Trade Financing Hua Xia Super Trade
Series I (Import Trade Financing)
DefinitionImport/export trade financing is an economic activity of funding or credit financing occurring during the process of import/export settlement in international trade. In other words, it refers to financing services for customers engaged in import/export trade (with import/export license). Hua Xia Super Trade is an aggregate name for all trade financing products of Hua Xia Bank. Applicable ClientsCorporations legally registered in China and have the right for undertaking import/export trades (with import/export license); and those corporations or opened RMB or foreign currency accounts, file for settlement, and maintain decent bank credit records at Hua Xia Bank. Functions and BenefitsIt fulfills the customer's short-term financing needs in import/export trade and promotes the normal running of international trade. L/C on Credit DefinitionIn L/C on credit, under the circumstances where the customer fails to deposit adequate fund provisions (incl. permissible band in L/C) in the L/C into Hua Xia Bank's security deposit account, Hua Xia Bank approves the line of credit for the L/C writing according to the customer's credit standing and writes letter of credit within the line. Applicable ClientsCustomers of import business qualification, good business performance and payment/receipt records, good credit standing, definite economic resources and customers capable to provide reliable guarantee, pledge, and mortgage to the bank are all eligible for L/C on credit. Functions and Advantages1. Accelerate fund turnover: Under the international L/C settlement, when the customer runs short of working capital for L/C issuance, the customer adopts L/C on credit for fund facility from the bank. The customer may therefore write L/C for imports and accelerate the working capital turnover. 2. Increase trade opportunities: The service reduces the occupation on working capital and releases the working capital for other investments or transactions. It therefore increases the trade opportunities and assists the customer to expand market share. Hua Xia Bank Advantages1. Mature international settlement and credit management system for convenient, prompt, and standardized service. 2. Line management to simplify procedures for each transaction. 3. Network of correspondent bank with global coverage to ensure timely and thorough L/C advices to exporter. Inward Documentary Bill Definition Inward Documentary Bill is a short-term trade finance solution. During the customer's import trade, Hua Xia Bank takes the customers import shipment as the mortgage and provide financing and payment to foreign party according to the customer's application for customer suffering from working capital shortage. The customer repays Hua Xia Bank's advancement and the relating interest and fees within a stipulated deadline. Applicable Clients Importers with import/export license and who opened RMB or foreign currency settlement account at Hua Xia Bank Functions and AdvantagesIt provides short-term trade financing and resolves the customer's shortage in working capital. Service Flows 1. Application and acceptance: After the trade financing department accepts the documentary credit application, the department will examine the importer's credit standing; Hua Xia Bank will examine the overall credit, import trade background, L/C, and import/export contract of the company. 2. Documentary bill examination: The administering officer will timely fill out Approval Form for Inward Documentary Bill and credit line occupancy approval form for the eligible inward documentary bill; the administrating officer then writes comments and signs the forms accordingly. 3. Documentary credit processing: The customer is required to present to Hua Xia Bank the shipment Trust Receipt under L/C and signs with Hua Xia Bank the Inward Documentary Bill Contract for inward documentary bill processing. 4. Execution: According to the import contract, the trade financing department fills out fund release advice and marks "INWARD DOCUMENTARY BILL" on the document. The document is passed to accounting department or the banking department for accounting entries. The international settlement clerks complete the endorsement and transfer procedures relating to title documents and deliver the import documents to the applicant. The payment to overseas parties is completed upon the payment due date. 5. Repayment: Upon expiration date of documentary credit, the customer is expected to repay principal and interest on documentary credit and collects back the Trust Receipt. Shipping Guarantee DefinitionUnder Shipping Guarantee, when the import shipment arrives before the delivery of shipping documents, the bank shall issue to shipping company or shipping company agent the shipping guarantee letter signed by the bank according to the importer's application for shipment pickup. The shipping guarantee letter assures that, upon receipt of the shipment documents, the applicant will timely follow up with the official bill of lading in exchange of the guarantee letter and the applicant affords all liabilities and expenses arising thereupon. Applicable Targets The import L/C issued from Hua Xia Bank that has not reached bill of lading on shipment and the underlying import has destination port in China. Functions and Advantages The customer may pickup the goods on bank credit under circumstances where the shipment arrives before bill of lading. It saves the demurrage fee and warehouse lease. The goods may be timely sold for fund collection, thereby reducing operating cost. Service Flows 1. The applicant presents application documents to international department of Hua Xia Bank. The documents include Shipping Guarantee Application signed by the applicant, Shipping Guarantee Letter, and the duplicate version of bill of lading, invoice, or their faxed version. 2. According to conditions for shipping guarantee acceptance, the administering officer examines if the applicant is eligible for application. 3. The administering officer examines the application documents and the relevant bills and certificates. 4. The bank writes Shipping Guarantee Letter and charges service fee for each transaction according to Hua Xia Bank's service fee standards. 5. After the issuance of collection advice, in case the bank does not receive official bill of lading within 20 days, the international department will cable enquiries depending on the actual situation to acquire relevant information of the bills. The department will urge negotiation or seek document delivery by the negotiation or the presenting bank. 6. Upon receipt of the documents, Hua Xia Bank examines if the document information is consistent with the content in Shipping Guarantee Letter kept in the bank. When the information is consistent and after specifying the payment fund or after the customer presents acceptance approval, the bank delivers the official bill of lading to the customer and urges the applicant to timely exchange official copy of bill of lading for Shipping Guarantee Letter and to return the guarantee letter to Hua Xia Bank. Letter of Guarantee in Foreign Currency
Definition Under Letter of Guarantee in Foreign Currency, the bank writes the written commitment of guarantee nature to foreign parties according to the applicant's requirement; once the applicant fails to repay debt or fails to perform according to the contract signed with the beneficiary, the bank performs according to the guaranteed commitments. L/G in foreign currency may be financing L/G and non-financing L/G. Applicable Clients The applicant shall be the company approved by the relevant State authorities for international businesses and the company with capacity to perform in line with the international contracts and for repayment. Service Flows1. Service flows for outward L/G in foreign currency: (1) Acceptance: The applicant presents application to Hua Xia Bank and provides the relevant application documents as per requirements. (2) Examination and verification: The credit administrating officer examines the application and, on this ground, launches investigation according to foreign currency loan investigation procedures before forming the written investigation report. (3) Payment assurance: Hua Xia Bank collects security deposit from the applicant according to the regulated ratio and transfers the fund into the security deposit account. Meanwhile, Hua Xia Bank implements guarantee measures. (4) Writing L/G (5) L/G management: After Hua Xia Bank writes outward L/G, the credit administrator will check the business progression under guarantee and timely track the applicant's business conditions. (6) L/G indemnification or cancellation Indemnification: The international department implements payment process only upon receipt of the official copy of L/G presented by the beneficiary. Cancellation: The international department cancels the L/G two months after the expiration of L/G. 2. Service flows for inward L/G in foreign currency: (1) Register L/G (2) L/G examination: The international department verifies the truthfulness and validity of L/G according to requirements. (3) Advise L/G/collect fees. (4) Claim or cancellation on L/G. Usance Acceptance Bill Repurchase (Forfeiting Repurchase) Definition: According to the overseas exporter or the bill holder's application, Hua Xia Bank purchases from the bill holder without recourse as of the draft or cashier's check already accepted by Hua Xia Bank. Applicable Targets Import Usance L/C written and accepted by Hua Xia Bank. Functions and AdvantagesThe overseas exporter may collect fund early and convert the usance accounts receivable into cash income, which reduces fund occupancy, increases fund liquidity, and improves balance sheet. Service Flows (1) Upon receipt of the telegraphic message attached with test key from the negotiation bank requesting Hua Xia Bank to repurchase the bill without recourse, Hua Xia Bank will examine the documents and the branch/subbranch determines if it will repurchase the bill according to the product return and the level of the foreign currency fund. (2) Hua Xia Bank thoroughly examines the import payment documents presented by the customer. (3) Hua Xia Bank sends to negotiation bank the purchase advice for acceptance bill under L/C and seeks conformation by the negotiation bank. (4) Upon receipt of confirmation from the negotiation bank, Hua Xia Bank fills out Export Bill Purchase Advice; the forex clearing department makes payment to the negotiation bank according to the payment advice issued by the international department; the accounting department makes the accounting entries. (5) When Hua Xia Bank's acceptance bill under L/C matures, Hua Xia Bank will complete the foreign currency purchase and import payment write-off procedures for the customer in normal circumstances; however, the foreign currency purchased under L/C is paid to Hua Xia Bank and the bank fills out Export Bill Booking/Buyout Advice and passes the advice to accounting department for booking.
Note: This page is for reference only, part of the business to local outlets announcement with specific provisions prevail.
Series E (Export Trade Financing)
Packing Loan Fund Release
Definition Packing Financing is also known as export credit secured loan. Under such arrangement, the exporter receives L/C from the issuing bank and applies for RMB liquidity loan at Hua Xia Bank for purpose of procurement, processing, packaging, and production of the export goods. Applicable ClientsExporters with import/export license and who opened RMB or foreign currency settlement account at Hua Xia Bank. Functions and Advantages 1. Increased trade opportunities: When the exporter suffers from fund shortage while it cannot obtain advance payment for the shipment, the service assists the exporter in organizing purchase, developing business, and capturing trade opportunities. 2. Reduced fund occupancy: The goods preparation such as production and procurement does not occupy exporter's proprietary fund, which relieves the exporter from working capital pressures. Service Flows 1. Application: The customer files for application at credit business department at Hua Xia Bank and presents the relevant documents. 2. Acceptance and examination: The international department of Hua Xia Bank carefully examines the L/C and its content. The credit business department is responsible for customer credit research. 3. Signing contract: The credit business department of Hua Xia Bank signs Packing Loan Contract and other legal documents with the customer. 4. Implementation of guarantee: The customer ensures securities such as third-party guarantee, mortgage, or pledge, files for the relevant security registration, notary public, or mortgage insurance and pledge delivery to bank. 5. Loan release: When the contract is in force, the credit management department fills out fund release advice according to the approved purpose and fund usage plan stipulated in the contract; the credit management department passes the advice to banking department for loan release. 6. Loan collection: After timely shipment release according to L/C terms and conditions, the customer prepares all documents required in the L/C and presents the documents to Hua Xia Bank for negotiation. Upon receipt of the export payment paid through issuing bank, the fund is firstly used to repay Hua Xia Bank packing loan principal and interest; the balance of the fund is then booked into the customer's account. In case the customer fails to ship the goods, or the issuing bank protests the export documents, the customer shall finance adequate fund for timely repayment of bank's packing loan. Outward Documentary Bill
Definition Outward Documentary Bill is a short-term export trade financing for the beneficiary. According to the application by the beneficiary (exporter), and when the transaction is not paid, Hua Xia Bank pays consideration to the beneficiary with recourse on the sight or usance export documents; Hua Xia Bank receives the title over the documents and provides short-term export trade finance to the beneficiary. Applicable Clients Exporters with import/export license and who opened RMB or foreign currency settlement account at Hua Xia Bank. Functions and Benefits It addresses exporter's temporary fund shortage, accelerates the corporate fund turnover, and increases export. Service Flows 1. Application and acceptance: The customer presents the outward documentary bill application; Hua Xia Bank credit business department accepts and conducts preliminary examination before passing documents to international department. The international settlement officer examines the documents presented by the customer. If the officer determines that the customer is eligible for Hua Xia Bank documentary credit, the officer fills out Hua Xia Bank export document credit approval form and signs with written comment. 2. Documentary credit approval: The bank mainly examines the applicant credit standing and the issuing bank or the payer credit standing; if the officer deems the applicant eligible for documentary credit, the officer signs with written comment on the approval form and passes the document to the general manager or the supervising bank president of corresponding approval authority for approval. 3. Documentary credit processing: The settlement department writes export documentary credit fund release advice according to the approval form and passes the advice to accounting department for documentary credit fund release. 4. Repayment: Upon receipt of overseas payment, Hua Xia Bank directly deduces the fund for documentary credit principal and interest. Bill Discounting DefinitionBill discounting is a short-term export trade financing for the beneficiary. According to the application by the beneficiary (exporter), and when the transaction is not paid, Hua Xia Bank pays consideration to the beneficiary with recourse on the Usance bill accepted by the issuing bank, certifying bank, or the acceptance bank; Hua Xia Bank receives the title over the bills and provides export trade finance to the beneficiary. Applicable ClientsExporters with import/export license and who opened RMB or foreign currency settlement account at Hua Xia Bank. Functions and Features It increases trade opportunities for the exporter; reduces fund occupancy for the exporter, and accelerates the corporate fund turnover. Forfeiting Definition Forfeiting is also known as bill buyout and is a mid-term export trade financing for the beneficiary. According to the application by the bill holder (exporter), Hua Xia Bank purchases without recourse the accepted draft or cashier's check (usually accepted by the local bank of importer) from the bill holder. Applicable Clients Exporter who uses Usance L/C as means of settlement and delivers bills at Hua Xia Bank Functions and Advantages 1. Improve export competitiveness: Forfeiting enables importer for delayed credit payment in business negotiation, thereby increases the competitiveness of exports. 2. Financing: It addresses the exporter's fund shortage and accelerates fund turnover. 3. No approval procedures for credit line; no need for security. 4. Avoid issuing bank risk: The issuing bank does not pay upon maturity; the exporter does not repay bank principal and interest. 5. Improve financial structure: The financed fund is booked as cash sales in financial statement; it shortens the accounts receivable cycle and enhances credit rating. 6. Early tax rebate: Exporter may immediately file for export payment write-off and tax rebate upon completion of forfeiting, whereas export documentary credit is eligible for write-off and tax rebate only after payment collection from overseas. 7. Avoid forex fluctuation. Credit Insurance Financing DefinitionIt is the trade financing under short-term export credit insurance ("Credit Insurance Financing"). Under Credit Insurance Financing, the exporter purchases short-term export credit insurance from China Export & Credit Insurance Company and transfers the claim right under export credit insurance to Hua Xia Bank; Hua Xia Bank makes short-term trade financing to the exporter according to the export trades such as goods shipment, export filing, and insurance premium payment by the exporter as per export contract. Applicable Targets Export trades under L/C, collection, and remittance that have purchased export credit insurance policy. Functions and Advantages The exporter purchases relevant Chinese credit insurance product and becomes eligible for Hua Xia Bank outward documentary bill under L/C and collection and bill discounting without guarantee. Exporter with valid guarantee, or exporter eligible for Hua Xia Bank credit fund release, may file for outward documentary bill under remittance (POD, i.e. O/A credit). Service Flows1. Exporter purchases short-term export credit insurance on the export shipment from the export credit insurance company. 2. Exporter applies for credit insurance financing to Hua Xia Bank and presents export documents and export credit insurance documents. 3. Hua Xia Bank examines the documents. 4. Upon approval, the bank mails the documents overseas and releases the documentary credit fund as per exporter's application. 5. Repayment: Upon payment receipt, after the deduction of documentary principal and interest and the relevant fees due for the bank, the balance is credited or exchanged into RMB for the exporter. 6. Claim payment: The exporter shall seek immediate claim to the export credit insurance company. Upon receipt of the compensation, the receipt is firstly used to retire Hua Xia Bank documentary credit principal and interest and to pay relevant fees; the balance is transferred into the exporter's account. International Factoring with Recourse Definition Under International Factoring with Recourse, the exporter transfers to Hua Xia Bank the creditor's right in accounts receivable arising from the current or future goods sales contracts signed between the importer (debtor) and the exporter; Hua Xia Bank provides full financial services covering trade financing, sales management by accounts, and accounts receivable chasing. Hua Xia Bank reserves the right of recourse against the exporter, i.e. in case Hua Xia Bank fails to collect the financing principal and interest upon expiration of factoring financing, exporter is obligated to unconditionally repurchase the rights in the accounts receivables. Applicable Targets International factoring with recourse is suitable for export trades on sales terms such as document against acceptance (D/A) or open account credit (O/A). Functions and AdvantagesThe customer may obtain Hua Xia Bank full financial services including accounts receivable debt chasing, sales management by accounts, credit risk guarantee, and factoring advancement. Service Flows1. The customer applies for factoring line: The customer is expected to provide the name list and information of the overseas importers and specifies the credit line for each importer. 2. Hua Xia Bank applies for importer credit line to the import factor. 3. Sign Export Factoring Agreement with the customer according to the lines approved by the import factor. 4. Customer ships goods to the importers according to the contract. 5. Customer delivers invoice and the duplicates of other relevant documents to Hua Xia Bank. 6. If needed, Hua Xia Bank may provide factoring financing for the customer. 7. Upon due date for the payment, Hua Xia Bank collects payments from the importer through import factor; Hua Xia Bank deducts service fee and pays the balance to the exporter or repays financing made by Hua Xia Bank. Risks Involved and Preventions 1. Truthful trade: This is the key point of risk control for Hua Xia Bank. If the trade is illegal, fraudulent, or has other flaws, overseas banks may run recourse against Hua Xia Bank. Today, the scope of buyout drafts accepted by Hua Xia Bank is documentary draft under Usance L/C delivered at Hua Xia Bank. 2. Issuing bank (or confirming bank) risk of bankruptcy. Loan on Custodial Export Tax Rebate Account DefinitionLoan on Custodial Export Tax Rebate Account refers to short-term working capital loan backed by receivable export tax rebate granted to the exporter. Under such arrangement, Hua Xia Bank helps the exporter in resolving short-term funding difficulties due to undue funding of export tax rebate under the precondition where Hua Xia Bank exercises custody over the company's export tax rebate account. Applicable Clients The exporter of import/export license: the company shall open the settlement account and export tax rebate account at Hua Xia Bank and appoints Hua Xia Bank as the main bank of import and export settlement. Functions and AdvantagesIt alleviates the short-term funding difficulties of the company due to insufficient export tax rebate. It also resolves the mortgage security problems for a part of the loan and assists the company for more exports. Service Flows 1. Application: The customer files for application at credit business department at Hua Xia Bank and presents the relevant documents. 2. Acceptance and examination: The credit business department accepts the customer application and launches thorough investigation over the company. The department examines the corporate credit rating, forms the complete credit investigation report, and presents the report to the credit examination department. 3. Signing agreement: Upon approval of the loan, the credit business department signs with the customer “Custodial Export Tax Rebate Account Agreement", loan contract, and other legal documents; and process for loan release. The loan shall not be released before "Custodial Export Tax Rebate Account Agreement" comes into force. 4. Loan release: After the completion of the export business, the customer presents to the credit business department the export documents for examination. The documents include bill of entry (tax rebate slip), verification form of export payment of exchange (tax rebate slip), VAT invoice, and export tax rebate payment statement. The credit business department shall verify information with the tax authority, and process loan release according to the approval procedures and through approval by the authorized institutions. 5. Loan collection: The export tax rebate fund shall be used firstly to retire Hua Xia Bank loan on custodial tax rebate account.
Note: This page is for reference only, part of the business to local outlets announcement with specific provisions prevail.
