Citi Commercial Bank Taiwan recently held a forum on “The Future of the Post-Pandemic Economy and New Supply Chain Insights”, attended by more than 100 clients in Taipei. With clients facing multiple complexities in the macro and operating environment, Citi economists discussed the three primary themes that are shaping the global economy with an impact on global supply chains - the extension of the U.S. interest rate hike cycle, China’s economic reboot, and geopolitics.
Helping clients navigate challenges and expand their businesses beyond borders, Citi Commercial Bank serves over 1,600 home-grown emerging corporate champions in Taiwan. Citi is also the largest foreign bank in the market, providing services to over 700 multinationals and more than 100 leading local corporations and financial institutions.
Michelle Yu, Head of Citi Commercial Bank Taiwan, said, “To effectively manage and mitigate risks from inflation and ongoing uncertainty in markets, mid-sized corporates need to prioritize diversifying their supply chains and leveraging digital platforms and processes to gain efficiencies. As demand and supply forces gradually re-adjust in the post-pandemic economy, companies need to reassess their operational and cash flow requirements to build in resilience and facilitate sustainable growth and development.”
Speaking to clients, Citi economists noted inflation in the U.S. as a major concern. Separately, the impact of China’s reopening and its growth plans on the global economy remains to be seen, they added. Geopolitics, they said, continues to influence corporate investment as firms diversify their supply chains including manufacturing bases. For example, with the Russia-Ukraine war having led to rising energy prices and costs in Europe, firms are considering Asia, including ASEAN, as alternative manufacturing locations. Markets including Vietnam, India, Malaysia, Thailand and Indonesia are benefiting from this trend, they added.
As Taiwanese companies with operations overseas navigate these trends, including volatility in exchange rates, Citi has observed that an increasing number of businesses are considering the possibility of building a second or backup capital management center.
Vivian Cheng, Head of Treasury and Trade Solutions (TTS), Taiwan, emphasized, “Various factors have to be taken into account when establishing a capital management backup center including differences in tax, legal and accounting requirements across multiple markets and how to link funds across different geographies to meet operational needs. Digitizing processes and using digital financial services can also simplify operations for companies while creating flexibility.”
Citi’s Treasury and Trade Solutions business in Taiwan provides clients with services across cash management and working capital, liquidity management and trade financing. As mid-sized companies respond to the pressures and challenges of funding demands across their supply chain operations, the TTS business is helping clients by leveraging relevant products and services.
Virtual Card Accounts, for example, can be used for many payment needs while allowing companies to keep cash on hand when making payments, thereby deferring cash outflows. This includes payments for digital advertising, cloud services, domestic and international supply chains, online subscription services and events. In trade financing, Usance Letters of Credit provide companies with the flexibility to deploy their funds and extend payment periods as needed.
Citi also integrates trade financing services with digitalization and ESG trends so that companies can significantly reduce the time taken for manual verifications and processes. Sustainability-linked financing products and services further support clients who are advancing their sustainability journeys.
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