OREANDA-NEWS. August 09, 2011. Zhongguancun National Innovation Demonstration Zone, the first such demonstration zone at the state-level, is now an important Sci-tech industry base in China. The Zone, China's largest Sci-tech industry base in terms of economic scale with the total revenue of over one trillion yuan, gathers a large industry group focusing on electronic information, bio-pharmaceutical, aerospace, new material, new energy and environmental protection and Sci-tech services. Some of the Zone's industries and products play a pivotal role in China: computer industry captures the largest market share, No.1 in mobile phone production, software and integrated circuit design sectors generate one-fifth and one-sixth of the national revenue respectively. Zhongguancun has paved the way for China to develop Sci-tech industries while driving the growth of other Sci-tech zones in the country, reported the press-centre of ICBC.

Against this background, it is an obligatory social responsibility of commercial banks in China to offer "Sci-tech financial services", serving well all the small and mid-sized Sci-tech enterprises. ICBC Beijing Branch is a member of Zhongguancun Credit Insurance & Trade Finance Service Alliance and a pilot bank for Zhongguancun Fast Credit project. Beginning from 2009, the Branch fully embraces the macro-control policy, financial regulatory requirement and Head Office's overall plan and strictly adheres to the agenda on speeding up Sci-tech financial services innovation laid down by the Beijing Municipal Government. By driving IT innovation through financial service innovation, ICBC Beijing Branch has demonstrated and played a leading role in several areas: delivery of financial services to Sci-tech companies, striving to be a bank dedicated to providing Sci-tech financial services, driving innovation on IT financial products and support to the set-up of Sci-tech Financial Innovation Center in Beijing. From 2009 till end of March this year, ICBC Beijing has disbursed RMB 81.2 billion in loans to 206 Sci-tech firms in the capital as one move to support their high-speed growth.

I. Support IT firms to grow through product innovation
In general, Sci-tech firms have "light assets". With this in mind, ICBC Beijing Branch rolls out the trade finance services (invoice financing against account receivable and factoring) and the commodity finance service based on inventory. The ICBC services enable Sci-tech firms to unlock liquid assets, and address the difficulty of small Sci-tech enterprises to access bank loan due to insufficient guarantee. The cash obtained from converting liquid asset can be used to cover business expense or production of the company.

Sci-tech firms are in frequent need of working capital. On this connection, leveraging the Branch's powerful Internet Banking to fully align with the customer need, ICBC Beijing Branch moves aggressively the Online Loan Link, a service for customers to draw loan revolvingly online, anytime, anywhere. At the heart of Online Loan Link is "Online + Revolving Loan" which allows customers to draw loan by themselves within the credit line. Loans can be borrowed and repaid anytime. To customers, cost of borrowing is reduced to the minimum.

II. Support Sci-tech financial services through professional operation
ICBC Beijing Branch opened Zhongguancun Sub-branch in August, 2000 to serve the Sci-tech firms in Zhongguancun. Then again in March, 2008, the Branch opened the first Small Business Financial Service Center under Zhongguancun Sub-branch in order to increase support to small and mid-sized Sci-tech enterprises. After the first National Innovation Demonstration Zone set up in Zhongguancun in 2009 under the approval of State Council, ICBC Beijing Branch immediately opened Yongfeng Sub-branch in Yongfeng Base in Zhongguancun North New Zone. The Branch was the first commercial bank in Yongfeng Base, offering an array of financial services to the Sci-tech firms in the Zone. Over the course of a decade, Zhongguancun Sub-branch has extended RMB 3.5 billion in loans to Zhongguancun's Sci-tech enterprises. The Branch's balance of loans to small and mid-sized Sci-tech enterprises went beyond RMB 1 billion, where balance of loans to small Sci-tech enterprises over RMB 600 million.

III. Examples of the support to small Sci-tech enterprises from ICBC Beijing Branch
Case I - Unique service: order financing, invoice financing, add more businesses, turn account receivable into cash.

An IT enterprise was established in 2004 mainly engaging in telecom value-added services. The company secured many good projects during the course of business. The payment parties were all large telecom companies. For many reasons, however, the company cannot expand further: the long cycle of collecting receivable, the capital insufficiency due to low cash flow reserves, the lack of adequate real estate for collateral and the large cash shortfall. After learning the situation, ICBC Zhongguancun Small Business Financial Service Center ("Center') took the initiative to make contact and understood the product structure and sales of the company. The Center and the company worked together to keep track the contracts since 2009. The Center then offered order financing service tailored to the company without the use of real estate to secure the ICBC loan. In January 2010, the Center provided order financing for RMB 11 million to the company. The contracts of the company were pledged to secure the loan. No real estate security is required. The ICBC loan solved the company's problem of "inadequate collateral" and greatly relieved its financial burden.

The solution won the applause from the company and helped the company establish good reputation for the next move. ICBC's financial services lent intensive support to the company for further progress. ICBC Beijing Branch also provided invoice financing after the company completed the order in July 2010. A loan of RMB 11 million was released for the company to free up the account receivables. Moreover, ICBC Beijing Branch offered suggestions and reminders to the company regarding its business operation, such as the planning and usage of short-term idle cash, the use of credit line as soon as possible, the deadline of credit line.

Case 2 - Unique service: rollover pledge of inventory, unlock company's quality liquid assets.

A company is a Sci-tech firm with good growth by leaps and bounds, and one of the main manufacturers of underground scraper and mining truck in China. The company has secured enough orders during the course of business, but production was hampered by the working capital shortage. Since the main raw material for the production must be imported and the production and order cycle of import equipment is 3-6 months, a large amount of existing inventory capital was occupied. In view of this, the Branch offered inventory pledge loan for the company to unlock the inventory and finished products.

Case 3 - Financial support for a top small Sci-tech firm to join World Expo

A small Sci-tech firm is engaged in the research and manufacturing of new-generation bamboo fiber products, a typical firm merging Sci-tech products into the conventional industry. The company has passed the selection of Word Expo Bamboo Fiber Industry and owned the patent on bamboo fiber technology. The production technology of highly pure bamboo fiber of the company is currently the most advanced. The company has ten years of operation and its products were included in the 2004 National Sci-tech Torch Plan. Companies in the bamboo fiber sector, however, are also required to be well-capitalized besides the strong R&D. Just at a time when the company was in urgent need of capital, ICBC Beijing Branch offered Online Loan Link based on the company's business characteristics, a 2-year loan of RMB 28 million was released to the company to cover its daily cash turnover.