Working capital comes into focus for Chinese companies

Western multinational companies MNCs might be struggling with tight liquidity, but many mainland Chinese companies have easier access to liquidity and have largely avoided such constraints. According to Fergal Power, a partner at KPMG China’s restructuring and cash management advisory, global studies show that cash is a tier-one priority for MNCs, but far less so in China given the greater availability of capital.

Accordingly, more financing from banks has led to reduced focus on working capital management among Chinese companies -- a trend that runs contrary to the global focus on liquidity. “One of the things we found was that while globally most businesses are focused on collections and trying to increase...