Pushing global aspirations
JEFF YU Treasurer of the year – China
When Jeff Yu joined JD.com last year as group treasury director, he already had ambitious plans to revolutionize the group’s treasury operations. A seasoned treasury professional with 15 years of experience working at high-profile companies, Yu was keen to play a big part in JD.com’s globalization push.
JD.com’s US Nasdaq listing in 2013, its first international bond issuance last year, and the strategic partnerships with multinational companies including Mattel are clear indications of JD.com’s international aspirations.
“At JD.com we started our treasury globalization journey several years ago. The first action we did then was looking for the right banking partners that have both an international view and local expertise,” says Yu.
In 2016 the company boasted 226.6 million active customers versus 155 million in 2015. Moreover, net revenue for the group reached US$37.5 billion, a 44% increase from a year earlier.
In the midst of JD.com’s rapid growth it was evident that the company’s treasury functionality needed to be revamped and upgraded into a centralized treasury operation from an inefficient decentralized process. “Last year we focused on several priorities. One was to enhance our dedicated treasury management system and achieve higher transaction efficiency; others were to optimize the treasury analysis mechanism covering liquidity management and financing; another priority was to set up a professional treasury control team ensuring regulatory compliance,” says Yu.
Yu’s incremental treasury transformation journey began in Hong Kong when he decided to implement connectivity with his banking partners. This resulted in a concentration of overseas payments and collections. “Our dedicated treasury management system is developed by our own engineers,” he notes. “The management system has set up host-to-host links with all of our core banking partners.”
The next step for Yu included crafting a sophisticated collections process that involved the use of virtual accounts and an automated account receivables process. This was enhanced with automated intraday and end-of-day reports to help smooth out the account receivables process for the company.
For Yu and JD.com, the process speed was crucial especially for a fast moving e-commerce company. As a result of this necessity, Yu worked on streamlining the company’s internal processes to allow for an updated cash flow forecast mechanism that took into account not only cash management, but investment and financing. This resulted in less paper work and a significant drop in the number of manual processes for the company.
Once treasury automation and system integration were established, Yu turned his attention towards liquidity management solutions. With more than 30 operating entities, the company wanted to maximize the use of internally-generated funds and minimize the need for external borrowings. Banking on a series of regulatory changes related to renminbi internationalization last year, Yu and his team formed various sweeping pool structures between Hong Kong and mainland China in both the US dollar and renminbi-denominated funds.
These structures not only improved visibility and control of funds for JD.com, but also laid the foundation for the company’s planned corporate treasury centre (CTC) in Hong Kong. “Hong Kong is one of our treasury platforms, which is helpful for our globalization strategy. As an international financial centre and the interface between mainland China and the outside world, the Hong Kong platform can support us to achieve treasury priorities with more options and solutions,” explains Yu. With an eye on further enhancing the growing CTC, Yu aims to focus on improving treasury advisory, system optimization, upgrading processes and tax planning for JD.com.
Apart from systems and processes, Yu hopes to place his efforts on talent development. Since his arrival, the treasury team at JD.com has grown significantly and now has multiple units, including cash forecasting, FX risk analytics, financing management and a dedicated treasury control.
In over 12 months since he joined the company Yu has moved JD.com’s treasury functionality from a desynchronized model into a sophisticated treasury centre. Under his leadership and guidance JD.com has also realized significant value, ranging from working capital management through active management on currency risk, and maximization of returns from daily cash flow.
“As we enter into the global market we need to understand international treasury practices and professional knowledge from our external partners,” says Yu.