Inbound Businesses

Expanding into China? Looking out for investment oppotunities? Ask us about business solutions based on local insights.

Inbound Businesses

Experts' analysis

Experts' analysis

Experts in managing client investment, operations

For Foreign Investment Enterprises (FIEs) in China, the need for a bank with global connectivity and local knowhow is vital and HSBC is perfectly positioned to offer their clients the best of both these worlds.

With over 148 years of operating in China, HSBC has an unrivalled understanding of the country. Amidst growing doubts over China's economic prospects, this international bank is confident that there are still plenty of opportunities for foreign companies coming into China.

HSBC's growing inbound investment team of 56 Relationship Managers (RMs) and advisors manning country desks that represent North America, South America, Europe and Asia are ideally placed to advise and counsel FIEs in the Chinese market.

New opportunities

China is a market that foreign investors have been working in for decades, often with huge success. Cheap labour may now be a thing of the past, but as the Chinese economy develops its opening up a whole raft of new opportunities for FIEs to explore.

Paul Allen, SVP Team Head & Europe Desk Corporate Banking HSBC China, describes the recent changes to China's investment landscape, "what I've seen, was that the first wave of investment into China went into outsourced manufacturing and industrialization from Western economies, which in particular benefited the German companies because they were so strong in terms of industrial machinery, tooling and equipment. This was followed by an investment into China's infrastructure, which is continuing today, and involves companies from around the world. Then it was the turn of the high end consumer, and in came the French with all of their high-end luxury brands. And what's happening now is investment is focusing on the rapid growth of the mid-market consumer. The American companies are very well geared up for the mid-market consumer, so are the European ones but they just haven't arrived in force yet."

As the growing economy creates new consumers in China and economies in other parts of the world stall or splutter uncertainly along, FIEs are quickly adapting, as Constantin Graf Droste zu Vishering, Head of the German Country Desk at HSBC China, describes, "Twenty years ago setting up a factory in China meant benefitting from very cheap labour costs and exporting production abroad. What we are seeing now is that these Chinese factories are producing for the Chinese market."

"Now, China is seen not as a cheap base for manufacturing, but as a huge market to sell products. However there's an element of getting it right or getting it wrong, the trick behind it is to understand what product this market wants, which may not be the same as what was sold in the home country."

Moreover, a growing consumer base isn't the only relevant change to FIEs; the maturing Chinese economy is also bringing opportunities in high-tech and green industries. As Constantin explains, "Over the past 30 years of growth, China has taken on a huge environmental mortgage; they have borrowed heavily from the health of the environment. Now there is huge potential for European companies to help with sustainable growth and environmentally friendly development of the economy. For example, insulation, up-to-date heating solutions and solar energy are all growing sectors."

The stronger focus on the environment is, in some cases, making foreign companies more competitive. As Paul says, "We are seeing some of the Government's environmental regulation beginning to kick in. We've got one mining company based in the West of China and the process is potentially polluting, however, they use strict European pollution standards to ensure everything is under control. The problem that they have had is that the European standards increase their costs. Meanwhile there have been other companies who do not have the same controls and therefore are producing more cheaply. They are telling us that the authorities will close down a number of these polluting competitors over the next 12 months and that will change their market rapidly. If that happens, there will be a huge change."

A valued personal connection

Venturing into China is, for many foreign companies, venturing into the unknown, so having a trusted and dependable partner who speaks your language, knows your industry and also thoroughly understands the Chinese market is invaluable. HSBC's RMs become an extension of their clients' team and are there to offer guidance and solutions to China's complicated regulatory environment. These relationships are forged in a professional setting but a personal friendship is often the end result after so much time spent working together.

"The guys here have established really strong relationships with companies they have worked with for years, as have the RMs - we have an RM that has worked here for six years." says Paul, highlighting the importance that HSBC puts on in creating and maintaining a friendly relationship with their customers. "They have built up really good rapport over that time and it's important to say it's not always Germans going out with Germans and French going out with French, it's very much different nationalities in the whole equation; we've been building some really good relationships with companies we've been dealing with for years."

Constantin adds, "at Chamber events we will sometimes bring product experts into the workshops they are organizing so that HSBC can demonstrate their specific knowledge and leadership in certain fields in the wider business community. On a personal level, people like to stick together among their same nationality and that's an element of our job. Having a casual glass of beer with a customer is fun because when you are working together for two to three years on a local basis then you can develop a personal relationship that makes business easier."

With new opportunities available in China, the need for global networks working in collaboration with local connections is essential for FIEs to succeed in China. Using its global position and extensive local coverage, HSBC is able to deliver significantly effective solutions for its clients in China regardless of where they are based.

"China is very special in many ways so that although a GRM in France, Germany or the UK may have some basic knowledge about how the banking industry works in China, when it goes beyond a certain level of detail they have to get us involved to offer more added value to the customer," says Constantin.

Paul adds "That really defines what we're doing, we've got excellent communication with the local people here who do tend to be Chinese working for the European companies, but then we're joining it up by talking to Europe."

In such a large, diverse country as China, having a wide coverage provides HSBC with an unparalleled level of local expertise and service. "I think the main asset of HSBC in this country is the branch network, covering 49 cities with 149 outlets," says Constantin. "China is a very large country with significant regional variations, so only if you have a local branch and branch manager there who has contacts with the local offices can you provide high quality, value added solutions."

Connecting the network

Despite the difficulties in establishing and running a global digital network in China, HSBC is offering its clients an effective connection. The HSBCnet is something that Constantin and Paul consider one of the greatest strengths of HSBC globally and something that adds real value for their clients.

"We have HSBCnet which is our internet banking platform and it's not uncommon to have seven or eight, but I've seen up to 16, different representatives across China that can all sit on the HSBCnet platform here in China," says Paul.

"We can provide a group facility for our customers and we can link HSBCnet up with other parts of the world. So we can have a group CFO sitting in Hamburg who could see exactly what's going on with Chinese subsidiaries and all of their finances and again that's a huge advantage over local banks here in China."

HSBC's international network brings many other advantages to their global clients operating in China. HSBC is a fully incorporated bank in China so their Chinese offices are subject to the same credit processes as local banks, however they can draw upon the global credit case of companies when issuing credit. But with HSBC's global network, from a customer's perspective its allocating credit capacity is based on its global operations which means that a FIE in China can borrow against the holdings of its parent company rather than just its local operations. It is what internationally operating corporations need from a global bank in today's world.

On the ground

Country Desks in China not only serve as a gateway to China for international companies but are also well positioned to offer advice and top-line suggestions to clients at each stage of their operations in China.

"I've spent cumulative days, maybe weeks on the phone with German CEOs and treasurers to really guide them through fundamental steps," says Constantin. "We can provide basic information on setting up a business from a legal perspective and make sure that the financial structure works and provide financing if required."

"There may even be questions on where they should settle and what kind of accounts do they need, if they can pay in capital and how they can do cross-border payments, should that be in foreign currency or RMB? So it is really step-by-step, basic stuff." He adds.

As the Renminbi moves along the path of internationalization, HSBC is able to help clients make cross-border payments more easily. As a leading participant bank in RMB internationalization, HSBC can offer many RMB pilot schemes to its clients to reduce foreign exchange costs.

"The really interesting thing at the moment that we are piloting is global cash pooling, which means we either have a debit or credit position in say China which we can then net off with a credit position in the US, Germany, France wherever and basically get charged a net position by HSBC on your cash or debit," Paul explains. "It's only a pilot scheme at the moment, we are working with the necessary authorities but the potential benefits are huge for these companies and it is a great advantage over our competitors in providing this functionality."

The reverse situation is now also true whereby operations in China are being used to support investments in the parent company's other locations. HSBC China recently issued a letter of credit to an FIE's parent company in London based on the holdings of the subsidiary. The letter was then used to support an investment program to build a factory in the UK. As Paul explains it's a beautifully simple solution to maximise the value of the customer's profits. "It's an excellent way of using Chinese liquidity for growth somewhere else in the world. The beauty of that as well, is that the Renminbi stays in China so if the client has any future investment plans here, then they still have the funds in hand."

Paul goes on to sum up why coming to China is so important for a lot of international companies, "there's no doubt that international brands have appeal in China, if you get it right the rewards are potentially huge. Something I found fascinating was that many subsidiaries I visited here in China are now the most profitable part of their group. Those companies have been here for 10 or 20 years - it takes a long time to get there, but once you're there the rewards are absolutely huge."

Insights from HSBC's European Country Desk on Successfully Investing in China

For Foreign Investment Enterprises (FIEs) in China, the need for a bank with global connectivity and local knowhow is vital and HSBC is perfectly positioned to offer their clients the best of both these worlds.

With over 148 years of operating in China, HSBC has an unrivalled understanding of the country. Amidst growing doubts over China's economic prospects, this international bank is confident that there are still plenty of opportunities for foreign companies coming into China.

HSBC's growing inbound investment team of 56 Relationship Managers (RMs) and advisors manning country desks that represent North America, South America, Europe and Asia are ideally placed to advise and counsel FIEs in the Chinese market.

New opportunities

China is a market that foreign investors have been working in for decades, often with huge success. Cheap labour may now be a thing of the past, but as the Chinese economy develops its opening up a whole raft of new opportunities for FIEs to explore.

Paul Allen, SVP Team Head & Europe Desk Corporate Banking HSBC China, describes the recent changes to China's investment landscape, "what I've seen, was that the first wave of investment into China went into outsourced manufacturing and industrialization from Western economies, which in particular benefited the German companies because they were so strong in terms of industrial machinery, tooling and equipment. This was followed by an investment into China's infrastructure, which is continuing today, and involves companies from around the world. Then it was the turn of the high end consumer, and in came the French with all of their high-end luxury brands. And what's happening now is investment is focusing on the rapid growth of the mid-market consumer. The American companies are very well geared up for the mid-market consumer, so are the European ones but they just haven't arrived in force yet."

As the growing economy creates new consumers in China and economies in other parts of the world stall or splutter uncertainly along, FIEs are quickly adapting, as Constantin Graf Droste zu Vishering, Head of the German Country Desk at HSBC China, describes, "Twenty years ago setting up a factory in China meant benefitting from very cheap labour costs and exporting production abroad. What we are seeing now is that these Chinese factories are producing for the Chinese market."

"Now, China is seen not as a cheap base for manufacturing, but as a huge market to sell products. However there's an element of getting it right or getting it wrong, the trick behind it is to understand what product this market wants, which may not be the same as what was sold in the home country."

Moreover, a growing consumer base isn't the only relevant change to FIEs; the maturing Chinese economy is also bringing opportunities in high-tech and green industries. As Constantin explains, "Over the past 30 years of growth, China has taken on a huge environmental mortgage; they have borrowed heavily from the health of the environment. Now there is huge potential for European companies to help with sustainable growth and environmentally friendly development of the economy. For example, insulation, up-to-date heating solutions and solar energy are all growing sectors."

The stronger focus on the environment is, in some cases, making foreign companies more competitive. As Paul says, "We are seeing some of the Government's environmental regulation beginning to kick in. We've got one mining company based in the West of China and the process is potentially polluting, however, they use strict European pollution standards to ensure everything is under control. The problem that they have had is that the European standards increase their costs. Meanwhile there have been other companies who do not have the same controls and therefore are producing more cheaply. They are telling us that the authorities will close down a number of these polluting competitors over the next 12 months and that will change their market rapidly. If that happens, there will be a huge change."

A valued personal connection

Venturing into China is, for many foreign companies, venturing into the unknown, so having a trusted and dependable partner who speaks your language, knows your industry and also thoroughly understands the Chinese market is invaluable. HSBC's RMs become an extension of their clients' team and are there to offer guidance and solutions to China's complicated regulatory environment. These relationships are forged in a professional setting but a personal friendship is often the end result after so much time spent working together.

"The guys here have established really strong relationships with companies they have worked with for years, as have the RMs - we have an RM that has worked here for six years." says Paul, highlighting the importance that HSBC puts on in creating and maintaining a friendly relationship with their customers. "They have built up really good rapport over that time and it's important to say it's not always Germans going out with Germans and French going out with French, it's very much different nationalities in the whole equation; we've been building some really good relationships with companies we've been dealing with for years."

Constantin adds, "at Chamber events we will sometimes bring product experts into the workshops they are organizing so that HSBC can demonstrate their specific knowledge and leadership in certain fields in the wider business community. On a personal level, people like to stick together among their same nationality and that's an element of our job. Having a casual glass of beer with a customer is fun because when you are working together for two to three years on a local basis then you can develop a personal relationship that makes business easier."

With new opportunities available in China, the need for global networks working in collaboration with local connections is essential for FIEs to succeed in China. Using its global position and extensive local coverage, HSBC is able to deliver significantly effective solutions for its clients in China regardless of where they are based.

"China is very special in many ways so that although a GRM in France, Germany or the UK may have some basic knowledge about how the banking industry works in China, when it goes beyond a certain level of detail they have to get us involved to offer more added value to the customer," says Constantin.

Paul adds "That really defines what we're doing, we've got excellent communication with the local people here who do tend to be Chinese working for the European companies, but then we're joining it up by talking to Europe."

In such a large, diverse country as China, having a wide coverage provides HSBC with an unparalleled level of local expertise and service. "I think the main asset of HSBC in this country is the branch network, covering 49 cities with 149 outlets," says Constantin. "China is a very large country with significant regional variations, so only if you have a local branch and branch manager there who has contacts with the local offices can you provide high quality, value added solutions."

Connecting the network

Despite the difficulties in establishing and running a global digital network in China, HSBC is offering its clients an effective connection. The HSBCnet is something that Constantin and Paul consider one of the greatest strengths of HSBC globally and something that adds real value for their clients.

"We have HSBCnet which is our internet banking platform and it's not uncommon to have seven or eight, but I've seen up to 16, different representatives across China that can all sit on the HSBCnet platform here in China," says Paul.

"We can provide a group facility for our customers and we can link HSBCnet up with other parts of the world. So we can have a group CFO sitting in Hamburg who could see exactly what's going on with Chinese subsidiaries and all of their finances and again that's a huge advantage over local banks here in China."

HSBC's international network brings many other advantages to their global clients operating in China. HSBC is a fully incorporated bank in China so their Chinese offices are subject to the same credit processes as local banks, however they can draw upon the global credit case of companies when issuing credit. But with HSBC's global network, from a customer's perspective its allocating credit capacity is based on its global operations which means that a FIE in China can borrow against the holdings of its parent company rather than just its local operations. It is what internationally operating corporations need from a global bank in today's world.

On the ground

Country Desks in China not only serve as a gateway to China for international companies but are also well positioned to offer advice and top-line suggestions to clients at each stage of their operations in China.

"I've spent cumulative days, maybe weeks on the phone with German CEOs and treasurers to really guide them through fundamental steps," says Constantin. "We can provide basic information on setting up a business from a legal perspective and make sure that the financial structure works and provide financing if required."

"There may even be questions on where they should settle and what kind of accounts do they need, if they can pay in capital and how they can do cross-border payments, should that be in foreign currency or RMB? So it is really step-by-step, basic stuff." He adds.

As the Renminbi moves along the path of internationalization, HSBC is able to help clients make cross-border payments more easily. As a leading participant bank in RMB internationalization, HSBC can offer many RMB pilot schemes to its clients to reduce foreign exchange costs.

"The really interesting thing at the moment that we are piloting is global cash pooling, which means we either have a debit or credit position in say China which we can then net off with a credit position in the US, Germany, France wherever and basically get charged a net position by HSBC on your cash or debit," Paul explains. "It's only a pilot scheme at the moment, we are working with the necessary authorities but the potential benefits are huge for these companies and it is a great advantage over our competitors in providing this functionality."

The reverse situation is now also true whereby operations in China are being used to support investments in the parent company's other locations. HSBC China recently issued a letter of credit to an FIE's parent company in London based on the holdings of the subsidiary. The letter was then used to support an investment program to build a factory in the UK. As Paul explains it's a beautifully simple solution to maximise the value of the customer's profits. "It's an excellent way of using Chinese liquidity for growth somewhere else in the world. The beauty of that as well, is that the Renminbi stays in China so if the client has any future investment plans here, then they still have the funds in hand."

Paul goes on to sum up why coming to China is so important for a lot of international companies, "there's no doubt that international brands have appeal in China, if you get it right the rewards are potentially huge. Something I found fascinating was that many subsidiaries I visited here in China are now the most profitable part of their group. Those companies have been here for 10 or 20 years - it takes a long time to get there, but once you're there the rewards are absolutely huge."

Helping North American customers stay one step ahead in China's rapidly evolving market

As China's economy matures and continues to quickly expand, Foreign Invested Enterprises (FIEs) need to be constantly kept abreast of new regulations, opportunities and other changes in China to ensure they efficiently capitalise on the world's largest market. With a diverse array of banking services and products on top of a legacy in China that spans over 148 years and one of the most expansive local networks of any international bank, HSBC is well placed to guide and facilitate companies from around the world make the most of their investments in China.

Jason Huck was born and raised in the United States of America where he worked in corporate banking at HSBC in San Francisco for 12 years. He has been in Shanghai for two and a half years working as HSBC's Senior Vice President and Team Head of the American Business Corporate Banking.

Jason shares his views on the changing business environment in China, the challenges facing his North American clients and how the full suite of products and services HSBC is able to facilitate the varied needs of FIEs in China.

A maturing market

'Things change every day in China - changes in the banking rules and regulations, changes in the way clients approach China and much more… You have to constantly be aware of what is changing and the way it will impact your business.' Says Jason.'

The recent macro changes to China's economy have been well documented in the press and much has been made on rising costs. Jason is upbeat on the country's prospects as an investment market however, "There are 1.3 billion people here and the economy is growing at such a robust rate that I don't see FIEs being adversely affected. Even rising labor costs that might put off some investors is being offset by productivity gains in the east of the country."

"I don't see a lot of American companies moving" he continues, "I think the rising labor cost is a concern but productivity is actually improving in China. I don't see a lot of US companies moving to Vietnam or Bangladesh for example, partly because of the high cost to do so but also because of the efficiency improvements here in the East."

His confidence in China is backed up by the large number of North American companies that have come to China in recent years. "I see a tremendous amount of referrals coming in from the US and Canada. Is that a function of the economy improving in the US and their willingness to invest in China, or is it more that HSBC is expanding so much in the US and they have more dedicated international focus? I think it's a combination of both, I think the economy in the US is getting better and US companies are increasingly willing to expand and also we have RMs to help in both the US and China."

The importance of a strong local network

In a country as large as China there are inevitably differences between the regions but with the largest branch network of any international bank in China, located in 50 cities with 150 outlets, HSBC can provide the insights and onsite assistance to foreign-based clients in almost any corner of the country.

Jason says. "Our branch network is hugely important, not only because we can provide support to our clients in the city they are based in but also we can better understand regional variations and can then explain to a client that is sitting in Chicago why they can do something in Suzhou that they can't do in Shanghai."

A full suite of banking products

As a leading international bank that's fully registered in China, HSBC is able to offer its clients a huge range of banking products and services to meet almost any need. HSBC is also a wholly owned foreign enterprise and as a fully registered company in China we can open up foreign exchange accounts, do RMB cross-border payments and issue RMB loans - so there are significant benefits to being a registered bank versus a non-registered bank."

HSBC's global network is also very important especially in terms of promoting a connected and holistic approach to a global client's needs. One global cash management solution that's highly appreciated by HSBC's clients includes cash pooling, as Jason explains. "Cash pool solutions are not just regional, they can be international as companies want to figure out ways to use the cash built up in China. HSBC is able to pool a company's cash reserves from their different subsidiaries and can move it, on an intraday basis, to support the businesses that require a bit more liquidity and that way clients are effectively borrowing from themselves, without having to borrow from us or any other bank."

"Corporate treasurers often want to globally utilize the cash owned by their subsidiaries in China by taking it out of the country. Part of our job is changing that mentality, explaining that for example, you can get 3% deposit rates in China or if you really need the cash you can borrow money against the guarantee issued by their subsidiaries in China and the cash actually stays there but you are still making money because the lending rate outside of China is much lower."

Another example of how HSBC can facilitate their clients' global business operations in China is with settlements in RMB; Jason illustrates the advantages of doing so with an example, "Let's say a US company has a vendor in China who is a manufacturer of socks - traditionally the US company will pay in USD so the Chinese vendor will add on a 6% buffer because they will expect the RMB to appreciate by 6%. In a case like this we might recommend that the US company pay in RMB, which takes away that buffer and therefore saves them money. And this is just one example of the many ways we can help our clients make the most out of their investments in China."

HSBC understands the changes taking place across China's regulatory landscape and is able to explain and provide suggestions or solutions to them. This is a vital function that any FIE must look for when deciding on a banking partner in China and one reason why HSBC has been so successful. Jason concludes, "It always gets back to that we are a fully licensed international bank in China which offers a full range of products across the country and we can structure deals that others might not be able to."

HSBC offers integrated solutions to manage the multifarious needs of companies from Asia Pacific

As one of the fastest growing regions in the world, with some of the most diverse people, cultures and languages, Asia Pac companies are hard to pigeonhole. From the high-tech firms of Tokyo to the mining corporations of Canberra, HSBC is able to offer a comprehensive suite of products and services to facilitate the success of these diverse companies in China.

HSBC is better placed than most to guide companies that want to invest in China as Foreign Investment Enterprises (FIEs), with over 148 years' history of operating in Shanghai and across Greater China. HSBC has a growing inbound investment team of experienced professionals in Shanghai, including banking Relationship Managers (RMs) and advisors manning country desks that represent North America, South America, Europe and Asia Pacific. The RMs, located across China, are ideally placed to advise and counsel FIEs in the China market.

Looking at the bigger picture

With over 20 countries under his purview, Jason Chen, who originally hails from Taiwan, has his work cut out. He's been with HSBC for the last five years and has been in the banking industry for the last 10. His team covers business entering China through Shanghai and the eastern region although he is responsible for forwarding on all referrals and following up with other HSBC branches.

The close cultures and tastes between Asia Pacific nations and China is of substantial benefit to FIEs from these countries as their products can be easily adapted to the local market. "We have a real mix of clients although probably the retail sector is currently the focus of Asia Pac companies." Says Jason Chen. "A lot of our clients are engaged in retail – food, coffee, clothes and handbags."

Regardless of where the FIEs originate, the macro-environment they encounter in China will be the same. Growing pains from China's rapid rise in addition to strains from the recent global financial crisis have led to concerns about the sustainability of China's long-term economic growth. While there are undoubtedly challenges for FIEs entering or expanding in the Chinese market, choosing the right strategy and partners will help alleviate many of these issues.

Jason is bullish on the long-term future of China's economy. "I'm confident that China's economy will continue to grow in a sustainable way," he says. "The latest GDP figure of 7.5% for the last half year was good. And it's clear that China's new leadership is seeking sustainable and long-term growth. Other markets share my confidence and most appear to have been ramping up their investments in China, although the rate at which they do this varies from country to country."

"The reaction to China's economy is different in each country I cover."Jason continues. "For example both Australian and Malaysian companies seem more cautious than other markets in the way they approach China. So with a number of companies from these countries we'll see them invest heavily in other Asia Pac countries but are much more cautious about China and only use limited capital, they're holding back. But the sectors they focus on is different too – Australia for example has a strong service sector focus so they don't need a big capital injection in China."

Local and international solutions

With a long history of helping companies from across the world succeed in China, HSBC has a deep understanding of the investment landscape facing their clients. In a country as large as China there are inevitably differences between the regions but with the largest branch network of any international bank in China, located in 50 cities with 150 outlets, HSBC can provide the insights and onsite assistance to foreign-based clients in almost any corner of the country.

Jason Chen explains, "When new rules are issued, first we need to focus on the implementation details and the main purpose of the control, then we need to explain it to our clients and advise them. We also share our knowledge across the network and to our clients' global RMs who can then explain it to the company headquarters. This kind of communications is complicated and it's only because of our experience, insight and network that we can provide it."

In addition to the wide branch network and understanding the rules and regulations, which is of huge importance, some of the international banks are localized and some are not. HSBC is a wholly owned foreign enterprise with high registered capital reserves which allows the bank to offer some services that other foreign banks are unable to do. And there's HSBC international network and the global cash management solutions that it enables.

The range of solutions HSBC offers through its vast network is hugely valuable to its clients, but it is often the smaller, value-added services that keep their customers satisfied. "When I make a new client, I will usually introduce them to our global market contact who deals with treasury foreign exchange transactions."Says Jason. "I assume all the FIEs in China will be involved in global market transactions. Our global market will provide regular reports on the Chinese economy and the foreign exchange outlook and the client can really benefit from this information. From the feedback I've received they really appreciate this. It's good to build up relationships through the global market and provide a daily pricing quotation to our client. It is just one way we maintain our local relationship with FIEs – this constant updating of information."

Choosing a trusted partner

Some of the most challenging aspects of succeeding in China for FIEs is understanding the market, regional differences and adapting to regulatory changes. Companies looking to invest in China need to work with parties like HSBC who really understand how things work and have the resources to support them.

"HSBC has strong global presence and is the largest foreign bank in China so that's our advantage and how we leverage this network is to the benefit of our clients in China. We provide a very consistent service. Plus we have very strong liquidity which helps us build up long-term relationships with clients in China and allows us to offer them services that we might not otherwise be able to do." Says Jason.

"For the FIE team I think the key thing we focus on is 'know your customer', especially in a local sense. We need to identify their real funding or service needs locally and we need to speak to their Global RM, who will have a better overview for this client's global ambitions, then we can provide a perfectly tailored service and product."

A customer's perspective: How HSBC can facilitate success

The rapid and sustained growth of China has made it an attractive destination of foreign investment from across the world. For over 148 years HSBC has been in China, assisting companies with their diverse portfolio of banking products and services. One example of a successful partnership can be found between HSBC and leading provider of EDA (Electronic Design Automation) and semiconductor IP (Intellectual Property), Cadence. This American company has been in China since 1992 and in that time has gone from strength to strength, now employing over 600 staff.

Cadence's business focus is on producing design tools and integrating electronics for the modern world's increasingly demanding high-tech industry. They provide a full range of solutions to their clients and it's this desire to offer their customers these leading edge solutions to help customers resolve their most difficult design challenges that has been behind their recent acquisitions of IP companies. Their banking needs are therefore diverse and growing and for the last five years HSBC has been their trusted partner in the Asia Pacific region as well as in the USA and Europe.

Cindy Yang, Finance Director, Cadence Asia Pacific and Heidi Cheng, Senior Finance Manager, Cadence Asia Pacific discussed the rise of Cadence in China and the support they've received from HSBC.

Leveraging an international network

HSBC has a network of 6,600 offices in 81 countries and territories, one of the broadest networks of any bank in the world. Cadence also has a strong international presence; headquartered in San Jose, the company has offices in three continents and already works with HSBC in a number of their other markets. So naturally HSBC were one of the first banks approached by Cadence when their regional management decided that it was important to build a more streamlined Asia Pacific network in terms of operations, communications and financing.

"The client management system of Cadence is regional, our company in North America has a share service, as does our European company but in Asia we didn't have one." Says Heidi, "Because of the success of our European counterpart we began to look at banks in this region that would be able to offer us similar services. After a long assessment of services and terms offered we ended up choosing HSBC."

With offices and R&D centers in different locales across China, HSBC's strong local network is invaluable, as is their ability to connect Cadence's offices across the greater region. "Before engaging HSBC different companies had different platforms and systems. If I was working in one region, it would be really difficult to know the global cash flow." Says Cindy, "It could take up to a whole day to collect this information and then another day to put it all together and make sense of it in a practical sense. With the shared service that HSBC provides one of the most obvious benefits is that staff from different regions or from specific departments can know the global cash flows in any particular country. He or she does not need to spend time gathering information and making consolidations or reconsolidations. It is the most obvious, comprehensive and biggest strength of HSBC."

Putting the customer first

HSBC is a bank that prides itself on talking about partnerships ahead of business and this attitude translates into the way Relationship Managers (RMs) approach their clients. The bank aims to be a trusted advisor to all their clients, not just offering a solution to problems, but providing proactive advice through understanding their clients underlying needs and ultimate ambitions. It's a working philosophy that Heidi and Cindy recognize.

"I have never regarded HSBC as simply a bank, in many ways it's more like a strategic partner." Cindy says. "For example HSBC will always be able to offer us advice in regard to foreign exchange policy and the most efficient ways to manage our cash flows. While they don't help directly in our management decisions, they do provide us with insight and advice on managing our company and with their specialized expertise this is a very useful service."

"Our cooperation with HSBC has always been very pleasant and we speak very highly of the HSBC team in Shanghai - they really do a good job. Firstly, they take action very quickly and are always willing to help. Secondly, they understand our problems and help solve them. They will help us adapt to policy changes or find different departments within HSBC who are more appropriate to provide support. It makes our job easier." Says Heidi.

This strong emphasis on building effective and lasting relationships with the customer means that HSBC's RMs are often approached for their advice and input. As Heidi explains, "I might have an idea to improve our systems but I don't know how to achieve it within the banking system, so I meet with our HSBC RM and they're able to tell me whether my idea is practical or not. HSBC will tell me what banking services they have in place that can help and support my idea. And they'll provide very honest feedback so we have realistic expectations on what to expect."

Summing up the Cadence-HSBC partnership Cindy says, "Frankly speaking, I didn't think too much about our partnership with HSBC before, because it seems to be a very natural way to work. But on reflection, the products they offer and the seamless integration of their services is very helpful on a day-to-day basis. HSBC's international platform operates so well you almost forget how convenient and an effective partner they are because they are so integral to our banking operations."

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