China cash management debate: Banks in China simplify a complicated world

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Five years ago, corporates began to expand, setting up manufacturing facilities and offices at home and around the world. As those companies buy fixed assets and trading companies across multiple markets, they need a way of linking that local entity to their group head offices back home in each of these territories.

EXECUTIVE SUMMARY

• Cash-management systems in China are becoming more complex as corporates expand at home and overseas.

• Chinese companies are spread across multiple regions and jurisdictions, making it vital that cash-management services are centralized on one automated and easily accessible platform.

• Competition to secure a client’s cash-management business is rising fast – even different branches in the same bank are competing for the same account.

• Small- and medium-sized enterprises need to secure credit, cut inventory and accelerate capital turnover. Banking partners can help them do this.

• Chinese banks need to invest heavily in hiring new, specialist staff overseas as mainland corporates expand into new markets.

Learn more about the China cash management debate participants

Euromoney Cash management is an increasingly important part of China’s banking sector. How is the cash management industry changing as China’s economy booms? What services are you offering? And what services are key clients demanding of their banking partners?

MW, Deutsche In the past five to six years, the cash management industry has been expanding very rapidly in China. From the perspective of Deutsche Bank, what we provide to our clients is based entirely on their changing needs and requirements. As companies in China get bigger and more global in their reach, they are naturally looking to become more efficient, demanding more automation and tailor-made solutions. China’s big enterprises have an increasing number of subsidiaries, spread across the country and across the world, and each of these companies is at a different stage of its life cycle. Some are seeking value-added services and ways to optimize internal liquidity. Others either primarily want to generate cash, or are already cash-rich, in which case they want to find ways to handle their surplus liquidity. Others are cash-deficient; for these companies we are developing different solutions. For example, we have created cash-pooling solutions to help them consolidate and automate their liquidity, helping them cut their reliance on external borrowings and reduce interest costs.

HL, Bank of China Cash management has undergone three stages of development in China in recent years. The first one is visibility – seeing what is going on. Many Chinese groups have divisions that are spread across the country, so seeing what happens at each division, how much cash they hold and so on is very important. Many executives turn to their banking partners to ensure that they receive a precise daily log of what is happening at each of their divisions. The second stage is control, since seeing is not the same thing as actively managing a situation. Here, we control the direction and level of the cashflow, enabling a company’s headquarters to exert control over its branches, helping increase efficiency and reduce waste and fraud. The final stage is where we add value. Companies want banks to offer short-term financing and money-management services to help boost returns. And in future, many leading corporates will also want their cash management, trade finance and supply-chain finance systems working seamlessly together. We should note that China is becoming a more consumption-led society, which also creates big new opportunities for us. Over the next 10 years there will be other opportunities as global Chinese industrial groups emerge in industries such as infrastructure, energy, and metals and mining.

WY, Bank of Communications We have found that our corporate clients need comprehensive cash management solutions. In the past, business was handled by different departments within our bank but now we have one platform providing an entire set of customized, centralized cash management services. Cashflow is vital, but so is information flow. Ten years, ago, there was no concept like cash management in China – we only learned about this business by watching big state-owned enterprises and foreign companies. New developments over the next couple of years will include a shift into electronic commerce-based services, creating greater demand on supply-chain financing and enhanced interdepartmental management efficiency. That’s why we are trying to understand more about different industries in order to customize our service offering.

MW, Deutsche The development of China’s cash management industry always moves forward in lockstep with the needs and requirements of clients. Look at China 10 or 15 years ago: you had corporates strung out across the country, in lots of different cities and provinces. Then, from around five years ago, you started to see corporates expanding their profiles, setting up manufacturing facilities and offices not just at home but around the world, which often required them to establish legal entities in those markets. Increasingly, these companies own fixed assets and trading companies across multiple markets; in each of these territories they need a way of linking that local entity to their group head offices back home. The demand here is for more synergy, with everything linked together. And that’s where we can help clients that are active in multiple markets, in multiple countries and currencies, operating under multiple jurisdictions and sets of regulations, to get access to a comprehensive suite of cash management services operating on a common platform yet tailored for local markets. Chinese multinationals have in many cases become very large, operating across Asia and in some cases around the world. As a result they need an efficient and all-encompassing cash management solution in order to manage their increasingly global operations in a coordinated and centralized manner. Many years ago, Chinese companies were mostly interested in knowing about plain-vanilla cash management solutions. But as they have grown in size and scale, many have started to demand more complex cash management services. These include liquidity solutions that offer more controls and transparency on information and cashflows, coupled with improved visibility of their group cashflow picture as they take on an increasingly international role in the global economy. This is one of the biggest systemic changes taking place today in cash management in China.

Euromoney We know that cash management is based on clients and their needs. For companies here in China, local and foreign, what cash management services do you demand from your banking partners?

LSL Our brand’s operations are spread out all around China, and the basic problem we face is how to coordinate and centralize our cash management operations in a country where our sales are growing so quickly and over such a wide area. We have more than 20 shops in China, including three shops in Beijing, five in Shanghai and three in Guangzhou. So geographically at least, we have a lot of ground to cover in terms of delivering our products and recouping cash back to our two headquarters in Hong Kong and Europe. Our daily operation is mainly on the retail side in China, so the process is a simple matter of distributing products to our branches and collecting the cash we make every day – or if the branch sits within a larger department store, the landlord will collect cash for us and remit it monthly. For many years China has been a cash economy, so collections have naturally been made in hard cash, but this is now changing. Cash is actually getting to be an ever-smaller portion of our daily liquidity flow. People increasingly pay using credit cards and UnionPay [China’s pan-national bank card organization and interbank network]. We purchase and import our products from abroad, and then complete the necessary importation documents, paying import duties and value-added tax and so on. We used to pay [our headquarters Hong Kong] in foreign currency, but increasingly we are paying in renminbi, and I would say that our cash management operations here in China have in recent times become much more simplified.

AW, Porsche Our business is really not so different to that described by Liu Sheng Liang. Porsche has no holding company in China, but has mainland operations coordinated and centralized in Hangzhou [the capital of eastern Zhejiang province]. We are also in the retail business – we have 12 dealerships selling our cars across China. Cash payments are a big part of our business. We need local accounts, not least for local tax payments, although that’s getting better – there is only one city left where we have special tax-payment accounts. And we are now looking to centralize all of this, coordinating it all from our treasury department in Hangzhou. Furthermore, we are in a market that is growing fast, and we are growing even faster. That means creating a lot of new entities each time we open up a new dealership, which in turns means we need to open up new bank accounts, fill in lots of new forms, and all of that has be linked into a centralized framework. This creates a challenge for us, as even when the products we are taking are standardized, the contracts are not. We would like it to be easier to set up local accounts and to create a centralized cash management solution that links all our branches across the country. This appears to be a problem shared across many industries in China.

MW, Deutsche Discussions around how a company can centralize its entire operations onto one platform have been under way in the market for a long time. But there are differences in the way banks tackle this challenge. At Deutsche Bank, we have been systematically centralizing our cash management operations, which fits the demands of our clients, who have been undertaking the same initiatives in parallel and demanding greater automation. At some companies, for example, you have the treasurer and the chief financial officer working in two different locations, yet together they are managing the company’s entire China operations. The aim here for clients is to centralize their funds as much as possible and to increase both efficiency and yields. What we can do is to provide clients with an all-encompassing single electronic platform that links together all the divisions and subsidiaries. And according to the client’s needs we can set up an automated system to move all of the company’s funds together onto one platform. This helps companies not just to consolidate all of their cash management processes but also to provide better transparency over their operations and information flow.

YZ, Xinxing The centralization of cash management is a really interesting issue. As the world’s largest producer of ductile iron pipes, we have production bases across multiple provinces, including Hebei, Hubei, Xinjiang and Sichuan. Over the years we have worked with many commercial banks on a national and regional level. But in recent years we are working more with just Bank of China, consolidating our cash management processes with them. Our headquarters asked why we were doing that. Wasn’t it too risky to put all our eggs in one basket? Their thinking was that, even if it was the same bank, that their services or their processes would differ from province to province. And, to be fair, a lot of banks don’t like to offer you too much service, as it’s a lot of bother to do that, and a lot of paperwork. But for us, the centralization of our cash management operations with Bank of China has been really good: the bank is technically excellent, and we have been impressed by how well our cash management needs are linked together.

Euromoney For corporates looking to get the best cash management services in China, how do you choose your banking partner?

LSL Because of the special situation that we face in China, we have to break away from the normal patterns of behaviour that we follow in other countries. In other countries, we have a global banking partner, but here in China we use Bank of China, as it has an extensive network of branches right across the country, which made the choice a very easy one for us, and a very easy decision to explain to our headquarters. When we look just at the local situation on the ground here, we need to have a bank with lots of branches, and that can help us make tax payments in multiples cities across China.

MW, Deutsche Clients choose their banking partners, wherever they are, based on the same fundamental group of metrics. Globally, they are looking for cash management solutions that span a company’s entire international operations. But there are also country-specific and market-specific questions that companies might want to ask, such as: Is my banking partner flexible enough? Is it providing me with the most innovative solutions? Most banks can provide basic forms of cash management in virtually every market – payments and collections, transactions, electronic banking and so on. But when it comes to innovation and complexity, a client will naturally become far more demanding. No doubt a bank with a nationwide branch network, as we have in so many countries around the world, has a clear advantage. But you also need to offer complex cash management services such as advanced treasury solutions. Having a physical presence without innovation often isn’t enough.

AW, Porsche Choosing a banking partner is a big decision. We have a whole set of processes to follow at our headquarters [Porsche Holding is based in Salzburg, Austria] and we have to explain very carefully the decisions we make here in China to our bosses back home. When we select a cash management partner, we have to decide if it is flexible enough to provide the range of services that we need. The other vital issue when choosing a bank is pricing: our cash management providers have to be very competitive in their pricing. We are happy here in China on the whole, and the framework and the cash management system we have here is very similar to the one we have in Europe – we can explain it very easily to people at headquarters. There are a few problems, notably when it comes to language barriers. We have to translate everything into English before we sign anything. If there were one thing I would like to change here, it would be a greater availability of English documentation.

YZ, Xinxing We have had lots of different banking partners, and we have often compared them with one other. If their service is poor, we reduce our level of business. We don’t cut them out altogether. But we have to be vigilant – we are a big company with branches in many places, with multiple business divisions. So if our banks are providing us with poor cash management services, it seriously affects our bottom line. We need a streamlined and comprehensive service from our banking partner. Often, there’s serious competition for our services, even from inside the same bank. In Handan [a city in Hebei province], for instance, we have three different branches of the same bank, in three different counties, all competing for the same piece of business with us.

MW, Deutsche I would say that the more-developed players in any country tend to discuss cash management strategy, rather than merely the operations with their clients. Every bank can provide basic services, such as opening multiple accounts for corporates, installing electronic banking services, etc. But not all banks can consolidate a company’s entire cash management operations on a single platform, pulling together information and data from across the world. Increasingly, companies will want their cash management partner to be a strategic partner, helping them to map out a future growth plan. They need tools that will enable them to evaluate their current performance and predict future cashflows. The bank that succeeds in offering a solution to these needs – coming up with innovative, workable solutions ahead of its peers – will be the one that remains one step ahead of the others.

Euromoney Let us turn to the issue of providing cash management services to small and medium-sized enterprises, the driver of any economy. What are banks doing to improve their cash management services to China’s army of SMEs?

MW, Deutsche Our local banking partners in particular are definitely playing a big role in this segment, and I believe that risk profiling is an important area to consider. The process we follow at Deutsche Bank is to guide our SME clients through our tailored financing and cash management programmes, with the goal of helping every client – whatever size they are and whatever industry they come from – understand industry patterns and trade cycles. As a result, we are better positioned to assemble the best tailored cash management service that suits their needs.

WY, Bank of Communications Even China’s premier, Wen Jiabao, has emphasized the importance of encouraging the development of SMEs, in line with the prospects of both the country and the banking system. Different banks have different aims – some focus on larger corporates, others on smaller firms. A strong priority of ours is certainly providing cash management services to SMEs. One of our aims is to make upstream and downstream SMEs of core large enterprises more efficient, to provide access to supply-chain financing, and to offer electronic services and online loan application services. Financing is still the biggest challenge for most SMEs, so we want to find ways of improving cash management services even for smaller clients – helping them raise working capital and optimizing their internal liquidity – to ensure that they are growing their business alongside us.

HL, Bank of China China has more than 13 million SMEs, and only one in 10 of these firms can get credit. Yet some SMEs say to us: since you have so much money on your books, why don’t you just lend it to us? But we don’t own the money that sits in our vaults – that money is owned by our customers, by our depositors. So in terms of smaller firms, we are very supportive, we seek to provide credit support to worthy SMEs. Yet we are also very cautious, as SMEs sometimes do not have collateral, or even complete financial reports – and if that is the case, how can we guarantee the security of a loan? In my opinion, the best way to support the remaining 90% of companies – the ones that can’t get access to credit – is to start from a cash management perspective. We need to seek to reduce SMEs’ inventory and to accelerate their capital turnover so that the revenue they generate can be invested into the next round of production. This is the future for SMEs, and vital to their success: by providing efficient cash management services, we can reduce the cost of cash management for SMEs and help them improve their cash turnover.

MW, Deutsche For most fast-growing SMEs, the issue isn’t about managing internal liquidity, or often about cash management at all, but rather about gaining access to capital in the first place. Very often it’s all about raising funds – access to cash is vital but managing it may not be a priority, and that’s something that banks have to bear in mind. That said, these are companies that are growing very rapidly, many of which will become multinationals in time: leading corporates in China and potentially around the world. So banks are often looking to provide a bridge between those two points of scale: between smaller yet fast-growing firms, and companies that are slower growing but increasingly global in scale. Our focus at Deutsche Bank has long been on large corporates and selected mid-sized corporates, known in Germany as the Mittelstand. What we often do in China is to offer cash management and trade finance services to selected SMEs that have strong, long-term links with larger corporations. If these companies, of different sizes, have existing links with each other, we can help make those connections stronger by providing trade financing to the smaller partner and helping it manage its liquidity. This in turn helps smaller firms to grow and to understand what cash management tools are and why they are needed.

Euromoney Technology is obviously paramount to the banking sector as a whole, and for cash management in particular. How much has information technology changed over the years, and how is technology changing and improving the cash management industry in China?

MW, Deutsche Technology is one of the most important factors when it comes to cash management. It determines how efficiently you can provide a service, and how quickly a client can get to enjoy that service. And so much when it comes to cash management depends on the bank’s strategy – how seriously it takes technology and how much it’s willing to invest to develop new services. At Deutsche Bank, we invest a lot of money in new technology that meets customer requirements, not just in China but globally. And with new technology embedded within the system, we can provide better services to our clients, wherever they are. Banks can now go a step further in terms of coordinating with clients and understanding customers’ enterprise resource planning and internal processes better. New accounting systems are developing very rapidly in China.

HL, Bank of China Technology is just one chapter in the cash management story. We are always seeking not just to create new technology but also to ensure that business and technology departments work together to provide better cash management solutions. One of the problems we find is that business people and IT people not only work in different departments, they also think differently from each other: sometimes they cannot understand one another. So when you are creating services that benefit customers, you have to ensure that both sides of the coin, business and technology, are working in harmony. But it is true that over the past five or six years big changes have been going on at China’s biggest banks. Every big commercial bank is investing billions of renminbi every year to improve technology.

WY, Bank of Communications I agree that internal communication when it comes to developing and understanding technology is vital to improving services for customers. That’s why we are focusing on training our staff and product managers, whether they are on the business side or the IT side, to ensure that they communicate better with each other. With this kind of bridge, they can interpret or infer the needs of customers far better – and that will turn the needs of customers into reality, creating better services for everyone. Cooperation between departments to create better technology is vital, as that helps us provide better service solutions and grasp what the customer is really thinking about.

LSL Technology has improved a lot in recent years. In our day-to-day operations, we use autopay a lot to process customs duties electronically. This is a big improvement, as two or three years ago it wasn’t practicable at all to process transactions this way. It saves us much time and money, as importation documents are thick and heavy. Before, we would have to assign this process of filling out forms to agents. But now we get to see all the data every single day, including how much duty we pay, and that is a huge leap forward in technological terms. We also do cash pooling with Bank of China, which is also done electronically, so we don’t have to have personnel at each branch to collect cash and vouchers. That solves a lot of our cash management problems.

Euromoney China’s rapid and harmonious rise is being accompanied by mainland corporates expanding overseas into new markets. Are banks keeping pace with this process of internationalization – and what new services are they seeking to offer Chinese firms with global aspirations and ambitions?

MW, Deutsche As Chinese corporates expand internationally, their cash management needs and demands change accordingly. Their growth is one of the drivers that lead banks to change in ways both big and small. Just to give one example, we have a Chinese corporate client that established overseas regional head offices in Hong Kong and Singapore. It subsequently decided to control all of its overseas operations through these hubs. Its first step was to ensure that it had total information consolidation within a central operating system, allowing it to monitor cashflow in every country where it operates. Then, taking the process to a more advanced level, its aim was to create a cash-pooling system that connects across countries. At [our client’s] regional head offices in Hong Kong and Singapore, it looked to centralize its treasury and foreign exchange operations, to make it easier to consolidate its service offering. So we offered it a whole suite of services through our electronic banking platform in more than a hundred currencies, allowing it to do all its currency matching and hedging in one place. That is just one part of the electronic delivery platform that we offer, helping to centralize our clients’ cash management requirements. With franchise operations in more than 70 markets, Deutsche Bank is one of the biggest global players in the cash management market – and a key partner to Chinese corporates as they go global.

HL, Bank of China A lot of big Chinese state-owned enterprises are expanding overseas – after 30 years of surging economic growth on the mainland, foreign trade has reached a bottleneck, so to create more profit, more Chinese capital needs to be invested overseas. Currently, direct overseas investment by mainland corporations, both public and privately owned, is growing by 30% a year. We want to serve these enterprises, but we have a lot of work to do beforehand. First, we have to establish and improve services that can be offered to all of our clients overseas, including 24-hour payment and cash management services in multiple languages and multiple currencies. Second, we have to expand the number of our overseas outlets. Even though we have almost 1,000 branches in Hong Kong, Macau and around the world, it’s still not enough. We need to hire more specialized professionals who know the local legal frameworks and the specifics of each local market in which we operate.

WY, Bank of Communications We are trying to integrate our domestic and overseas operations, creating a comprehensive foundation for our global cash management services. In China, we have a lot of branches, but we don’t have as many as Bank of China. There is a gap for us when it comes to global cash management, so we are working more with foreign banks and foreign-funded banks, helping to integrate our payment operations and improve our technical services. But we also need to hire more overseas staff to familiarize ourselves with regulations and taxation related to cash management services in different markets. Our mainland clients know China well, but they don’t always know much about banking and finance and taxation in foreign markets.

HL, Bank of China We need to train more employees in foreign markets, and introduce more talent to those markets and offices – and to do this, we need to invest a lot more. Up to now, we have established business relationships with more than 1,500 banks worldwide and we are planning to expand our business cooperation in terms of cash management with them.

WY, Bank of Communications Chinese corporates are faced with the pressing issue of globalization. Producing goods overseas is one thing, but these companies also need financing channels and platforms overseas. Chinese firms such as [computer maker] Lenovo and [telecoms equipment maker] Huawei already have strong sales outlets overseas. But for many [smaller or more domestically focused] Chinese companies these are new challenges and problems. We talk with them to understand what services they need, helping them to understand that the cost of capital and finance is different in China than it might be in another country. You can now transfer renminbis outside China more easily, so we have to consider that too.

Euromoney Let’s turn to the issue of the globalization of China’s currency, one of the big stories for decades to come. How is the rise of the use and spread of the renminbi affecting how banks and corporates use, and husband, their cash? Are Chinese companies working overseas increasingly choosing to settle transactions in renminbi?

MW, Deutsche From our point of view, more and more corporations are actively swapping foreign currencies for the renminbi in their trading activities. We see an increasing number and volume of transactions that use renminbi as the preferred currency for settling trades, which is greatly increasing the global spread and the usage of the renminbi. But we should also note that whichever currency is used ultimately still depends on where the recipient of the currency is located. It has become increasingly easy in many developed markets to exchange US dollars or euros for renminbis. But then the question arises: if you are an exporter receiving renminbis overseas, what do you do with the Chinese currency that is now sitting on your books? This is a critical area of advice for banks to provide to their corporate clients, and another example of where a good banking partner can provide cash management and supply-chain financing advice for Chinese corporates as they expand overseas.

LSL We try to do as much of our cash pooling at our headquarters [in Hong Kong and Europe] as we can, focusing on hedging our currencies in one location. For Chinese companies that begin trading with the outside world, I can see that one of the hardest things that you face is working out how to hedge your currency abroad, particularly if you are trying to hedge the renminbi.

WY, Bank of Communications The free convertibility of the renminbi will be stepped up over the next few years, in accordance with guidelines set down by the 12th Five-Year Plan [China’s official development plan, covering the five years to end-2015]. The internationalization of the renminbi will happen in distinct phases. It is already being used widely as a form of payment in Hong Kong, and it wouldn’t surprise me to see the renminbi become accepted very quickly in a lot of markets, allowing Chinese exporters to settle orders easily overseas in the currency. As the renminbi becomes increasingly a form of settlement overseas, and becomes an increasingly international currency, being used in multiple jurisdictions as an important cash management tool, it will move towards greater convertibility.

Euromoney What regulations are likely to help or hinder China’s cash management industry, in the years to come, as mainland corporates expand overseas in search of new markets?

HL, Bank of China Regulations set by foreign governments will always affect the products and services that we can offer our clients. All countries have different characteristics. In countries like Malaysia, Vietnam and others, you cannot enjoy total freedom of cross-border transactions, while in other countries – in the UK, or Australia, or the European Union – there are no foreign exchange controls, but there are language barriers and different time zones [to China]. One of the things that we have to watch out for in the years to come is potential trade protectionism by foreign governments. How we develop our cash management services depends on how policies develop in other countries, including tax and cash policies, and rules over financial regulation. Chinese enterprises are increasingly expanding into Africa, the Middle East, Asia, and Central and Eastern Europe, so we need to keep an eye out for rule changes in those areas, so that if our clients have specific demands in those regions, we can be flexible and responsive.

MW, Deutsche China as an economy and a marketplace has opened up so much – even over the past five or 10 years we have seen many changes. This includes increasing flexibility shown by regulators toward rules and regulators, notably the relaxation of foreign-currency controls, which has led to a continued rise in cross-border trade as a result. Likewise, there is an increasing influx of innovative liquidity solutions into the market, making cash management a more dynamic area of the banking sector, and helping Chinese corporates become more efficient, even by international standards. Regulators are also deepening their engagement with companies to find out what they need – and I see this happening every day. Regulators visit different regions and cities, talking to the representatives of big corporates and SMEs, seeking to understand their concerns and needs, and passing regulations that encourage the upward development of the industry – so long as the new rules are in the interests of the country. These are gradual changes – they are taking place over years rather than weeks, but all the changes we are seeing are good changes, they are all moving the economy in the right direction.

WY, Bank of Communications Regulations on companies [in China] are rising, so that more communication between corporates and banks on one side, and Chinese regulators on the other would be a good thing. In my opinion it would be a good thing if we were able to talk more about financial issues with [regulators like] Mofcom [the commerce ministry] and [foreign exchange regulator] Safe. Regulations need on the one hand to focus on risk control; on the other hand they need to adapt and work to satisfy the needs of companies. That’s something that regulators need to understand; if they understand company needs more, they might relax the rules a little as well.

MW, Deutsche Some rules could be refined to streamline and improve efficiency. Overall there are many foreign-currency regulations that require corporations to prepare a multitude of supporting documents, and that takes time. Yet here again we see change for the better taking place. Safe, for instance, is reducing the number of forms and documents companies need to submit to complete cross-border payments and transactions in a few pilot cities across China. This reduces companies’ workloads. Of course, there always need to be sufficient control mechanisms in place to ensure that transactions are monitored and that companies and banks comply with regulatory requirements. But the relaxation of rules, while gradual and systematic, is both positive and of huge benefit to the expansion and increasing efficiency of China’s economy.

Euromoney Summing up, what conclusions can we draw about the development of China’s cash management industry, and the pace of development in the country’s banking industry? Are we heading in the right direction?

LSL Banking in China is moving forward in leaps and bounds. I still remember the days when accountants would line up in front of the counters and present the bank with vouchers to process. These days, banks come to our offices presenting documents, helping us with data processing and data organization. We’ve come a long way in a short period of time. In some cases in China, cash management services are just as advanced as the services outside China. And with the increasing internationalization of the renminbi, and with competition within the banking sector on the rise, service quality will only continue to improve.

HL, Bank of China Big changes have taken place within China’s banking industry over the past five or six years. We are introducing and attracting more talent into the bank, both here in China and at our operations all around the world. Our cash management team gets younger every year, and our executives are increasingly specialized, and increasingly professional, with college graduates accounting for a much larger percentage of the workforce. Our IT systems and culture have made great strides as well. In the next five years, in terms of cash management, I believe we may become as good as Deutsche Bank and other global leaders.

AW, Porsche Banks could add better language services into the mix – again, when it comes to providing better English-language documentation. But I have to say – I’ve been here in China for three years, and already the change is amazing. The banks are really on the right path, with services that are increasingly sophisticated and customized to the needs of the client.

MW, Deutsche China’s cash management industry is already surprisingly developed and mature, despite its relative infancy. An increasing number of banks are entering the market, concurrent with a growing number of Chinese enterprises that are becoming national, regional and even global in scale. Ten or even five years ago, there were only a small handful who knew about cash management: back then, cash management tended to mean electronic banking, which is just a payment delivery channel. The market still has a long way to go: it needs to evolve further and become more mature. While we are seeing more transactions being settled in renminbis, the currency is still far from being fully convertible. Yet I am amazed to see every day just how far China’s cash management industry has come in such a short time.