The Case Study On South Korea H Company's International Financing Management Under The Renminbi Internationalization

This case study analyzed South Korea H Company's international financing management under the RMB Internationalization. H Company established the investment holding company in Shanghai and performed cash pooling of 8 subsidiaries in China.Multinational company reflected overseas business & financial risk on its cost of capital and should decide its optimal capital structures to maximize net benefit from increasing debt amount. Overseas business Company generally used financing instruments such as capital increase, loan from parent company, borrowing from its national bank & global bank and borrowing from local bank. It should select the most effective financing instrument considering on its business circumstances.Currency Internalization needed 3 phases and satisfied prerequisite conditions of macroeconomics, capital market and regulation. China government promoted RMB Internationalization to enhance RMB position and South Korea government targeted off-shore RMB Hub as international asset management center.H Company changed intra-group trading settlement currency from USD to RMB and performed CNH trading finance. Also it tried to execute CNH direct onshore loan and Dim-sum Bond issuing. Finally, it consider cross-border cash pooling and offshore borrowing using Shanghai FTZ financial reform policy to improve H Company's global business competitiveness.