HK en­ter­prises seen look­ing to Shaanxi fi­nance com­pa­nies for co­op­er­a­tion in help­ing out SMEs

China Daily (Hong Kong) - - HK BUSINESS - By EVELYN YU in Hong Kong evelyn@chi­nadai­lyhk.com

Once the eastern de­par­ture point of the Silk Road, and now the start­ing point of the China-led Belt and Road (B&R) Ini­tia­tive, Xi’an — cap­i­tal city of the China’s cen­tral-north­west­ern prov­ince of Shaanxi — has been the strate­gic cen­ter of Chi­nese his­tory.

Not on par with its rich­ness in his­tory and re­sources, Xi’an is deemed as one of the less-de­vel­oped in­land cities. But, lo­cal fi­nan­cial ser vice com­pa­nies have stepped in, fund­ing the city ’s small and medium-sized en­ter­prises (SMEs) in grasp­ing the op­por­tu­ni­ties of­fered by the B&R project.

Among them is Chin­link In­ter­na­tional Hold­ings Ltd, which is prin­ci­pally en­gaged in pro­vid­ing fi­nanc­ing so­lu­tions in Shaanxi through fi­nanc­ing guar­an­tees, sup­ply chain fi­nance and fi­nance leas­ing to SMEs, and is one of some 10 Xi’an com­pa­nies listed in Hong Kong.

Li Weibin, chair­man and man­ag­ing di­rec­tor of Chin­link, says Xi’an has much to of­fer to SMEs.

“Xi ’a n i s h o m e t o m a ny flag­ship air­craft and avi­a­tion gi­ants, such as Xi’an Air­craft In­dus­trial Cor­po­ra­tion, and has been the hub of the mil­i­tary in­dus­try. Backed by its high-tech ad­van­tages and the lo­cal govern­ment’s push for mil­i­tary tech­nol­ogy to be con­verted for civil use over the years, I see great prom­ise for many of the SMEs in this realm,” he tells China Daily.

Li notes that SMEs, par­tic­u­larly star­tups, have long faced dif­fi­cul­ties in ob­tain­ing bank fi­nanc­ing as it’s dif­fi­cult for them to pro­vide stan­dard types of col­lat­eral. Tight­ened credit rules have also made com­mer­cial banks more strin­gent in lend­ing to en­ter­prises.

How­ever, Li notes that the sit­u­a­tion is im­prov­ing as reg­u­la­tors are in­clud­ing fi­nanc­ing of the real econ­omy and SMEs into the assess­ment sys­tem, but the cost is still high for such star­tups.

“If an SME goes to a com­mer­cial bank, the rate for loans would be around 20 to 50 per­cent above the bench­mark in­ter­est rate, reach­ing up to 70 per­cent in some re­gional com­mer­cial banks. So, if the bench­mark rate is around 5 per­cent, SMEs could be bur­dened with a rate up to 8.5 per­cent and, in the pri­vate credit mar­ket, the in­ter­est rate could be as high as 50 per­cent.”

As a long-term client with banks, Li says Chin­link can ob­tain loans worth bil­lions of yuan at lower in­ter­est rates, to be lent to SMEs in need of fund­ing.

Chin­link has a unique fi­nan­cial eco-sys­tem com­bin­ing its proper ty and lo­gis­tics busi­nesses. Tak­ing their fi­nanc­ing guar­an­tee ser­vices as an ex­am­ple, Li says un­der the com­pany’s in­ven­tory-as­col­lat­eral risk man­age­ment sys­tem, SMEs can pledge their in­ven­tory to the com­pany as col­lat­eral, en­abling it to pro­vide guar­an­tees to lend­ing banks. Chin­link also of­fers lo­gis­tics ser­vices, such as warehousing, trans­porta­tion and de­liv­ery ser­vices.

Chin­link, which owns sev­eral com­mer­cial prop­er­ties in Xi’an, also pro­vides sup­ply chain fi­nanc­ing to its ten­ants. The syn­er­gies across dif­fer­ent sec­tors al­low the group to max­i­mize its cross-sell­ing op­por­tu­ni­ties.

For the year ended March 31, 2017, the group’s rev­enue reached HK$518.8 mil­lion — up 157.7 per­cent from that of the pre­vi­ous year, which stood at HK$201.3 mil­lion. Yet, the com­pany recorded a 99.2-per­cent de­crease in net profit to HK$1.3 mil­lion. The com­pany’s an­nual re­port said the sharp de­cline was due mainly to a one-off HK$310mil­lion ac­qui­si­tion it made a year ear­lier.

In June, Chin­link said it would ac­quire a con­trol­ling stake in MCM Part­ners — a Hong Kong-based fi­nan­cial ser­vices bou­tique which cur­rently has a Type-1 li­cense deal­ing in se­cu­ri­ties, a Type 2 deal­ing in fu­ture con­tracts and a Type-4 li­cense for ad­ver­tis­ing in se­cu­ri­ties. The com­pany is also ap­ply­ing for a Type-9 li­cense for as­set man­age­ment.

L ee notes there’re many li­censed sec uri­ties com­pa­nies in Hong Kong and Chin­link is merely eye­ing MCM’s in­ter­na­tional ex­per­tise, which he be­lieves can bet­ter serve his SME clients in Xi’an and across the Chi­nese main­land. MCM founders Rachid Bouzouba and Adrian Valen­zuela are sea­soned bankers with 20 years’ ex­pe­ri­ence in the se­cu­ri­ties and cap­i­tal mar­kets.

T hrough joint ef­for ts, Li be­lieves, Chin­link is well

chair­man and man­ag­ing di­rec­tor of Chin­link In­ter­na­tional Hold­ings Ltd

po­si­tioned for the B&R Ini­tia­tive. Cit­ing the launch of China (Shaanxi) Pi­lot Free Trade Zone (FTZ) in April, he re­veals that among the coun­try’s seven newly ap­proved F TZs, only that in Shaanxi is­sues per­mits to for­eign in­vestors to es­tab­lish al­laround fi­nan­cial ser­vice com­pa­nies. Such fa­vor­able poli­cies are a clear in­di­ca­tion that the govern­ment is sup­port­ing Xi’an in tap­ping the B&R op­por­tu­ni­ties.

“Years ago when cities like Chengdu were wildly us­ing bank’s ac­cep­tance in trad­ing, we were still us­ing col­lec­tion and cash on de­liv­ery. Many peo­ple didn’ t know what a bank’s ac­cep­tance bill is. It took lo­cal banks years to pro­mote the new tool. Nowa­days, lo­cal busi­ness­men are more open-minded and they ac­cept new fi­nan­cial tools quickly.”

Backed by its high­tech ad­van­tages and the (Xi’an) lo­cal govern­ment’s push for mil­i­tary tech­nol­ogy to be con­verted for civil use over the years, I see great prom­ise for many of the SMEs in this realm.”

PRO­VIDED TO CHINA DAILY

Chin­link In­ter­na­tional’s ‘World Port’ in Xi’an, Shaanxi prov­ince, which in­cludes lo­gis­tics parks, trade and whole­sale cen­ters and shop­ping malls, re­flect­ing the group’s in­te­grated ser­vices it pro­vides to the city’s small and medium-sized en­ter­prises.

Li Weibin,

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