Chinese banks have ramped up support for foreign trade enterprises since the second half of last year, as companies join delegations led by local governments to go overseas to compete for orders and expand their businesses.
Bank of China, a large State-owned commercial lender, has taken the lead among its peers in releasing a cross-border financial service plan to support Chinese enterprises in their competition for orders overseas. The services, including settlement, exchange, credit enhancement, financing and insurance, will help foreign trade enterprises grow their business.
Over the past few months, an appliance manufacturer in Ningbo, Zhejiang province, has participated in such overseas competition for orders in Japan, Indonesia and the Middle East. Its orders are already scheduled until August this year.
During a trip to the United Arab Emirates, the company won nearly $50 million in new orders within just a few days. BOC tailor-made financial solutions for the company based on its trade partners, transaction methods and settlement periods. So far, the BOC Ningbo branch has provided the company with more than $1 million of settlement services for new orders overseas.
Jinan Zhaoyang Aluminium Industry Co Ltd, a company in Jinan, Shandong province, joined the local government’s team of competitors for orders in Malaysia and signed a contract for aluminum coils with a foreign importer.
The contract stipulated that the Chinese company must provide an advance payment guarantee issued by a bank before the importer can make an advance payment. BOC opened a “green passage” to accelerate the issuance of the guarantee, which was completed in one day.
Currently, BOC has provided financial services to 76 trade delegations made up of over 1,000 foreign trade enterprises since November while the delegations, organized by local governments, traveled overseas to obtain orders and investments. During this period, BOC helped the companies win orders and investments, with a total value of more than 10 billion yuan ($1.44 billion).
Changzhou Unionfaith Trading Co Ltd, a small clothing exporter in Changzhou, Jiangsu province, faced a shortage of liquidity due to factors such as COVID-19 and exchange rate fluctuations last year.
China CITIC Bank Nanjing branch recommended an unsecured, online loan product to the company. The product is developed by the bank for export-oriented small businesses that have purchased the small and micro enterprise easy credit insurance policy of China Export & Credit Insurance Corp, also known as Sinosure.
The Changzhou-based clothing exporter obtained a line of credit of 3 million yuan from China CITIC Bank, a national joint-stock commercial lender. Based on its actual needs, the client withdrew 600,000 yuan on Dec 28, nearly 1.4 million yuan on Dec 30 and about 1 million yuan on Jan 10 at an annual lending rate of 4 percent.
An executive of the exporter said the loan had greatly eased the company’s year-end capital repayment pressure and could be repaid at any time, allowing the company to make repayments promptly after receiving overseas funds, thus reducing its financial costs.
On Feb 20, the State Administration of Foreign Exchange launched the bank-enterprise fund matchmaking service application scenario on its cross-border financial service platform.
Using the application scenario, foreign trade enterprises can independently release their financing needs to one to three banks. With the authorization of the enterprises, banks can verify the credit information of the enterprises and decide whether to accept their credit applications.
China CITIC Bank Nanjing branch provided the bank-enterprise fund matchmaking service to a foreign trade enterprise in Wuxi, Jiangsu province, via the application scenario on Feb 20.