With the launch of cross-border RMB trade settlement, Siemens created the ability for all of its intra-group companies, independent from their global location, to be able to pay and collect in RMB for group-internal business, as well as for business with third parties in China. The Hong Kong regional treasury centre of Siemens' Financial Services unit (SFS) led the global project to implement a complete RMB solution in February last year.
The main benefit for a global multinational engineering and technology company such as Siemens concerns its currency risk management. Previously, all payments had to be settled in either US Dollars or Euros, and the transactions hedged in China in order to manage the FX risk. With cross border payments denominated in RMB, all RMB FX risks can be pooled together, potentially netted, and managed centrally. This significantly reduces hedging volumes and transaction costs, but also simplifies the process of managing Siemens’ RMB risk exposure.
Furthermore, offering RMB for payments and collections not only benefits Siemens, but also Siemens’ Chinese customers and suppliers, since its business partners in China typically find it much easier to pay in RMB than in US Dollars. By reducing the foreign exchange risk for key suppliers, for example, Siemens might be able to receive better terms and conditions, since the suppliers themselves benefit from reduced foreign exchange risks. This benefit can be passed back to the buyer through a price reduction. With Siemens’ strong commercial relationships with a number of state-owned enterprises, as customers and supply-chain manufacturers, RMB invoicing can be a win-win situation for both sides.
At the 13th EuroFinance Cash, Treasury & Risk Management in China annual conference, Helen Han Ling, Head of Global Markets, SFS China, is going to share the story of SFS has achieved ‘ultimate centralisation’ in China by leveraging the latest deregulation and how they integrate China into the global treasury.
To hear from our keynote speaker, join us at the conference on the 18-19 November in Shanghai.
Register now: http://www.eurofinance.com/