The Prospering Trade Relationship between Europe and Asia
by Holger Frank, Head of Financial Institutions Group and Global Transaction Banking Asia, UniCredit
Asia is becoming increasingly attractive as a destination for international corporates due to the growing population, demand and wealth in the region – and these incentives are being compounded by the possibility of realising significant efficiencies through regional treasury centres. Meanwhile, corporates based in Asia are looking to expand into Europe to broaden their presence. As they do so, the adoption of the new Single Euro Payments Area (SEPA) payments format is paving the way for these corporates to achieve considerable operational efficiency – making European expansion increasingly achievable. UniCredit’s long history in Asia and profound knowledge of European markets makes it well positioned to support corporates moving in both directions – offering a range of tools and support to help make the transition smoother and more efficient than ever before.
Throughout its 30-year history in Asia, UniCredit has been working to support European corporates wanting to do business in the region, as well as those in Asia seeking access to European markets. Trade between these two continents has a long and rich past – encompassing the historic Silk Road trade routes established over two millennia ago. In the meantime, of course, advances in technology have facilitated ever greater interaction between Asia and Europe, and today many European corporates are looking to establish regional treasury centres in key Asian locations such as Shanghai, Hong Kong, and Singapore – an initiative that promises to generate considerable efficiencies.
Of course, the benefits of technology and interaction go both ways, and as corporates in Asia deal with European counterparties, they are adopting the new extensible markup language (XML) format mandated by SEPA. This is acting as a catalyst for innovation, with the new standardised format facilitating faster and more efficient treasury operations.
Asian adoption of SEPA’s XML format
Asian corporates face a number of challenges, including mounting regulatory demands, stiff competition from industry peers, and economic uncertainty – with Asian trade volumes dropping by almost 21% in the first half of 2016, according to the World Federation of Exchanges. As a result, internal efficiencies are becoming increasingly prominent as a means of driving profitability.
Consequently, while SEPA may have initially appeared simply to create a further regulatory hurdle for Asian corporates in Europe, the reality is that the implementation of SEPA-compliant processes is highly advantageous.
For a start, SEPA’s XML format is inherently efficient – facilitating rapid and low-cost payments with counterparties all over Europe. But beyond this, it has also paved the way for technological innovations that can further streamline trade finance and payments processes.