China cash management debate: The challenges of Chinese cash management
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China cash management debate: The challenges of Chinese cash management

China’s rapid expansion as a leading trading nation presents opportunities for banks to develop solutions to internal and international cash management needs. In this debate bankers and corporate clients discuss what has been achieved so far and what still needs to be done.

China cash management debate: Learn more about the panelists


• Large Chinese companies involved in consolidation have had to improve cash management capability within China as well as extend it overseas

• Foreign companies doing business in China need special help in setting up appropriate cash management systems

• Chinese companies seeking to expand overseas require cash management expertise that can seamlessly link foreign operations into the Chinese system

• Use of the renminbi as a settlement currency is still in the early stages of development but has big potential in making trade flows more efficient

• Renminbi-based overseas investment products are set to grow in importance as Chinese regulations are liberalized

• The renminbi has good potential to become a reserve currency

Chris Wright, Euromoney The whole world is fascinated by the China story: by the pace of expansion of Chinese businesses, domestically and in many cases internationally. So let me start by asking the corporates what their experience has been, and the impact on their cash management functions.

YHC, CHEC China Harbour Engineering is a wholly funded subsidiary of China Communications Construction Company. We are responsible for its overseas businesses and operate in more than 35 countries. We are focused on infrastructure development, including harbour construction, roads, bridges, power plants and some large water conservancy infrastructure projects. We started from project contracting and expanded into EPC (engineering, procurement and contracting). Now we are expanding into financing plus EPC. We are providing integrated services, involving BOT [build operate transfer], BT [build transfer] and PPP [public-private partnerships]. As for cash management, we have experienced great demand for cash management services. We have a partnership with HSBC for our overseas offices and our subsidiaries outside China, with vertical management of financial matters.

PMF, CPF The State Grid Financial Corporation was established in 1993 as State Grid Trust Company, then reincorporated into the financial corporation in 2003. We have five major regional companies, with 24 branches, and with centralized cash management operations and settlement. Our journey in recent years has been to centralize the cash management functions of these regional companies into one. The regional branches had different methods of settlement, so from 2007 we started to standardize their practices, before integrating all of their processes and settlement methods in 2009. We also centralized management of human and financial resources, as well as integrating and centralizing cash management flows.

We follow the characteristics of the State Grid. The first characteristic is that it has a large coverage of electricity supply, serving 24 provinces, municipalities and autonomous regions, and a very large population. We worked with a lot of big commercial banks in China, such as ABC, Bank of China, CCB and ICBC, to develop cash management products around a multi-polar model. Through these four banks, we enjoy customized cash management products and can do the following things: we can realize trans-regional cash management; we can integrate cash from the domestic banks into the State Grid financial company, vertically and horizontally (by which we mean we have a cash pool and different regions can integrate their cash into it); and since 2009, we can realize uniform settlement. We do that through the corporate banking account and through internal transfer functions.

Now, many different banks can be integrated into the system, with internal transfer and settlement across several thousand units. The cash management for our company has developed by leaps and bounds.

However, with greater power, we have greater responsibility, and we face several challenges, especially since under the 12th five-year-plan we have to go global. As well as providing quality service to our citizens, we have to provide international services. Currently we are transmitting power to the Philippines on a 25-year project, and we are considering several projects in Japan. At the beginning of this year our company established eight agencies or representative offices to look at cooperative projects in order to implement the global strategy. So cash management now poses new challenges: how can we manage and support overseas projects with financing and cash management monitoring? We are doing research on that.

Euromoney Let’s turn to the banks. We are hearing stories of domestic and international expansion, of increasing sophistication, and of challenges in integration. From the banks’ perspective, how is your business developing in serving clients like these?

LH, Bank of China Our clients fall mainly into three categories. One is clients that need to go global, such as Sinopec; we need to work out how to serve them better, to strengthen their financial management and control. We have more than 1,000 outlets overseas and 1,000 agency banks, so we will work with them to establish a working mechanism, making use of their local settlement system services. We think the focus area should be Africa and Eastern Europe, as these are the places more Chinese companies would like to go global to; in the current situation domestic companies do not have that much business going on in the US and the EU.

The second group is customers who want to make their way into the Chinese market. According to Mofcom [the commerce ministry], utilized foreign investment was $60.89 billion from January to June 2011, an increase of 18.4% on the previous year. We see a rich source of customers and we can serve them through our more than 10,000 outlets, our advanced IT system and by working closely with agency banks in relevant countries, so when customers come to China with their business we can serve them better.

A third area is domestic clients who need advanced cash management. The 12th five-year plan encourages the upgrading of businesses, especially in steel, non-ferrous metal and coal development. The State Council has encouraged M&A in these sectors in order to make the industry more concentrated. Progress in this area is obvious, such as the Shougang steel company buying smaller local companies. During this process, group companies will have large needs for the operation, integration and monitoring of the branch companies. For example, in the coal sector, smaller mines have to be integrated, while bigger mines are established with capacities of billions of tones. In this process, how do you regulate their cash management and operations? They need products from the banks to support them. We see great business potential here.


JSM, CCB As for bringing foreign companies into China, we have some observations. China is a vast country. There is a tendency for companies to move from tier-one cities to tier-two and tier-three cities. Their first question is how to start the market-tier system of management with centralization of control and local adaptation after they have established branches in these tier-two and tier-three cities. The business plan, service network and mechanism of the partner bank is the focus for the foreign company when they select a bank. To meet these company’s treasury management needs, our bank will provide personalized treasury management solutions according to the customer’s treasury management set-up. At the same time, our bank has a nation-wide branches network, which is more than 13,000 domestic business institutions. It can provide customers with a three-tier supporting service system and collaborative service mechanism between head office and the branches. We have rich experience and advantages in servicing these companies.

At the same time, we observed that in addition to online cash management, these companies have offline requirements, which need the support of our branches, such as cash or bank drafts for gathering and payment of physical funds. The proportions of online payments are still high, which requires us to integrate online and offline services. Some of our branches have been developing integrated management systems for different types of transactions. We’re improving our system and integrating the resources of our branches, subsidiaries and outlets, to join them to the modern cash management needs of corporate clients. In recent years, we have made efforts to build a new cash management system to construct a service system in which three channels are complementary, including the counter, self-help bank and e-platforms. At the same time, we have many diversified cash management products that include innovative new products such as the cash pool and settlement card. In 2010 our cash management customers were up 90% on the previous year.


SB, HSBC We cooperate a lot with state-owned, central enterprises, helping them to do business abroad, and have observed some of their tendencies and trends. First, most of these state-owned companies are in the vibrant areas of resources and project contracting. Secondly, their focus is particularly on the Middle East, Africa and Latin America (especially M&A activity related to Brazil). Thirdly, Chinese companies established representative offices in overseas countries. With the improvement of management and with greater reliance on foreign capital markets, we have seen overseas assets and profits of Chinese state-owned companies grow rapidly. So talking with these companies about cash management, it is not just confined to settlement, financing and foreign exchange related risk management is also included. There are quite comprehensive services needed for China’s central enterprises; they have been thinking about how to better operate their financial service operations, and there is no one-size-fits-all approach, because they are at different stages of development and in different areas of business.

One thing we have observed is the overseas treasury and asset holding platform. Some companies have a controlling company that directly holds overseas assets, which may be formed through direct investments or through M&A; some use an overseas trading company or settlement centre as a transit platform to serve the needs of centralization of trade flows, so as to collect overseas trade information and help manage foreign exchange exposure. They can be very different.



LS, HSBC Cash management is a high priority area for HSBC. In China our traditional advantage is services to multinational companies since we have close relationships with their overseas offices and can apply those overseas practices to China. In the past five to six years we have felt the pressure for Chinese companies to expand abroad, and we have adjusted our strategies to better serve them.

We observed that there should be several stages for Chinese state-owned enterprises going overseas. The first stage is risk mitigation: cash visibility, controllability and operability. Many Chinese state-owned companies face challenges to understand the new countries, currencies and tax policies overseas. The conventional model is for headquarters to assign a business manager and a financial manager to communicate with the local offices, which leads to challenges to staffing capacity.

The second stage is to look into the return of liquidity. Many Chinese companies have invested massive amounts of money overseas, so how can they make sure of an optimized return on the working capital? Chinese companies started to look into the services commonly employed by multinational companies such as cash pooling, centralized hedging and treasury investments.

The third stage of needs is to improve the operational efficiency through concepts such as shared service centres or regional treasury centres. That needs a good platform for investment and for basic banking needs, to get rid of low-efficiency manual services. It means using host-to-host connections in ERP systems to reduce the labour involved in the process, to reduce costs and support future expansion.

HSBC has endeavoured to become the natural choice for Chinese companies overseas with focuses on three key areas. First, we are focused on technology improvement. Host-to-host connections and ERP system connections are common practice now and we must ensure we can connect to the Chinese standards. For example, HSBC has developed an interface with a local ERP system, Ufida. Secondly, we focus on understanding laws and regulations: China has controls on the interest rate, exchange rate and on cross-border transactions, so we need to understand both the letter and the spirit of the regulations in order to discuss product innovation with Chinese customers. Thirdly, we focus on the training and education of our staff for cash management. In many countries, for example, we have a China desk, specifically for Chinese companies, where the desk people can speak Chinese with these companies overseas to discuss the details of cash management services on the ground.

Euromoney Globally there is a great deal of fascination at the process of the renminbi becoming more international – slowly and steadily. How does that process affect you, both the companies and the banks?


YHC, CHEC There have been a number of currency swap agreements signed between China and some southeast Asian countries. Our company has gained some beneficiary arrangements and investment possibilities from that. As we expand our business into investment functions, exchange rate risk is one of the most important risks; we can try to control it but cannot circumvent it. If the renminbi becomes more international, we will enjoy lower risks in the countries that have currency swap agreements with China than in those that do not. So it is a very encouraging point for us in going global. We have some long-term projects under way and we will discuss with our partners the possibility of doing settlement using renminbis. We have noticed the potential.

Euromoney Offshore settlement in renminbis is something people are very interested in – people can see the potential but are wondering if it is happening yet in practice. It sounds as if it is already an opportunity for you?


YHC, CHEC We’re not yet doing settlement in renminbis, just considering it. But in many BOT projects, which take place over 30 to 50 years, we can see the internationalization trend of the renminbi so are discussing it with our partners. We will make the point that there is potential to do offshore renminbi settlement over a long period – but it is not a reality yet.


PMF, CPF We have some licensing going on in the Philippines, but really going global only starts this year for us, so everything is still under research.


JSM, CCB The renminbi has already been used as a settlement currency in certain sectors because of historical legacy, local economic development or some natural trading laws. China has started renminbi settlement with small businesses and small countries in southeast Asia; the phenomenon has existed for many years, but not on a very large scale until China liberalized regulations in recent years. So in some neighbouring countries and in specialized areas, we can carry out effective renminbi settlement. There, we started with barter, until finally renminbis were accepted by everyone, and now we have other commercial paper such as cheques based on renminbis.

For banks, there are large opportunities for us as we facilitate transactions. In closed or remote areas, foreign exchange accounts generate a lot of difficulties that would be greatly reduced with renminbi settlement. It also facilitates trade and allows us to expand the business. It creates regular revenue for banks.

For the next step, as more regions use renminbis, it will have more influence on companies because it plays an active role in circumventing foreign exchange risks. But it will proceed step by step. We should have careful arrangements under the legal framework, and we should establish a complete international settlement system with the engagement of all banks so we can make a concerted effort to push forward a system we will all benefit from.


LH, Bank of China For the renminbi to go global, we have three things to do. One, outward flows should be possible. Secondly the currency can stay in businesses overseas. Thirdly, the currency can be repatriated. You have to be able to go global, to stay there, and come back. If you can realize this cycle, you are internationalized.

As far as outward flows are concerned, starting from neighbouring countries, we have spread the system and transaction values have reached over Rmb1 trillion [$157 billion]. Last year foreign trade in China reached almost $3 trillion. And our trading partners are expanding in number. Instead of being focused solely on the US, EU and Japan, we have Korea, Taiwan and Hong Kong to trade with us, which means we have foundations and channels for renminbi going outwards. So that’s step one.

For the second phase – staying overseas – we have some accounts using renminbis overseas, but we need markets and transactions to keep them there. At present we focus on Hong Kong; maybe that can be an overseas local market for renminbis. Maybe we can design investment products and issue bonds so the renminbi can be traded in that market.

For step three, to repatriate renminbis, maybe local governments and corporates can issue bonds or loans so we can recover the currency in the local areas overseas. If we can accomplish all three tasks, banks have an active role to play: we can do settlement, design investment products and improve the quality of the banks. We lose some foreign exchange profits but will make it up elsewhere.

Euromoney It is widely agreed that the investment product development you mention is a crucial part of the market’s development. Do you feel much progress has been made?


LH, Bank of China It has been constrained by some legal issues, especially foreign exchange. China’s policy is to half open the door. It is open for trade and services, on the current account, but a restraint remains on the capital account. Just now we were talking about cash transfers on the capital account, so we still need deregulation on this to push forward projects. Another precondition is deregulation of interest rates. A currency with a managed interest rate cannot realize internationalization very fast.


LS, HSBC For HSBC, there are more opportunities than challenges with the renminbi internationalization initiative. The Chinese government has designed a three-step strategy: first, to have renminbi as a settlement currency, for export and import and as a consideration for tax payment. This has basically been achieved. Second, as an investment currency. Early this year a regulation allowed Chinese companies to use renminbis for outgoing investments. However, on the incoming investment side the relevant rules and regulations have not yet been issued. So that door is half open. The third step is to make the renminbi a reserve currency, and to allow countries and companies to use it in this way. That will not be a government regulatory practice but a choice by the market.

There are already renminbi-denominated investment products overseas; a few weeks ago there was an renminbi IPO in Hong Kong, while the issuance of renminbi-denominated bonds overseas is a hot topic. It is a rising international currency with great potential.

There are several challenges too. The first is that, as an international currency, the renminbi still needs to improve in terms of its operations. For example, standard global clearing channel Swift does not support double-byte characters, so system enhancement needs to be done to support Chinese characters, which are mandatory to process payments via the domestic clearing system. Additionally, our existing foreign-currency control mechanism involves a number of interconnected systems such as Safe [regulatory] reporting, customer declaration and a tax reporting system. Changing of the settlement currency will require a realignment among the underlying systems. These challenges are being resolved one by one and eventually transnational transactions will be accepted by both sides.


SB, HSBC There are both external and internal causes for renminbi internationalization. The external cause is the US prime mortgage crisis, low interest rates and quantitative easing, which have made the US dollar weak. China has a double surplus under the capital and trade accounts, and in this situation massive amounts of foreign exchange have flowed into China. The internal cause is that China has become the largest trading nation in the world, and so using a foreign currency for trade settlement is inappropriate. You’d think that when China becomes the largest trading nation the renminbi would be used as a settlement currency first, then a reserve currency; in the US, it took 50 years between the US becoming the largest trading nation and the dollar becoming the reserve currency.

In Hong Kong, overseas settlement is increasing very fast, and Hong Kong’s status as an offshore centre for the renminbi has been consolidated. The stock of renminbis in Hong Kong is about Rmb54 billion, but in time this can increase to Rmb1 trillion.

There are no restrictions on renminbi-denominated imports: any products can be imported with payments made in renminbis. But for exports only 20 provinces and municipalities are at present permitted to export in renminbis. This is a policy restriction that causes an imbalance. Another influence is the expectation in the international market of the unilateral appreciation of the renminbi. That means that if we pay in renminbis foreign customers would be happy to accept them, but if we export and ask foreign customers to pay in renminbis, they might be reluctant. Chinese parties might still be at a disadvantage when it comes to price negotiation power.

The renminbi bond market in Hong Kong has been very active, but the renminbi loan market faces some barriers because there is no benchmark interest rate for overseas renminbi denominations. Different banks will have different quotations, which is a barrier to renminbi overseas financing. Also, although bonds are developing fast, there are barriers to the cashflow back.

If overseas subsidiaries use renminbis to buy US dollars, the pricing is better than in the onshore market: there is around 20 points difference in the spot market recently, and in forward markets that difference sometimes can be as high as 400 or 500 points. In this situation, many companies have changed their way of settlement: settle the intra-group sourcing between China and Hong Kong in renminbis and let the Hong Kong entity sell renminbis in exchange for US dollars in Hong Kong.

HSBC has set up a central management entity to understand the laws and regulations, upgrade systems, develop products and assist customers. We are the first international bank to have achieved renminbi settlements on six continents; we can settle transactions in renminbis in 48 countries. We believe that in the coming three to five years, global renminbi-denominated transactions will amount to $2 trillion. That means 30% to 40% of China’s total foreign trade, and for trading with developing countries it could be 60% to 70%. That makes China’s currency one of the largest for international trade, matched only by the US dollar and euro. So we have a lot of work to do to prepare.

Short-term liquidity

Euromoney Moving to more technical themes, I’m interested to know how Chinese companies manage their short-term liquidity. What products and structures are available to help with that?


PMF, CPF We attach great importance to liquidity management because the national state grid has developed very fast in recent years, becoming the eighth of the top 500 businesses in 2010. Under the 12th five-year plan we will have high-voltage grid development this year and will need a lot of funds for this, as well as guaranteeing normal operations. So liquidity management is our top priority in cash management. We can issue short-term bonds, but that is difficult this year because we have to do a lot of work. Large banks show great support for us and play active role in our liquidity. We have a warning line: when we reach it, we exercise more strict asset and liability management, including the transfer of assets and closer cooperation with partners and banks. We also have some inter-sector lending.

Euromoney Do you have all the products you need, or are there other things you would like to see developed?


PMF, CPF We need banks to have short-term financing tools to support us, because they focus more on long-term lending.

Euromoney I’ll ask the local banks to respond to that.


LH, Bank of China For short-term financing, the credit quota is very limited. Some short-term funds for overseas have been squeezed, and the central bank has a cap on currency issuance to check inflation, but we can try to do something in trade financing, such as improving turnover rate.


JSM, CCB Most short-term financing products are in medium- and short-term paper. Domestic banks have supported receivables business development, such as the guarantee and discount of receivable papers; corporates can make active use of such tools. Also there are loan products under trade financing. For quality businesses, banks would like to improve their credit lines so as to provide them with more loans. So banks, as an issuer or a financing partner, can provide products to support corporates.


YHC, CHEC We are considering more how to increase and maintain the value of short-term assets.


SB, HSBC There are three perspectives: how to expedite collection of receivables; how make up the short-term cash gap; and how to manage the extra money. To accelerate collection of receivables, customers would seek A/R financing solutions such as factoring or forfaiting or other ways to handle it. Chinese companies going global will have many overseas partners and a lot of receivables; they can make use of international banks, so that the receivable risks are transferred to them. That way corporates can collect cash and realize settlement early so as to avoid risks from the depreciation of the US dollar.

On the short-term cash gap, a lot of corporates hope financing can be arranged overseas: demand for that has increased. Banks can offer them committed or uncommitted credit facilities; in the past domestic companies have been used to committed facilities without a commitment fee. But as companies realize that cash is in short supply, they are becoming more likely to accept committed facilities with a commitment fee. For certain companies with a long-term relationship, banks can offer an overdraft facility to meet their demand for short-term money.

Third, for surplus cash on hand, many domestic companies consider principal protection over liquidity over yield. Only after principal protection and liquidity do they consider if an investment product is good or not. Highly structured products with imbedded options or swaps cause a risk to principal and are not welcomed by state-owned enterprises.


LS, HSBC The uniqueness in China is that large companies tend to have easy access to cash, while small and medium-sized companies find difficulties. Since August 2010, HSBC has seen an increasing demand to establish a cash-pooling arrangement in China on the market in view of the difficulties of accessing external liquidity.

Euromoney I’d like to ask the corporates about counterparty risk – how they go about selecting banking partners.


YHC, CHEC We have two levels of concerns: partner banks for the company as a whole, and for specific projects. When we choose bank partners for specific projects, we look for matchability – whether they have outlets in the areas where we operate, and branches for financing, investment, foreign exchange exposure, tax support and consultancy. We look at the comprehensive services the banks can provide. It’s not just the financial power.

In the past we have focused on construction and engineering and used the US dollar as a settlement currency, so we mainly consider the renminbi/dollar exposure. But with more investment projects we look at other currencies and exchange rates. We have a BOT highway project where we receive money in local currency, for example. We need banks to provide us with products to avert such risks.


PMF, CPF In previous years the provincial offices would choose banking partners, but now headquarters makes the choice. We used to have cooperation with many banking partners but now focus on just a few main banks. In the selection, we look at the power and strength of the bank, including its research and development, such as information-based products and the technology it can provide. We look at the competence of professionals and at productive communication. Thirdly, we look at cash management: we need the bank to have a certain power to control, so that the spirit of our cooperation agreements is implemented at the grassroots level of the banks’ offices. If the bank does not have control, an agreement might be signed at headquarters but the spirit of it is not carried out on the ground. We also check whether or not banks have a long-term perspective and will pay attention and support us. When, for example, we issue bonds and there is a fluctuation of interest rates, we want banks to support us as sincere partners.

Euromoney What about for the banks, what are the counterparty risks you face with your own banking partners?


LS, HSBC A common practice of multinational companies when they choose banking partners is for counterparty risk to be one of the most important things they look at. After the financial crisis, many banks were downgraded, so large companies now pay a lot of attention to the credit rating of banks, and we attach great importance to our own double-A rating. In addition, for big global companies, it is common for them to diversify their banking relationships by choosing a group of core banking partners.


SB, HSBC State-owned companies choose several Chinese-funded banks and some foreign-funded banks to form their core banking group. For us the key is global coordination: the coverage bankers based in Beijing serving the SOEs will manage coordination and negotiation in the 87 countries where we have offices.

I have noticed that many companies want to have bank training and guidance on foreign-currency risk. We can organize that for those finance executives in these companies.


JSM, CCB I fully agree that execution power is very important, particular in cash management cooperation for groups with multiple branches. This is particularly true for large companies. They have a lot of layers and entities to manage, so the cash transactions among these internal organizations are very complicated. It’s vital for the cash management system that the partner banks can help them to improve the execution power, as well as the mechanism. The bank needs to coordinate the agencies that provide services, which means that it has a strong control mechanism. In addition, the pertinence of the treasury management solution is one of the considerations when these companies choose a bank with which to cooperate. The bank should design individual solutions according to the company’s common needs and management features.


LH, Bank of China Starting from 2004 and 2005, state-owned banks carried out foreign stock reform. We have been learning from the best international banks such as HSBC and Citibank. They have an advantage of clear, defined responsibilities and layers: a bank cooperation department, a customer network department. Large clients have comprehensive needs for almost all the services a bank can offer, so in choosing banks, they make comprehensive choices.

Now Chinese state-owned banks are trying to transform their mechanisms and cultures so large companies can work with them more closely. But if corporates have special needs, they can still choose smaller or specialized banks to supplement them. The big commercial banks in China are very powerful because they have the government behind them; they are making progress, optimizing operation processes and can meet the majority of demands of customers.

We have 13,000 outlets at Bank of China, and even with that number we cannot solve all the needs of our customers. So in choosing our agent banks, we choose powerful partners with brands that can radiate to a larger area, with high-quality staff and strong internal control mechanisms.


Euromoney The corporates have all talked about centralizing, consolidating and going overseas. Are the systems and technology available to allow you to do what you need?


PMF, CPF For systems and technology, we hope banks’ systems can guarantee the integration and real-time sharing of information so we can monitor and analyse it in a timely manner, to do a better job for cash management. For technology, we hope banks and their cash products can operate stably, conveniently and fast. We have a lot of units, organizations and accounts that need effective monitoring and settlement.


YHC, CHEC We are concerned with financial management with overseas subsidiaries. Integration of these subsidiaries with the help of banks is our first step, and then we need these banks to provide more comprehensive services. In my opinion, from the technology perspective, this does not create much difficulty.


PMF, CPF We only consider working with bank partners with strong technology and infrastructure.


LH, Bank of China Technology is our internal pursuit. We must provide safe, reliable, accurate information services, and stable payment and collection. This imposes a lot of requirements on information systems but banks have made remarkable progress in recent years, achieving centralized management through one host. We are exploring how we can use ERP and online banking to better connect with companies. We have to outsource to suppliers sometimes, and they can help us to better provide services. We have to work to mitigate the risks involved in working with high-tech companies, because of their growth cycles and stability, and the speed of technology phase-out. So on one hand banks need to develop their professional teams and, on the other, need to stabilize and consolidate ties with suppliers.


JSM, CCB Technology and systems are the foundation of cash management because most of it occurs over e-platforms. Technology is a priority for banks. We’ve attached great importance to the construction of the cash management system and tried to improve the system’s levels of safety, reliability, convenience and number of functions, which is the reason that many companies choose us as their partner bank. For the future, we will increase the investment in the system construction and improve the service level continuously.

The challenges for systems are two-fold. There are new services and products, which need to be carried on platforms according to the companies’ treasury requirements, so we need to develop and improve them in a reliable manner. And we need to provide targeted, customized needs to customers through our systems. In 2002 we succeeded in the public tendering of GE, a milestone event for Chinese banks; from then, cash management systems here developed and thrived. But we still need to adapt to changing needs and build the cash management system to be more strong and perfect.

LS, HSBC There are many things we can still work on and improve. Cash management platforms are becoming internationalized, so companies can observe information on many different cash accounts. Services must be integrated on cash management platforms, including receivables, payables and cashflow information. But platforms must be able to customize.

Common standards on connectivity and file format are becoming more popular. For example, HSBC is working with the Swift organization to promote the SwiftNet to corporates and develop the XML standards so that companies can use one standard platform to access various relationship banks.

We also need to focus more on the solutions than the products. In HSBC, we will have a dedicated implementation manager to project manage the solution delivery. In addition, an integration manager will work closely with the implementation manager to directly talk to client’s IT resources to ensure a smooth and seamless development on the system interface.

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