Standard Chartered

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CXC reports are based on confidential peer discussions between senior corporate treasurers sharing their solutions to complex treasury challenges.

Our commentaries, comprising the key findings from the reports are FREE - simply register to access 150+ commentaries and receive new commentaries direct to your inbox.

Our reports are packed with practical, experience based learning allowing users to benchmark their operations and identify proven, actionable efficiencies - please get in touch for details.

To read this commentary please Register or Log In.

CXC reports are based on confidential peer discussions between senior corporate treasurers sharing their solutions to complex treasury challenges.

Our commentaries, comprising the key findings from the reports are FREE - simply register to access 150+ commentaries and receive new commentaries direct to your inbox.

Our reports are packed with practical, experience based learning allowing users to benchmark their operations and identify proven, actionable efficiencies - please get in touch for details.

Commentary

With complex countries, we usually think of emerging markets. Japan is one of the most advanced, largest and affluent economies in the world – but it is also a very complex place for foreign companies to operate in.

Usually, the complexity for treasurers comes from regulation. In Japan, this is not the case: the yen is freely traded in one of the deepest markets; cash can be pooled and swept both within the country and across borders; one participant does POBO there; Japanese banks willingly report transactions and balances by MT 940; it has deep and open capital markets; and four of the world’s twenty largest banks by assets are Japanese. Instead, the complexity comes from a very strong culture, which is often not well understood by non Japanese, and which leads to a different way of doing business.

This call, which was well attended and quite animated, went into the challenges foreign treasurers face in this environment. Peers raised the following:

• High bank fees: Japanese banks are reluctant to negotiate these down
• Japanese banks are not used to RFPs for cash management – this is not how the domestic market operates. Many large Japanese companies have strong historical relationships with their banks, which often involve minority shareholdings.
• While MT 940s are not an issue, one participant faced significant issues getting their Japanese bank to implement even a simple host to host communication
• Communications challenges: it can be difficult to find Japanese employees who speak good English – very few bankers in domestic operations speak it.
• The need to carefully manage business meetings: these are usually more formal than in many other cultures: deference to senior personnel is required
• Difficulty managing onshore operations from a remote location: the local online banking tools are nearly all Japanese language only
• The language issue is further complicated by the katakana character set
• Resistance of local teams to change, especially if it involves working with foreign banks
• Complexity in managing relationships and wallet share with Japanese banks, who are often key global providers of credit and FX
• The use of company chops instead of signatures, and the related control issues
• The requirement to use local bank accounts for certain types of tax payments
• Security and confidentiality in Japanese online payment systems is not best in class – one participant had an issue with a single person (not in HR) making all payroll payments
• Repatriating cash via dividends and intercompany loans is not a problem, but it brings the usual complications: the need for retained earnings (one participant’s business receives advance payments), withholding tax and currency hedging cost. 

How to handle these problems?

• One peer did an RFP a few years ago, and awarded

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