banking update 21
HSBC embraces the opening of China’s renminbi
Would you like to increase your business? How many organisations would reply with an obvious affirmative – yet be wary of an approach which is blatantly selling them something? In a difficult economic climate, business help, especially from a bank which has global reach and has embraced key developments in China, may be a key component for growth
HSBC head of corporate banking (Solent), Mark Frettingham, leads a team which has expanded by four recently due to growing its business and customer demand. Frettingham said: ”We’re still very much open for business in the domestic and international market for UK companies, especially those looking to export, with strong corporate deals taking place for customers throughout the region.”
The team is committed to helping businesses out of the downturn, with the differentiator being its focus on international and companies who have aspirations to trade overseas. Sally Cash, who holds the role of senior international business manager, expanded: ”The HSBC global network is ideally placed to support businesses keen to import and
export. HSBC Group operates in more than 80 countries and territories and 60 of these have a trade and supply chain presence. Having a trade specialist in the local market bridges the gap between buyers and suppliers, providing in-country knowledge and a fast, accurate, efficient documentation processing and transaction funding service around the world.”
Until last year the renminbi (official currency of China) was a closed currency in the mainland of the People’s Republic of China (PRC). It could not be held nor traded offshore. However, it has opened up to trade transactions and is predicted to be freely traded by 2020, with 50% of trade in and out of China taking place in renminbi by 2015. It makes it more efficient for the trading partner, and
CASE SUDY – Surface Technology International
STI, Surface Technology International, is a UK market leader for contract electronics manufacturing. Utilising the latest technology and equipment in its facility in Hook, Hampshire, it offers engineering design capability, supply chain management and manufacturing of printed circuit boards assemblies for all major market sectors including aerospace, energy, telecoms and medical.
Having been trading for more than two decades in the UK, and with the acquisition of a Philippines manufacturing facility in 2010 to complement its supply chain offices opened in the Far East several years earlier, it moved its banking to HSBC Corporate in the summer, after lengthy discussions with four banks over its five-year business plan and future cash funding requirement.
”Experiencing 20% year-on-year growth and international expansion at the same time demanded a step change in our approach,” explained group finance director Keith Crossley. ”Other banks we looked at trade more in the US and Europe so it was the wider international reach of HSBC that was very important for us, and HSBC spent the most time on due diligence, visiting our factories here and overseas and getting to know our people very well. It dovetailed a meeting I had in Manila, Philippines, so I could meet the local banking representative.
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – OCTOBER 2011
Keith Crossley, finance director of STI (left), with Nick Spong, GRM at HSBC
”The solution was a perfect fit for our business: HSBC knows both our customer and supplier base, with products and people ’on the ground’, it’s an excellent platform. In a climate where it’s difficult to secure finance, the lending facility is nearly three times that of our previous, long-established banking partner. We subsequently wrote to suppliers and said we were delighted to be working with HSBC.”
”With long contracts for supplies, STI has an unusual cashflow pattern but is a top end manufacturer. It takes time for all the components to be assembled pre- manufacture,” added Nicholas Spong, HSBC global relationship manager. ”This company has a very strong management team and is a success story for UK manufacturing.”
it is no surprise, therefore, that exporters
are keen to trade goods and services using it with mainland designated enterprises, which can be loosely summed up as approved Chinese companies. Having previously dealt in sterling or US dollar, switching to renminbi removes the exchange rate risks and costs for Chinese companies, therefore opening up the possibility of attractive pricing advantages for UK companies.
”The message to companies is if you are looking at your strategy for China, then you should be considering this right now. Being ahead of the game and ready to discuss trading in renminbi with Chinese trading partners can only be a positive move for UK businesses and future trade,” Cash continued.
HSBC was the first bank to complete trade settlements in six continents and among the first banks in the UK to open currency accounts in renminbi, something which is drawing much interest. ”Clients need to cut through the mystique and take the first step to trading in renminbi while hedging their currency risk, HSBC has these products ready and available now,” said Cash.
Her role is to provide solutions to businesses wanting to trade cross-border securely as well as creating bespoke working capital finance structures and she works closely with global relationship manager Nicholas Spong.
HSBC is also working in partnership with the Government to offer facilities supported under the Export Credit Guarantee Department’s new schemes, whereby the Government supports exporters with a bond support scheme, working capital scheme and also an export enterprise finance guarantee scheme from the Department for Business, Innovation & Skills.
Combining an international and domestic focus it might be apt to ask not just ”Would you like to increase your business?” but also ”When would you like to increase your business?”.
Details: Mark Frettingham 0845-585-9449 07786-524027
markfrettingham@hsbc.com
www.businessmag.co.uk
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