When Tiffany & Co. decided to take its China strategy to the next level by establishing a wholly foreign-owned entity to support its retail operations, much of the heavy lifting for the financial and operational design fell to organizations under the direction of treasurer Michael Connolly. The team’s deep knowledge of the company’s strategic priorities made the choice easy, but it wasn’t the only criteria for involving the executive and his treasury. Besides his skill set in corporate finance and cash and risk management, Connolly also brought a substantial background in integrating tax principles that allowed him to shape a capitalization structure for the new Tiffany-China Co. with just the right mix of equity investment, inter-company loans and bank debt up front, including all tax rate considerations.

The $2.4 billion fine jewelry retailer–with more than 150 retail stores in 21 countries–had operated two boutique locations in Beijing and Shanghai. Under the new structure, Tiffany opened two new stores in China last year. It also has more control, a formalized supply chain process for imports, borrowing and cash management relationships with Chinese offices of two international banks that supply debt and cash services, and a financial platform for the future. “By bring-ing the two disciplines [of tax and treasury] together, you get to ask all the right questions up front,” says Connolly. “Our goal is that all subsequent surprises are operationally driven rather than due to a lack of design.”

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