The Research On Business Group’s Treasury Management

After decades’ dramatic development, China’s economy is reaching the so called “New Normal” stage. Conglomerates are facing critical challenges.Optimized Treasury Centralization is the key to use capital efficiently and to make management & control effectively. Establishing a well balanced Internal Capital Market is the fundamental of realizing Treasury Centralization. A preferred form to do Treasury Centralization is the Finance Company.Started from RMB 10 M and entering the Fortune 500 club no more than 3 decades, H group found a solution to those challenges via strengthening the finance company’s function and implementing Treasury Centralization. Its practices and lessons deserve the attention of its peers in China.This thesis summarizes the major models of Treasury Centralization and the theories & works on Internal Capital Market, exploring the relationships between Internal Capital Market and Corporate Value, challenges for using, the root cause of which is the agent problem and information asymmetric.Based on the analysis of relating data, this thesis makes a case study of H group’s Treasury Centralization. Key financial indexes are also incorporated into the study. The development of H group can be divided into three stages: initial, expanding, and globalization. The trigger, process, and effect of its Treasury Centralization are streamlined. Relating theories are tested, and the proposals for H group’s Treasury Centralization are provided.A big issue during the implementation is the Bank Accounts Authorization. The methodology to solve this issue is presented, containing the hypothesizing, interviewing, testing, following up, and reviewing.The conclusion is that the Treasury Concentration enabled the magic of H group, especially its globalization. Further improvement of the Treasury Concentration will definitely contribute a lot to H group’s future.