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2
Supporting International Trade
1. Hong Kong – gateway to China
2. Trading considerations: risk, funding, visibility & control
3. Offshore Renmembi - CNH
4. CNH capabilities
5. RBS Corporate Global Account
6. UK Government Support Schemes for Exporters
7. Value added services for UK businesses
8. Further Help
3
2000
US
ASEAN
Western
Europe
Latin America
264 167
138 154
283 102
92 91
Japan 29 37
121 177
52 22
17 22
China’s
Exports
China’s
Imports
2010
Eastern
Europe
Central Asia
16 14
5 7
42 42
1 3
36 9
1 1
(In US$ bn)
Hong Kong – a gateway to China – World’s 2nd Largest Trading Nation
Source: HKMA Website
4
Trading Considerations: Risk, Funding, Visibility & Control
1) Risk
• Guaranteeing payment & performance (Letters of Credit, Collections, Bonds)
2) Funding
• Covering contract costs (Pre and post shipment finance)
• Funding goods purchase for sale (Import Loans)
3) Visibility & Control
• Initiating, tracking, executing trade online (Maxtrad)
5
Growth of the offshore CNH Market Through trade and investments
•Trade settlement: Y1.7trn (Sep’11)
•78% of total China-HK bilateral trade
•6.3% of total China trade
•Deposits: Y622bn (Sep’11)
•10.4% of HK’s total deposits
•20% of HK’s total foreign$ depos
•0.8% of China’s total deposits
•Bonds: Y191bn (Sep’11)
•30% of HK’s total debt market
(excl. EFN issues)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jul 0
9
Sep 09
Nov 09
Jan 1
0
Mar 1
0
May
10
Jul 1
0
Sep 10
Nov 10
Jan 1
1
Mar 1
1
May
11
Jul 1
1
Sep 11
Deposits Bonds CNY trade settled
6
Scope of CNH Services offered by RBS Hong Kong
(1) Account Service
Any eligible enterprise located in Hong Kong and other
regions outside PRC can open CNH account
Current and Saving accounts are available
(3) Currency Exchange
Two ways conversion for trade settlement and non trade
settlement
Available in Spot or Deliverable Forward
(4) Remittance
Outward and inward CNH remittances in and out of PRC subject
to PRC regulations and guidelines
(2) Trade Finance
General trade services including Documentary Collections,
Letter of Credits, Guarantees and etc.
Both Import and Export loans are feasible
Interest rate to be determined by banks on a commercial
basis
(5) Investment
CNH fixed deposits
Investment in CNH bonds issued in Hong Kong
7
Global Account
• Any size of business can now take advantage of our global banking network
• In-country account in up to Hong Kong and 13 other countries – all from the UK.
• One bank, One relationship contact
• Access Online allows account visibility across the globe
• Cash management and trade finance products available locally
USA (Citizens)
EMEA
Belgium, France, Germany, Ireland (Ulster
Bank), Italy, Spain, Switzerland, Netherlands Asia
India, UAE,
Hong Kong & Singapore
8
Government Schemes for Exporters
Objective: Help UK businesses to obtain funding for an export contract
• Risk sharing between the government and the banks
• Govt will take up to 90% of the risk
Most popular schemes:
• Bonds and Guarantees Support Scheme
• Working Capital Support Scheme
• Letter of Credit Guarantee Scheme
9
Value Added Services
Buying machinery from abroad?
• Capital Import Finance : Asset financing with the protection of trade finance in one package.
Need help collecting monies owed to you, from around the world?
•Debt Collection
Minimise risk and spend less time completing documentation
•Document Preparation
10
Further help
Online:
www.rbs.co.uk/international
www.natwest.com/international
Incl. Cashflow Calculator
Offline:
Guide to International Trade
12
RMB Settlement Infrastructure – Overseas imports from PRC Enterprise
3. Remittance 4. CNAPS
(China RTGS)
2. RMB Payments
If necessary,
HKD / USD RMB 5. RMB Receivable
Our RMB
Corresponding
Bank
PRC Enterprise / Approved
Mainland Designated
Enterprise (MDE)
1. Goods
Hong Kong
Overseas
Enterprise
Beneficiary Bank
in PRC
13
RMB Settlement Infrastructure – Overseas exports to PRC Enterprise
4. Remittance 3. CNAPS
(China RTGS)
2. RMB Payments 5. RMB Receivable
Our RMB
Corresponding
Bank
Remitting Bank
in PRC
1. Goods
Hong Kong
Overseas
Enterprise PRC Eligible
Enterprise
Trading considerations: risk, funding, visibility & control
14
Potential Benefits to PRC Suppliers/Customers
Risk Management • To match both payables and receivables in CNY to eliminate the risk of FX
fluctuation and associated costs
• To avoid the risk of CNY appreciation against foreign currencies
Efficiency improvement leading to
quicker application of funds
• No FX verification required
• Quicker settlement of funds
• Faster Export Tax Rebate (provided the suppliers are approved Mainland Designated
Enterprises)
Improvement and Greater
Transparency in Cost Structure
• To manage both production and sales in a single currency to eliminate the need for
FX management
• To improve the overall cost structure and profit margin
Funding Efficiency • CNY L/C issued with tenor over 90 days will not consume any foreign debt quota
15
Potential Benefits to Overseas Buyers/Sellers
Liquidity Management and
Investment Diversification
• To hold and manage CNY liquidity outside of China under various funding and
investment options
• To add CNY as an alternative currency to their portfolio
Risk Management • To hold CNY to hedge for two-way import and export flows with China
Increase Control • To proactively and effectively manage FX transactions
Increase Pricing Transparency • To reduce potential markup from suppliers due to cost of FX
Access to a wider buyer /
supplier base
• Flexibility to settle trades in CNY will become a competitive advantage
• To access suppliers, who might have FX constraints