(12 February 2025 – China) HSBC has launched an innovative new cross-currency netting solution developed collaboratively with Royal Philips in China.
The solution addresses challenges faced by Royal Philips, a leading health technology company which operates nine entities in mainland China, conducting over 4,000 intra-group transactions across seven currencies annually.
The company aimed to implement a single RMB cross-currency netting structure for all intragroup cross-border transactions involving Chinese entities, but with no precedence under mainland China’s existing regulations, Philips’ nine entities (including 17 business units) in mainland China could not be integrated into the global netting structure.
The netting process converts all monthly cross-border payments and receipts into RMB using Philips’ in-house bank exchange rate. These transactions are then netted into a single settlement between Philips’ domestic and overseas netting centres, significantly reducing the complexity and volume of transactions. By facilitating transactions in RMB, the solution also supports the growing use of the currency in international trade and finance.
“Netting may be a common treasury practice for MNCs, but every once in a while, a company redefines the boundaries of what’s possible. Philips’ groundbreaking RMB cross-currency netting solution in China is one such game-changer” said Infynit Founder Dr Ritesh Jain.
“China, a market of immense opportunity yet tightly controlled financial systems, has long been a challenge for integrating global treasury operations. Philips took a bold step, partnering with the PBoC and HSBC to implement a market-first RMB-based netting structure, overcoming regulatory hurdles and streamlining thousands of cross-currency transactions into a single RMB settlement. True leadership in payments lies at the intersection of innovation, collaboration, and bold vision. Philips has proven that even in the most complex regulatory environments, transformative solutions are possible with the right mindset” Dr Jain added.
“Multinationals’ need for centralised and optimised treasury processes increases as their businesses in mainland China grow. Through the adoption of our industry-leading solution, companies can greatly reduce the manual processing of their cross-currency transactions, materially lower the cost of each transaction, and vastly improve the visibility and control of their cash flow” commented HSBC Co-Head of Global Payments Solutions APAC, Yvonne You.
“HSBC has been our longstanding trusted advisor as we expand our business in mainland China. This groundbreaking netting solution removes many treasury-related pain points, unlocking our onshore working capital, reducing both the volume and the cost of our cross-border transactions, and improving our FX risk management” stated Philips Head of Treasury for APAC, Kathy Yu.