Facilitating Japanese Globalisation through SWIFT
by Helen Sanders, Editor
Japan is in the midst of an economic transformation, as corporations shift from a largely domestic focus to embrace international markets. The global downturn, including recession in Japan, has resulted in depressed domestic demand and increasing price pressure, exacerbated by growing competition from countries such as China. At the same time, huge government debt and Japan’s credit rating downgrade has meant that the cost of borrowing has increased. All these challenges, combined with the effects of the tragic earthquake and tsunami in 2011 have changed the industrial and economic landscape in Japan dramatically. Hans Janssen, Head of Treasury and Securities Services, Japan, J.P. Morgan comments,
“Traditionally, Japanese corporates have enjoyed close relationships with Japanese banks, with a primarily domestic commercial focus. However, challenges within the Japanese economy and broader macroeconomic trends have resulted in many corporates accelerating their overseas expansion.”
Consequently, we see Japanese companies focusing on international markets as a source of growth. As well as bringing new opportunities, trading internationally brings challenges too, not least the difficulty of maintaining visibility and control over cash balances and flows as global banking relationships become more numerous and complex. In this context, leveraging SWIFT as a single channel for bank communication can bring considerable advantage.
Growing importance of global cash management
With a strong (and growing) international presence of many of the companies surveyed, many of the primary cash management concerns indicated by respondents were similar to those of other multinational corporations. Hans Janssen, J.P. Morgan notes,
“International expansion is not a new phenomenon for Japanese companies; in particular, many have invested in lower-cost manufacturing in other parts of the world. However, these corporations are now seeking to develop a deeper and more diverse overseas presence. For example, countries that were previously bases for manufacturing are becoming important consumer markets, so Japanese companies are seeking to establish sales and distribution functions overseas. While these companies’ international profile is typically not yet as extensive as that of multinational corporations headquartered elsewhere, this is changing quickly and treasurers are becoming more proactive in seeking efficient ways of managing their cash.”