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HSBC Expert Opinions

HSBC Expert Opinions

"Mobilising" Global Resources --- Tailor-made Cross-border Financial Solutions for Small and Medium-sized Enterprises by HSBC's International Relationship Managers

Terence Chiu, Managing Director & China Head, Commercial Banking, HSBC (China) Company Limited

In the wake of China's increasing importance in the global economy, the expansion of Chinese companies into the global market has become an unstoppable process - Chinese business leaders are now an increasingly common sight in places such as Times Square, the City of London and the business districts of major cities in emerging markets such as South America, Africa and Southeast Asia. They are acquiring local brands in order to enter foreign markets, purchasing advanced technology to improve the quality of their own products, building factories overseas to reduce production costs and even selling Chinese branded products worldwide.

Over the past few years, large Chinese companies have been at the forefront of this process. However, many small and medium-sized enterprises (SMEs) have now begun to foray into the global market following their continued growth. While diversifying into a wider variety of businesses, SMEs are experiencing an increasing need for cross-border services. With a globally connected network, HSBC has a unique advantage to meet those needs. Our International Relationship Managers work together to maximise the use of resources across our network and in doing so have constructed a comprehensive and efficient cross-border financial services system. This enables us to provide seamless global solutions for our customers and create a favourable environment for cross-border acquisitions and investments. HSBC's International Relationship Managers seek to become "core partners" of these SMEs during their continued expansion into the global market.

Understanding "Differentiated" Customer Needs

Chinese SMEs are now moving on from the initial low-risk stage of going global, such as relying heavily on exports, OEMs and international subcontracting. Many of them are now branching out into more complex areas of international business, such as establishing subsidiaries overseas, acquiring overseas brands and conducting small-scale mergers. For SMEs in particular, this necessitates a new strategic direction with branding and technological innovation at its core. They must balance short-term and long-term development in order to ensure their continued expansion into the international market.

Unlike large companies, one of the challenges facing SMEs during their process of internationalisation is the lack of a dedicated in-house team of experts that can plan the company's global strategy. They also lack a professional finance department that can effectively handle financial jobs such as cross-border trade finance or payment and settlement. Most SMEs rely on banks to provide them with appropriate financial services based upon an accurate understanding of their global business needs. For this reason, our relationship managers frequently organise events to share successful experiences of cross-border financial management for smaller enterprises. In addition, they invest a large amount of time and energy every day in acquiring an in-depth understanding of issues such as the financial robustness of SMEs' cross-border trade counterparties and the latest monetary policies and economic trends in different countries. By considering these factors plus the company's current business performance and its future strategic plan, our relationship managers are able to accurately identify the company's specific financial needs for its cross-border business.

"Tailor-made" Financial Solutions

While enjoying assistance from HSBC's International Relationship Managers during their global expansion, SME customers also benefit from support jointly provided by HSBC experts across various departments such as Global Payment and Cash Management, Global Trade and Receivable Finance, and Global Markets.

These experts are good at formulating a complete set of cross-border financial solutions tailor-made for the needs of SMEs. This includes a secure and efficient payment and settlement process for cross-border trade, cross-border cash management services and a sound set of foreign exchange hedging measures.

For example, if a Chinese SME wants to acquire foreign technology in order to improve its own products, our local relationship managers can offer comprehensive local investment guidance and advisory services for the customer. Relationship managers from HSBC China can assist the SME in finding feasible financing solutions such as bilateral and syndicated loans and long-term bonds. A tailor-made set of financial solutions most suited to the customer's actual needs can then be formulated in order to minimise its cross-border financing cost.

HSBC has already established a number of China Desks with Chinese-speaking staff at many of its outlets worldwide. In addition to understanding customers' local business performance, staff at these China Desks can also coordinate with their colleagues in HSBC China to provide Chinese SMEs with further expert advice on the expansion of their overseas business.

Thanks to our global connectivity and rich experience in cross-border business, HSBC's International Relationship Managers are uniquely positioned to serve our customers. Moreover, HSBC will continue to develop more innovative financial solutions in accordance with relevant policies and customer needs in order to support SMEs' global ambitions.

The HSBCnet Platform – "Simplifying Business"

In order to improve the environment for SMEs' global expansion, HSBC has been mobilising its local and global network of resources. This enables us to find appropriate innovative solutions for SMEs to better support their overseas business development.

SMEs place a high premium on all of their cross-border transactions. In light of this fact, HSBC established HSBCnet, a cash management platform for cross-border transactions. This system allows each SME to access all of its HSBC accounts and transaction details worldwide with a single login. In order to strengthen account security, HSBCnet can also provide different levels of user access according to the company's needs.

With HSBCnet continually upgraded, we will also provide SMEs with a host of other services to simplify their business. An increasing number of SMEs are now utilising financial tools to forward-looking and systematic financial plans for the expansion of their international business.

Ensuring a Successful Global Strategy

SMEs' global expansion is a continuous process. Any company wishing to succeed in the international market needs to create a strategically relevant and feasible model for its global operations, incorporating aspects including corporate culture, management, business processes and human resources.

In order to help SMEs achieve this goal, our relationship managers strive to gain an in-depth understanding of business owners "both inside and outside their offices" and think in the interests of our customers to assess how the companies should penetrate into global market. They also provide day-to-day guidance for customers, especially with regard to "removing" risks in cross-border finance. These include risks such as the general lack of understanding by SMEs about the financial robustness of their counterparties in cross-border trade, resulting in delayed payment; insufficient calculation of foreign exchange risks, leading to exchange losses, or inappropriate trade finance arrangements forcing the company to accept high interest rates.

Of greatest concern for SMEs is the sudden introduction of foreign exchange controls in a country where their counterparty is located, indefinitely postponing payment. Many SMEs are also concerned about the exchange risks associated with RMB appreciation. For this reason, HSBC has been committed to promoting RMB settlement for cross-border trade and investment worldwide. By using RMB settlement, SMEs can effectively avoid these currency fluctuation risks.

HSBC will fully support SMEs during their global expansion by providing them with innovative solutions most suited to their needs. By assisting SMEs with the development of their international business, we will help to ensure that SMEs not only "go global" but do so successfully and sustainably.

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