Case Study #4 – Aerospace Manufacturer – Multinational
- Having seen an increase in sales in aerospace products and parts, Company D switched to RMB invoicing in 2012 and manages its RMB exposure in the same manner as any other currency.
- Now comfortable with the amount of liquidity in the offshore RMB market, Company D wants to improve on how it manages its intercompany loans between its central treasury and its subsidiary in China on a corporate basis to avoid taking out loans with a third party.
- The aerospace product and parts manufacturing industry is important to Canada’s manufacturing sector, contributing $27.8 billion to Canada’s GDP and employing 172,000 people in Canada in 2013.
- It is also a top 10 exporting industry to China, with nearly $500 million in exports to China in 2014.
- Company D applied to SAFE for a quota.
- Company D has put cross-border RMB pooling in place between its central treasury department and its subsidiary in China.
- Financing costs have gone down.
- It is easier to move money in and out of China – less paper work and reduction in manual processes.
- It has created greater flexibility to make payments to suppliers in RMB, pay employees and make investments.
- Open RMB bank account in Canada.
- Access RMB liquidity and investment options.