As a time-honored brand of China's financial industry, BOC has also accelerated its innovation while fully developing traditional advantages in trade and financial services, actively supporting domestic enterprises to implement a globalization strategy, and participating in international competition, thus realizing great success with the globalization of enterprises.
Developing international settlement advantages and meeting foreign trade enterprise demands
A highly-efficient and convenient international settlement service is vital to the development of foreign trade enterprises. As a bank with the longest history in international business and the highest degree of internationalization in China, BOC's international settlement business is renowned for its advanced technology and all-around service. It has maintained a leading position in the market share for a long period of time, offering powerful support to the business development of domestic foreign trade enterprise. Influenced by the international economic situation, the growth of China's foreign trade volume dropped in 2008, this impeded growth especially obvious in Q4. Even under such a negative situation, the international settlement business still saw growth, and nearly US$1,700 billion worth of business was transacted throughout the whole year, a growth of above 21% year-on-year; BOC continued to take the No 1 position across the world.
At the time of offering such basic services as international settlement to foreign trade enterprises, in view of the large amount of trade conflicts caused by the price slumps of bulk commodity under the new international economic situation, BOC developed its own advantages for active negotiation with foreign banks and helped enterprises settle disputes and avoid losses in a single sweep. It also actively rolls out customer training and guide enterprises in a correct fashion to effectively evade conflicts at the same time. In view of the few foreign banks’ international convention-violating behavior of viciously refusing to make payments, by taking the advantage of main seats in various international trade and economic organizations, BOC can resort to such platforms as the International Chamber of Commerce to help Chinese enterprises strive for their deserved rights and interests, which has effectively supported the development of Chinese enterprise.
Innovate trade and financial products and tackle difficulties in trade and financing
In light of the business characteristics and demand of foreign trade enterprises, BOC enhanced their innovation in trade financing and launched a series of new services in trade financing to help foreign trade enterprises tackle the difficulties of financing for trade in China. The biggest characteristic of the series of financial services is that it can help customers avoid the trade and financial risks of all categories, strengthen the management of payable/receivable accounts, cut down management costs, raise contract-performance competence and credit lines, and help enterprises accelerate fund turnover and expand export size.
In 2008, BOC tailor-made a "Tongyida" service for a domestic import and export enterprise. It transacted the import letter of credit for the enterprise through the pledge of account receivable under the letter of credit, which has not only solved the problem of inadequate credit lines but also gained the investment of large amounts of new receivable accounts, and reduced the cost of funds.
BOC takes the lead among domestic banks in launching such featured financial services as factoring, domestic letters of credit, forfeiting, "prompt custom declaration" and guarantees for online duty payments. These services have strongly supported the development of foreign trade enterprise, especially small and medium-sized enterprises, and helped them to solve such difficulties as operational cost hikes and tie-up funds. By the end of 2008, the balance of trade financing in foreign currencies of BOC domestic branches was US$15.1 billion, a growth of US$3.03 billion year-on-year and a market share of above 30%, securing a leading position in the industry; the balance of trade financing in yuan was 33.656 billion yuan, a growth of 88.18% year-on-year.
Help enterprises evade risks by flexibly using product portfolios
The continuous yuan appreciation in the previous three quarters of 2008 has helped Chinese foreign trade enterprises, especially import enterprises, obtain a lot of profit, but it's also pressing for the enterprises to avoid the risk of the exchange rate. Therefore, BOC actively launched the "Import Huilida." Through the combined use of such services as import bill advances and forward foreign exchange settlements and sales, BOC helped import enterprises cut down financial costs and raise profit room. The business volume of "Huilida" amounted to dozens of billions of US dollars in 2008 and BOC helped to save several billion yuan in funds for foreign trade enterprises. BOC also offered such one-stop financial services as short-term financing, account collection, and account management for export enterprises by using such services as invoice discounting. For example, the textile import & export business of a Guangdong-based enterprise with a foreign trade volume of US$2 billion faced great impact, but by using such financial services as invoice discounting, it discovered foreign exchange advances and fund turnover acceleration, and effectively evaded risks in foreign exchange. As the yuan exchange rate saw two-way fluctuation in late 2008, BOC developed "Export Huilida" in view of foreign trade enterprises' demand for value maintenance and appreciation, and piloted it in some sub-branches, winning unanimous praise from their customers.
To help foreign trade enterprises prevent credit risk and guarantee enterprise rights and interests in foreign trade, BOC made efforts to popularize the credit investigation business and helped small and medium-sized foreign trade enterprises learn the opposing party's credit in a timely manner before signing the contract, thus reducing credit risk in foreign trade. In view of the collection risk of the transaction model of sales on credit, especially export enterprises, BOC actively popularized such products as export dual factoring and forfeiting. It also pushed forward projects under relevant trade promotion plans of European Bank for Reconstruction and Development (EBRD), Asian Development Bank (ADB) and Inter-American Development Bank (IADB), helped enterprises manage their accounts receivable, and prevented and controlled risk through risk participation.
BOC keeps a keen eye on the latest trends in the fields of commerce and trade across the world and launched a supply chain financial service integrated with banking, insurance, logistics, and factoring such as "Ronghuoda," "Rongxinda," "TSU" and "supplier financing project." BOC Shenzhen Sub-branch designed and developed "recycling factoring" and "undisclosed factoring," which has effectively raised the enterprises' risk resistance competence in the financial crisis. In the entirety of 2008, the international factoring business handled by all sub-branches in China amounted to US$12.919 billion, a growth of 51.53% year-on-year; the domestic fractoring business handled an amount of 56.742 billion yuan. Since 2008, BOC has become the biggest export factoring provider in the world.
Implement macroeconomic policy to help enterprises change their development mode
While offering all-around financial services to foreign trade enterprises, BOC actively implemented the macroeconomic control policy of the state. It further tilted credit certification resources and funds in favor of high-quality foreign trade enterprises, having rather strong competitiveness and development to support them to expand their business upstream and downstream of the supply chain, in and out of the country, and to effectively grasp the opportunity brought forth by a new round of international industrial transfer. Meanwhile, it supported SMEs to further expand the export market and disperse the risk through financial products for trade. The forfeiting business has effectively assisted enterprises to develop emerging markets in Asia, Africa and Latin America, increased their trade opportunities, accelerated the collection of goods payment and avoided risks in the exchange rate. In 2008, BOC's forfeiting business value was US$3.032 billion, a growth of 35.95% year-on-year.
From 2003 to 2008, BOC offered international settlement and trade financing services to about 120,000 domestic foreign trade enterprises, accumulatively transacted nearly US$3,000 billion international trade settlement, and offered more than US$200 billion in trade financing, playing the role of the main financial channel for boosting the development of foreign trade enterprises.
Integrate overall resources, transform into the premier image of globalization
Through such measures as improving marketing and service modes, intensifying product integration and innovation, strengthening the associate action of institutions in and out of the country, developing its advantage of business diversification and promoting cooperation with industrial organizations, BOC aims to be the premier bank for enterprises to implement the strategy of globalization.
In view of the financing difficulty of globalizing enterprises resulting from the credit crunch of overseas banks, BOC offers a guarantee for the overseas financing demands of high-quality enterprises via such products as global unified credit lines and foreign capital loans. By the end of 2008, BOC offered a US$5.2 billion financing-related guarantee for domestic enterprises and established a syndicated loan mode co-participated by overseas sub-branches in Hong Kong, London, Macao, Singapore, New York, Tokyo, Frankfurt and Luxembourg, which effectively tackled the financing difficulty of enterprises’ overseas institutions. A Chinese foreign trade group established wholly-funded subsidiaries in Italy, Germany and Hong Kong in succession and actively explored the international project and machinery products market. Influenced by the international economic situation and restricted by the capabilities of overseas subsidiaries, the group has experienced financing difficulties in its expansion to the overseas market. Under such circumstances, after reasonably analyzing the overall situation, BOC offered a total of more than US$88 million in credit and funding support to three overseas subsidiaries of the group in the style of "head office guarantee and overseas sub-branch financing" and swiftly aided the groups in escaping their plight.
To cooperate with foreign projects contracting enterprises' globalization strategy and develop BOC's advantage in foreign bidding, contract performance and advance payment guarantee, BOC collaborated with the China International Contractors Association to offer dedicated risk funds for the letter of credit for project contracting abroad. Since handling the business in late 2001, BOC has accumulatively issued letters of credit worth US$2.019 billion, involving a contract size of US$34.991 billion. This business has relieved the difficulty of some enterprises in credit line shortage and greatly supported the expansion of project contracting size and overseas business. Up until now, not one claim and advance against collateral ever happened, realizing a win-win effect.
In the face of the current global economic and financial situation, BOC will grip development opportunity hand-in-hand with risk, give full play to its advantages in brand, channel, products and technology, enhance efforts on innovation and endeavor to be "the best trade and financial service bank across the world" while offering strong support to enterprise globalization .
(China Daily March 11, 2009)