OREANDA-NEWS. October 08, 2012. From this year, ICBC offers more international trade financing and settlement services to support the healthy growth of foreign trade companies, given some of them already have to face declining orders and rising cost. Just during the first seven months of 2012, ICBC ranked No.1 among the peers by providing over USD 100 billion in international trade facility to foreign trade enterprises, covering import documentary bill, L/C finance, export invoice finance, packing loans, reported the press-centre of ICBC.

Amid the booming bilateral trades between China and emerging market countries, ICBC branches in China and abroad embark joint marketing effort to promote international settlement services and make new breakthrough. At the end of July this year, all ICBC branches posted more than USD 1 trillion in international settlement. Besides securing its top spot in domestic ranking, ICBC becomes one of the top international settlement banks in the world.

To help foreign trade enterprises get though hard times, ICBC branches/subsidiaries and foreign trade enterprises get together to discuss the import/export situation. Depending on their requirements, tailored solutions on international settlement and trade finance are provided with one-stop service encompassing settlement, financing, wealth management and services in home and foreign currency.

The solutions are aimed to help them centralize manage liquidity, control exchange rate risk and improve export competitiveness. An example is "Vessel Link", a new ICBC product designed for vessel export enterprises, whose business requires large capital, high-tech and involves complex payment. Based on the conventional trade finance solutions, ICBC provides rollover loan in line with the different stages of ship building, supplemented by forward settlement of different tenors in order to address their difficulty to access bank loans. Another example is the settlement services for Guangdong companies engaged in processing for re-export/import. Given their special requirements and market needs, ICBC launched a new solution designed for close-tied supply chain, which combines international trade service, international trade finance and domestic trade finance supply chain policies. This creative solution provides greater access for core companies and upstream suppliers in processing trade to get loans.

Another focus of ICBC is the export-type small-and-micro enterprises (MSEs). More innovative products and services are offered to support these export MSEs in different ways. Zhejiang Yiwu is the world's largest wholesale market for small commodities. Over 99% companies in Zhejiang Yiwu are MSEs and individual industrial and commercial households doing trading business. A majority of them are small import/export enterprises. Many small foreign-trade enterprises receive a lot of orders. Yet, a good many of them have the difficulty to produce guarantee for bank loan since they only rent business premises in Yiwu without owning any property.

In the end, they have no choice but give up some of the orders because of working capital shortage. Yiwu's Zhejiang Shuangjia Garments Co., Ltd ("Shuangjia") is a case in point. Shuangjia mainly engages in the production and sales of shirts. The company is a typical export company with over 90% Shuangjia shirts sold to Russia, UK, South Africa, USA and other international markets. This year, Shuangjia joined many exhibitions and expositions in China and overseas and won a large number of customer orders. However, the company lacks the necessary working capital to expand production timely. After numerous visits, ICBC customer manager designed a tailored finance solution for Shuangjia. ICBC granted a credit line of RMB 7 million for Shuangjia's international trade to address its immediate need of working capital.

Besides offering loans, ICBC offers special services to help small-and-micro export enterprises expand international market based on their individual needs. Hangzhou Taida is a small export enterprise producing and selling hardware and fixtures, mainly to USA, EU countries, and UK. During the last few years, the market gradually becomes a buyer market as a result of the global financial crisis. Nowadays, Taida has to sell on credit or delivery against acceptance, instead of L/C or collection, which are international settlement options generally used before. Taida worries about liquidity shortage if allowing buyers to buy on credit. Moreover, Taida does not have sufficient collateral to secure bank loan. Another worry is that, the creditability of foreign importers may change during the financial crisis.

The risk is that the importer may not pay for Taida goods. ICBC, after knowing the Taida's dilemma and understanding on Taida's settlement options, Taida's importers and quality of Taida's export goods, offered a buy-out export factoring solution that covered USD 5 million of revolving facility without recourse. ICBC provided loan to Taida within the credit line of USD 5 million if approved by import factor. ICBC will assume the risks that Taida's importers will not pay or low creditability. To Taida, the solution does not occupy his credit line, and needs not worry about that importers will not pay. It also provides a new source for small export enterprises to get funding while international trade market is in the doldrums.