How China Unicom Global Limited built its fund concentration management systems to deliver efficiency and liquidity
As the international subsidiary of China Unicom, a China-based state-owned telecommunications company, China Unicom Global Limited (Unicom Global) provides carriers and enterprise customers all over the world with comprehensive solutions such as connectivity, cloud computing, data centres, ICT, and the Internet of Things. Unicom Global has abundant international submarine cable resources, expert level system integration capabilities, and digital technology innovation advantages. Besides, it also provides global voice and data roaming for individual users, thus establishing its reputation as a trusted value creator in international digital services.
Nearly a decade after it was established in Hong Kong, Unicom Global has set up over 35 branches around the world, as part of a synergistic global operation. Unicom Global has also assumed the responsibility of global capital management, enhancing the capital circulation capabilities of China Unicom's offshore companies.
Even as China Unicom’s global business has expanded gradually, due to ongoing volatility in the global economy and trade, the management of overseas funds is beset by several challenges.
Large, decentralised overseas branches: There are several overseas branches in a decentralised structure, with a long management chain and low immediacy of communication. As a result, it is difficult for the group to coordinate the scheduling of overseas funds.
Numerous overseas accounts with complicated income and expenditure scenarios: With some areas under foreign exchange control, it becomes difficult for Unicom Global to carry out unified monitoring and control, resulting in an inefficient use of funds.
A globally volatile business environment: High winds and waves in the international business environment translate into exchange rate fluctuations, geo-economic issues, and other problems, which result in risks and hidden dangers for offshore funds. To enhance the efficiency of fund management and mitigate risk, the international operations have taken various measures to strengthen centralised fund management.
The company is guided by ‘Opinions on promoting central enterprises to accelerate the construction of treasury system and further strengthen the management of funds’ (guiding opinions), issued by the State-owned Assets Supervision and Administration Commission (SASAC). The goal is to actively expand the capacity of systematic management and promote an integrated approach to managing domestic and overseas funds.
Building a centralised management structure for overseas funds by relying on fund pools from financial institutions
China Unicom Group has continuously improved its overseas income and expenditure settlement systems. Since 2018, Unicom Global relied on the local capital pools of financial institutions such as Bank of China (Hong Kong) Limited (BOCHK). This helped fully realise the return of Hong Kong’s local operating funds and maximise the centralised management and integrated dispatch of funds across subjects and regions, in compliance with the conditions of territorial foreign exchange control.
The goal was to improve the efficiency of capital utilisation and provide overseas companies safe, efficient, and unified external settlement and internal clearing services, and to maintain a stable capital concentration of 98% from 2021 to the present.
(i) Management structure:
A cross-border capital pool with Unicom Global as the Vertex account, covering Hong Kong, the Americas, Europe, Asia, Australia, and other regions.
(ii) Management principles:
1. Receipts and expenditures: To prevent the debt burden caused by frequent borrowing and lending by affiliates, funds deposited by members in the pool's international Vertex account cannot be overdrawn.
2. Sweeping on a daily basis: To prevent regional fund risks, automatic sweeping daily is set up in the capital pool.
3. Retained balance setting: Considering the average daily flow of funds in the account as the basis for calculation, the daily retained balance of each account is limited to the average daily outflow of funds. The retained balance is dynamically set in the system. Funds in excess of the reserve are transferred to the extent possible and pooled into the Vertex account.
(iii) Technological implementation
To support the pooling of funds in all non-regulated areas outside China, Unicom Global has set up cross-border funds pooling, reverse time zone funds transfer, and cross-currency funds sweeping. The financial institution continues to make gradual improvements to expand the scope of centralised funds management.
Fund collection technological implementation solution
II. Enhancing the ability of centralised fund management with refined classification
The bank accounts of Unicom Global and its overseas subsidiaries are opened with the principles of high centralisation and efficiency, prudent expansion, streamlining, and dynamic monitoring. Preferred banking partners are the ones with direct links to enterprises.
(i) Access bank list management
Under the guidance of the Group, Unicom Global has set up an access bank list management mechanism which considers factors like fund management requirements, bank-enterprise cooperation, the bank's operation status, service capability, solvency, risk resistance, etc.
The list of access banks for each overseas company includes the designated cooperative banks that have uniformly set up offshore fund pools. To meet genuine business demands, an independent selection can be made from another family of local cooperative banks which will subsequently be managed as if it were on the list of access banks.
(ii) Fine management of account categorisation
Accounts are categorised to set the retained balance. For automatically pooled sub-accounts, the daily retained balance is set through financial institutions. This strengthens the management of the limits of un-pooled funds, clarify the criteria for the limits, the adjustment process, and establishes a mechanism for regular assessment and updating.
Unicom Global regularly monitors the balance of small currency accounts, special accounts, and standby accounts. Should the balance exceed or fall below the standard, the system automatically issues a warning, leading Unicom Global to balance the account through manual fund transfers to avoid risks such as poor overseas fund flow.
(iii) Coordinating cross-border fund operations, saving costs and enhancing benefits
Through centralised management of funds, Unicom Global effectively integrates and revitalises stock funds using several measures. These include improving the efficiency of fund use, and increasing returns, by ensuring the normal flow of funds of member companies.
Unicom Global International can centrally plan the direction of cash investment, and evaluate the establishment of overseas branches, while providing management advice and shared service support for overseas operating companies. Unicom Global also plans funds and provides loan services for companies with short-term capital needs at market-based interest rates, to improve the efficiency of the use of funds and to revitalise its capital pool.
In addition, Unicom Global has joined the two cross-border fund management channels of "Cross-border two-way RMB fund pool" and "Cross-border fund centralised operation and management business" filed by China Unicom Group, which can protect the cross-border fund financing between the Group and Unicom's overseas companies.
(iv) Improve the overseas functions of treasury and enhance the management capability of digital intelligence
China Unicom's overseas companies have wide business coverage, work in different political and economic environments, and are subject to governmental control and external factors, which makes management difficult.
Guidance from SASAC covers overall overseas fund management, combined with business scenarios and personalised needs. At China Unicom Group, we have been able to accelerate the speed of fund management. This will effectively solve the pain points of overseas fund management, promote our construction of a "world-class financial management system", accelerate its international competitiveness and global influence.
Highlights: step-by-step construction and promotion
1. Function optimisation and comprehensive coverage
With a unified management of China Unicom's bank accounts in overseas countries, the use of funds can be optimised to achieve full coverage of the management of accounts, budgets, settlement, and major matters. The management system is gradually adapted and improved in the process of promotion.
2. Promote reuse and optimise features
Based on the promotion and reuse of existing capabilities of the treasury system, the functions are optimised and perfected in accordance with actual business scenarios and personalised needs outside the country. This helps realise the full combination of system tools and business practices, and to effectively solve the pain, difficulty and blockage points of offshore funds.
3. Application interoperability and closed-loop monitoring
The system is highly integrated with other management centre systems internally. It is also connected externally and interoperable with BOCHK, SWIFT, and other organisations, to enhance the efficiency of dynamic monitoring of account information.
4. Integrated planning and step-by-step promotion
The offshore fund management system has been taken online on a pilot basis and then gradually promoted in batches.
In 2023, under the guidance of the finance department of the group, China Unicom Finance, in cooperation with Unicom International, developed the business landing plan for the first batch of online function modules. In early 2024, function development and online implementation began. As of June, the pilot online launch of the first batch of online function modules was completed. From 2024 to 2025, the functions of the module of offshore settlement and budget management will be optimised and fully promoted.
