PowerChina’s global treasury hub revolutionises cash and risk management

Power Construction Corporation of China (PowerChina) is a leading global integrated construction group and a key player in mainland China’s infrastructure development. Operating close to 780 entities in 130 countries, PowerChina is one of the largest power design and contracting firms globally, managing some of the world’s largest infrastructure, energy and hydropower developments.

PowerChina’s international footprint involves managing a vast network of subsidiaries and project companies, each generating significant cash flows in local currencies. This resulted in a highly decentralised treasury structure, where cash, payments and FX are managed at the in-country level, exposing the firm to currency exposures and regulatory compliance challenges as well as difficulties in implementing a consistent set of policies.

Furthermore, the lack of visibility and control as well as suboptimal use of cash at the Group level impacted PowerChina’s overall profitability and financial viability of new projects. This led to high levels of external borrowing in certain areas of the business, while other parts of the organisation held excess funds.

PowerChina sought to setup a global treasury hub to better manage its offshore treasury activities and strengthen the firm’s overall approach to risk management. With its many megaprojects involving significant capital, the firm sought an optimised liquidity structure to mobilise funds across entities and locations, including in restricted and politically sensitive markets.

Supported by HSBC, PowerChina established a Global Treasury Centre (GTC) in Singapore, which now serves as the firm’s offshore treasury hub responsible for optimising cash activities across all its overseas entities.

A critical enabler for the GTC is the deployment of a sophisticated multi-country cash concentration structure that automatically sweeps surplus funds across PowerChina’s offshore entities to the GTC in Singapore, transforming idle local balances into a consolidated actionable pool of liquidity. By setting a target balance for each local account, the GTC gains real-time visibility and control over PowerChina’s global liquidity, ensuring funds are centrally managed and readily available. At the same time, aggregated balances are notionally pooled to yield additional interest income without physical movement of funds from certain restricted jurisdictions.

The establishment of direct connectivity between PowerChina’s ERP to HSBC via host-to-host and APIs, has also enabled the GTC to improve control over cash across 150 entities. This includes automating payments initiation to move away from manual batch processing, obtaining real time balance reporting and enabling seamless reconciliation across the entities to mitigate risks, improve data accuracy and accelerate cash cycles.

Given PowerChina’s scale and complexity, the solutions will enable the GTC to play an increasingly critical role in centralising and managing overall risks for the broader organisation, to help deliver sustainable international growth for its business.

• Improved cash visibility and unlocking of idle cash to drive greater optimisation of funds across the Group
• Manhour savings by automating reconciliation, fund transfers and ledger adjustments
• Cost savings from lower external borrowing
• Enhanced hedging strategies by centralised FX exposures
• Incremental interest income generated from investing surplus funds, contributing to the firm’s bottom line
• Real-time data flows from ERP integration improves strategic decision making