At the forefront of digitalisation - DKSH’s blueprint for transformation

DKSH is a market expansion services provider that offers sourcing, market insights, marketing and sales, eCommerce, distribution and logistics as well as after-sales services for high-quality products and brands of multinational companies, helping them grow their business in new and existing markets. While headquartered in Switzerland, DKSH is firmly established in Asia Pacific. DKSH operates in 36 markets with 28,060 specialists, generating net sales of CHF 11.1 billion in 2024.

As a leader in market expansion services, DKSH Hong Kong embarked on a transformation journey to digitise its treasury operations while accelerating digital adoption among local businesses in the market, to support the growth of its customers’ brands. HSBC acted as a strategic partner, advising on the approach as well as providing the necessary solutions and capabilities to achieve DKSH’s goals.

As digitisation continues to shape the world, DKSH Hong Kong acknowledged the need to undergo its own digital transformation by integrating cutting-edge technologies into all facets of corporate operations, culture and consumer experiences. For treasury, the company’s strategic direction is to integrate automation into existing processes as much as possible, to build agility for local teams to navigate market changes quickly, build value for their customers, and reinforce DKSH’s position as a market leader.

Additionally, DKSH’s local entities, with their insights into the specific market, were responsible for executing their own strategies to support the local business, in line with global direction and policies. The firm also operates a Business Process Operations Center (BPO) in Malaysia that centralises day-to-day payment execution.

The strategy: To align with the global directive and vision of creating an integrated, cashless payments ecosystem that benefits both businesses and customers, DKSH Hong Kong sought to overhaul its treasury and payments activities to build agility and improve operational efficiencies to increase market competitiveness and strengthen its position as a market leader. The transformation evolved around three key pillars – digitisation, centralisation and standardisation.

The challenges: While major retailers and large institutions in Hong Kong have widely adopted digital solutions, small-to-medium enterprises (SME) like local pharmacies and mom-and-pop stores – which forms a large portion of DKSH’s distribution network – often still rely on traditional payment methods and are therefore in the transition phase to adopt digital payments.

With an extensive distribution network that range from large retailers to family-run businesses, DKSH Hong Kong has been working closely with its banking partner, HSBC, to deploy tailored solutions to realise their vision, while keeping the needs and nuances of their local customer groups at the core of the digital strategy. The transformation also marks a first critical step for DKSH Hong Kong to transition to a real time treasury and establish a future-proof structure to support strategic growth.

Transforming payments, improving convenience. In line with its global directive, DKSH Hong Kong digitised its payments and collections approach to not only automate and streamline cash flows but also tap into enriched data to deliver strategic value for its partner brands. The transformation – which involves driving digital adoption across its distribution network, also supports the Hong Kong government’s aim to accelerate digital adoption among local businesses to foster an increasingly digital economy.

By including new payment methods like QR-based real time payments via Hong Kong’s Faster Payment System (FPS) into its proprietary mPay device, DKSH is making it simpler for SME businesses to pay digitally. As part of the process, DKSH has employed digital ambassadors and trained its drivers to continuously educate customers on the benefits of digital payments, in an ongoing effort to accelerate adoption.

For smaller businesses that prefer to stick to conventional cash payments, DKSH Hong Kong introduced a new option that enable them to make small-value payments via cash at over 900 convenience stores around the city. As part of this, barcodes are now embedded on customer invoices, which are first scanned at store counters to identify the invoice being paid for. The customer then settles the invoice via cash at the counter, which is credited to DKSH’s operational account by end of day. Cash deposits are also identified against their corresponding invoice on end-of-day reports, automating reconciliation. The proposition allows businesses to conform to existing payment practices, while DKSH also benefits from collections being consolidated and digitised, easing reconciliation efforts.

Centralising funds, optimising liquidity. Given the company’s extensive network in Hong Kong, DKSH opted to centralise surplus funds into a single bank via HSBC, improving visibility and control over cash. The approach facilitates further centralisation of cash from Hong Kong into DKSH’s regional liquidity pool.

Integrating connectivity, enabling data-driven decision: Through host-to-host integration of its Enterprise Resource Planning (ERP) system with HSBC, DKSH Hong Kong now benefits from improved data flows from its payments and collections activities, enabling the firm to capture sales patterns and channel dynamics, to deliver value for its customers and partner brands.

By feeding information into the ERP, DKSH Hong Kong is also taking prudent steps in ensuring data discipline that will allow the firm to make better informed decisions on strategic matters, identify potential cyber crime, as well as enable improved cash flow forecasting locally, and for its BPO.

Building ecosystems, driving change: By undertaking the initiatives above, DKSH is aiming to build out an integrated real time ecosystem that connects the company with its banking providers, partners and customers, as well as integrating digital platforms like mPay, to deliver greater value to all parties. The conducive environment allows customers, especially SME businesses, to embrace and test out digital solutions, in an effort to drive greater adoption.

Digital transformation is a present-day necessity. As a market expansion services provider, DKSH Hong Kong is embracing and driving this change by partnering with banks and government bodies to lead by example particularly helping local SMEs and family-run businesses in adopting digital payments.

Success:

• Accelerate adoption of digital payments across SME businesses
• Reduction in quantity of non-digital payments from local businesses
• Enhanced clarity and visibility of real time cash flows
• Improved cash conversion cycles and working capital management through accelerated reconciliation
• Mitigating fraud risks through reduction of manual cash collection
• 3rd party payments are now processed through the centralised ERP system with proper approvals, eliminating all manual cheque issuance by local finance

1. Customer focus:
   • Understand customer needs and market nuances; build solutions based on evidence-backed data
   • Spread awareness; educate customers to drive digital adoption
2. Learning and reskilling:
   • Foster a culture of continuous learning and development discipline among treasury team, keep up to date on best practices
   • Invest in people; equip employees with market-leading platforms to drive behavioural change
   • Invest in change champions, training and communication upfront
3. Agility and adaptability:
   • Adapt and remain agile to quickly capture new opportunities; embrace new digital solutions, platforms and partnerships
   • Adjust to market dynamics and align products/solutions with customer behaviours and demographics
   • Align treasury goals with other functions and ensure strong collaboration and cohesiveness in achieving these goals
   • Establish open and regular communication with external partners, e.g. banks, regulators, industry bodies, to keep up with market changes and be at the forefront of change
4. Risk management and contingency planning:
   • Plan for unforeseen risks and conduct scenario planning
   • Institutionalise risk and cost best practices

Digital treasury transformation is a present-day necessity for companies to remain competitive and build resilience in today's fast-paced, data-driven environment.

As a market expansion services provider, DKSH has a pivotal role to embrace and drive this strategic change yet remain nimble in leveraging digital technologies to modernise its treasury operations, increase transparency, improve decision-making, and support real-time financial management. DKSH Hong Kong’s actions to rebuild its treasury function on the foundation of technology is the unifying thread that will help reinforce them as a market leader, stand at the forefront of innovation, build value for their customers and stay ahead of the game.