FTZ’s cross-border cash pool­ing poli­cies lauded

China Daily (Canada) - - SHANGHAI - By SHI JING in Shang­hai

shi­jing@chi­nadaily.com.cn

The num­ber of fi­nan­cial re­form poli­cies in­tro­duced in the China (Pi­lot) Shang­hai Free Trade Zone (FTZ), in par­tic­u­lar those that in­volve cross-border cash pool­ing, have re­sulted in sub­stan­tial ben­e­fits to com­pa­nies lo­cated within the Zone, said Zhang Yuepeng, pres­i­dent of Dover Asia Pa­cific.

Dover Cor­po­ra­tion from the United States, which had re­des­ig­nated its China head­quar­ters in Pudong New Dis­trict as its Asia Pa­cific hub in 2011, was one of the first com­pa­nies to carry out cross­bor­der two-way ren­minbi cash pool­ing in the FTZ, and Zhang said that the new poli­cies have greatly en­hanced ef­fi­ciency and saved the com­pany much in cur­rency con­ver­sion.

“Be­fore cross-border cash pool­ing was avail­able, ev­ery sum of money needed to go through a very strict ap­proval process, which might take a week or even a month. This in­cluded a lot of hu­man and fi­nan­cial costs. At present, the cash pool­ing works like an in­ter­nal bank within the cor­po­ra­tion, with which we can ef­fi­ciently man­age the cir­cu­lat­ing cap­i­tal,” said Zhang.

Be­cause of China’s for­eign ex­change poli­cies, Dover Cor­po­ra­tion used to have two dif­fer­ent cap­i­tal man­age­ment meth­ods — one spe­cially for China

Zhang Yuepeng, and an­other for the rest of the Asia Pa­cific re­gion — and Zhang said that the im­ple­men­ta­tion of the poli­cies solved this prob­lem as the com­pany can now bet­ter man­age its cap­i­tal. Ear­lier this year, Dover China was able to use its ren­minbi cap­i­tal to ac­quire a com­pany in Italy.

“It was easy for cap­i­tal to en­ter the Chi­nese mar­ket but much harder to exit. As a re­sult, the re­gional head­quar­ters in China used to have less say at the cor­po­rate level,” said Zhang.

Be­cause of th­ese poli­cies, Dover is now plan­ning to pro­mote ren­minbi as the third re­serve cur­rency within the cor­po­ra­tion, in hope of en­cour­ag­ing over­seas cor­po­rate com­pa­nies to ac­cept ren­minbi.

Zhang added that they will con­sider is­su­ing bonds within the FTZ in the fu­ture when cap­i­tal ac­counts are opened and when the com­pany is plan­ning a large in­vest­ment. He is also hop­ing that au­thor­i­ties will un­veil fur­ther poli­cies that can fa­cil­i­tate the ac­qui­si­tion of com­pa­nies out­side the FTZ, say­ing that the cur­rent ap­proval pe­rio d of sev­eral months is still too long.

The fi­nan­cial in­dus­try in Pudong has ex­pe­ri­enced rapid growth ever since the FTZ ex­panded in April. In the first three quar­ters of this year, the added value of the fi­nan­cial in­dus­try in Pudong reached 146.1 bil­lion yuan ($22.88 bil­lion), up 27.2 per­cent yearon-year, ac­count­ing for up to 51.1 per­cent of the to­tal added value of the city.

By the end of Septem­ber, the to­tal num­ber of fi­nan­cial in­sti­tu­tions lo­cated in Pudong, in­clud­ing banks, se­cu­ri­ties com­pa­nies and in­sur­ance com­pa­nies, amounted to 883, with 39 of them hav­ing started oper­a­tions in the Zone this year.

The emerg­ing fi­nan­cial in­sti­tu­tions have also made a break­through re­cently — a to­tal of 1,539 new eq­uity in­vest­ment and man­age­ment com­pa­nies were es­tab­lished in the Zone by Septem­ber. The num­ber of newly-added fi­nan­cial leas­ing and wealth man­age­ment com­pa­nies were 762 and 86 re­spec­tively.

Be­fore cross-border cash pool­ing was avail­able, ev­ery sum of money needed to go through a very strict ap­proval process, which might take a week or even a month.”

Dover Asia Pa­cific

pres­i­dent of

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