EuroFinance: Emerging markets’ treasurers are challenged as their companies begin to go global.
Day two of the annual EuroFinance International Cash and Treasury Management conference this week in Geneva, Switzerland, touched on, among other things, the challenges faced by treasurers of companies from emerging markets as these firms go global. Their companies are facing increasing pressure in their own home markets from foreign (read: Western) multinationals looking for growth as their own markets stagnate. One response in return is for those “local” companies to ignite efforts to expand abroad themselves.
While large and potentially very profitable, Western economies are not target Number 1 because of slow rates of growth. Instead, these emerging MNCs find that other emerging markets are more natural target markets. Not only that, but from a treasury perspective, local regulatory environments – often with FX controls and other financial-market restrictions – are actually more familiar than their more open, deregulated sister markets like those of Western Europe.
David Blair, a VP of treasury at Chinese telecoms infrastructure, software and applications provider Huawei, remarked that that type of regulated economy is his “home environment” and his company thus feels more at home operating in such markets. Western MNCs, on the other hand, are often frustrated with regulations because they are used to being able to “do what they want to do,” he said. Conversely, companies like Huawei feel almost a little “shaky” when entering deregulated markets because “nobody tells you what you can and cannot do.”
Going to the polls
A popular feature of the EuroFinance conference is the audience polling. Treasurers’ top-three concerns this time around were: the economy (44 percent); availability and cost of credit (33 percent); and counterparty risk (32 percent). The top three were closely followed by perennial challenge cash-flow forecasting (31 percent). Among the respondents, 64 percent are concerned or very concerned that financial regulations will affect the levels and types of services offered to corporates by banks.
The EuroFinance International Cash and Treasury Management is being held October 6-8, 2010, in Geneva, Switzerland.