Fuelling Global Growth with SWIFT

Huawei’s Treasury Technology Transformation

Huawei is a flagship Chinese corporation that continues to demonstrate impressive growth across its extensive international footprint, resulting in increasingly complex and diverse cash and treasury requirements. To manage these evolving needs, Huawei has been a forerunner amongst Chinese multinationals in introducing industry-leading cash and treasury management technology and processes, including multibank connectivity through SWIFT.

Treasury organisation & objectives

Huawei has established an efficient treasury and finance organisation with a centralised group treasury function in Shenzhen and regional treasury centres in Singapore and the Netherlands. However, the company’s ambitious and highly successful growth strategy has resulted in greater complexity in its internal treasury technology and bank connectivity requirements. The number of banks and accounts had proliferated, with an increase in the number of banking connections and proprietary formats, which were costly and resource-intensive to maintain.

Consequently, Huawei recognised the need to implement a technology model that was more closely aligned with its business strategy and minimised operational risks. Treasury co-ordinated a project team comprising key personnel from account management, global payments, treasury and IT to set objectives and formulate and deliver on a strategy. This team identified the following objectives:

• Centralise payments through a global payment centre
• Achieve visibility and control over all accounts globally
• Enhance efficiency of internal cash and treasury management processes
• Improve quality and timeliness of reporting
• Automate payment and reconciliation processes
• Streamline bank communication through a single, robust channel
• Standardise payment formats and documentation across partner banks

Solution overview

To achieve its treasury objectives, Huawei made the decision to implement a new technology infrastructure (figure 1), supported with an efficient organisational structure and business processes:

• SWIFT for global bank connectivity;
• Payments are transmitted using MT101 messages (for urgent/ad-hoc payments) and SWIFT’s file transfer mechanism, FileAct (for batch payments). Most payments (including supplier payments) are conducted through FileAct;
• Global bank account balance and transaction reporting is obtained daily through FileAct;
• Standardised message  ormats for payments and account statements based on ISO 20022 XML-based formats (XML). XML provides flexibility, versatility and future validity, with widespread stakeholder and regulatory support and increasing adoption globally. XML supported local language requirements and allowed enriched data to be exchanged, enabling Huawei to define detailed reconciliation rules and automate processes;
• SunGard treasury management system (TMS) for treasury and cash management, integrated with the group ERP, Oracle, and SWIFT, in order to automate the exchange of internal and external data.

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Implementation in practice

Huawei embarked on its SWIFT implementation in 2009 and started working with its three primary banks, including Standard Chartered, to replace its existing bank proprietary electronic banking systems with SWIFT, using XML message standards. The company decided to connect directly to SWIFT as opposed to outsourcing connectivity to a service bureau to comply with internal security and control requirements.

Huawei is adopting a phased approach to implementation. Standard Chartered supports the company in 21 countries across Asia and Africa, 13 of which are now connected to SWIFT and more to follow in 2013. Ultimately, all payments and account statements will be migrated to SWIFT to automate and streamline payment and reconciliation processes globally.

Addressing implementation challenges

Large multinational corporations often face the challenge that XML formats may be interpreted in different ways by each bank or within each country. To ensure that Huawei met its standardisation objectives, the project team held a harmonisation workshop with its three partner banks to ensure consistent formats. Huawei took the same approach to SWIFT documentation, and negotiated a single agreement with all three banks to avoid lengthy legal negotiations.

As a diverse, multinational business, payments are generated from more than one system within Huawei, so treasury and finance processes were centralised and rationalised to ensure consistency and efficiency. This resulted in very high transaction volumes, so Huawei conducted thorough stress testing to ensure resilience and reliability of processing.

Benefits for Huawei

Huawei is already successfully achieving its treasury technology and connectivity objectives, with both operational and strategic advantages:

• Cost effective solution, with lower ongoing maintenance, connectivity and integration costs;
• Greater productivity, enabling Huawei to manage increased volumes and complexity without adding further resources;
• Enhanced controls, facilitating compliance with internal and external audit requirements;
• Scalability and flexibility to manage evolving requirements as the company’s international strategy evolves;
• Bank independence to enable banking partners to be selected based on the quality of solutions and service in each location;
• Greater visibility and control over global cash positions, enabling treasury to manage liquidity at a group level;
• Enhanced ability to centralise and streamline processes, supported with timely, complete management reporting, supporting financial decision-making and working capital optimisation.

With Chinese companies increasingly seeking new international opportunities for both sourcing and sales, cash management and banking relationships are becoming increasingly complex. Using SWIFT for multi-bank connectivity provides the security, scalability and flexibility that multinational corporations require to meet their current and future cash management needs, particularly when supported by an experienced international bank.[[[PAGE]]]

A successful banking partnership

For over five years, Standard Chartered has been a key partner for Huawei, helping the company to implement innovative working capital solutions across Asia, Africa and the Middle East. The SWIFT project was managed by an expert team, with local Standard Chartered representatives who worked with Huawei units within each country, with central co-ordination in China. Huawei is just one example of the Chinese multinational corporations that are leveraging Standard Chartered’s unique emerging markets footprint and comprehensive suite of electronic channels to drive their strategic, financial and operational objectives.