in China. Regulatory easing may compel treasurers to rethink their operational approach. Furthermore, the returning investment into the region from the international banks as they follow their customers into Asia means companies are spoiled for choice when choosing banking partners.

According to Vettoretti, Asia is no longer just a region for sourcing and manufacturing. “Asia is an end market in itself and this changes the fundamental business minds of many international companies,” he said. “The role of the headquarters in the context of the different countries, tax structures, intellectual property rights and expectations of service levels all affect how treasuries operate in the region.”

Asia is definitely becoming more significant for Netherlands-based paints, coatings and specialty chemical company AkzoNobel. “We are a typical MNC with mature operations in the developed north America and western European markets,” said Sophia Porcelli, treasury director for Asia at AkzoNobel. “But we are increasingly migrating to the east and the emerging markets.”

While it is common for large global MNCs to operate centralised treasury centres and shared service centres to drive down operational costs, AkzoNobel utilises a regional treasury approach to offset timezone differences between subsidiaries and to be able to react faster with data. “On the treasury front, rather than have a more traditional centralised model, we are moving towards a more regionalised approach,” said Porcelli. “We are shifting our operational model. Of course we have to liaise with our team at the head office but we want to be able to support our local offices [In Asia] more directly.”

When discussing the pros and cons of centralised treasuries, many MNCs will think geographically, but in Asia a centralised treasury model could involve having staff in multiple countries centralised through connectivity. “Treasury operations are changing to more of a virtual model,” Porcelli noted.

¬ Haymarket Media Limited. All rights reserved.

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