Money Moves

Banking on China business

by Grace Chan

Leading Japanese financial institution expands presence in mainland China

Toyoki Oka, joint general manager
Mizuho Corporate Bank Ltd
Photo: Edde Ngan

Robust economic growth in mainland China is expected to fuel a stronger demand for banking and financial services. One top Japanese corporate financier is set to capitalise on the country's booming economy by extending its branch network and expanding its range of trade finance products.

With more than 30 years' mainland experience, Mizuho Corporate Bank became the first Japanese bank to deliver a cross-border Renminbi settlement service in July this year.

The bank started exploring the mainland market as far back as 1979, opening its first representative office in Beijing two years later. Its Shanghai branch was the first foreign venture to be allowed to commence onshore Renminbi business in 1997, and in 2007 the Mizuho Financial Group became the first Japanese financial group to establish a subsidiary to compete in the flourishing Chinese economy.

"Mizuho has always been a forerunner in grasping mainland banking business opportunities," says Toyoki Oka, joint general manager, Hong Kong branch, Mizuho Corporate Bank Ltd. "Over the past few years, we've had regular discussions with mainland authorities and banking institutions on the development of Renminbi products. As soon as the details of the pilot cross-border RMB Trade Settlement Scheme were announced in July, we started working with our mainland branches to offer the service to selected clients."

To date, more than 70 per cent of Japanese companies listed in Tokyo, and an increasing number of mainland and international corporations are Mizuho clients.

Stronger foothold

Under the pilot RMB Trade Settlement Scheme, eligible companies in five mainland cities and regions are allowed to settle their cross-border deals with trading counterparts in Hong Kong and Macau in Renminbi.

Eligible enterprises benefit from the privilege to conduct their Hong Kong-mainland trade in the Chinese currency, as this allows them to better manage currency risks.

"By leveraging our global branch network, we anticipate increasing RMB trade settlement transactions from our mainland and international customers as well as those from Japan," notes Mr Oka. "Our Hong Kong branch plays a key role in networking with our mainland branches to expand this area of business."

The bank is also keen to offer a broad range of products, including project and structured finance and advisory and business matching services, for clients in mainland China, Hong Kong and Taiwan.

For instance, Mizuho's Hong Kong office last year set up a dedicated department to meet the growing need for cross-border structured financial solutions ranging from advisory services, to business alliance and cash flow management, alongside other sophisticated banking products.

This department also assists in structuring cross-border transactions and major Sino-Japanese projects. It will be involved in formulating more innovative financial services in due course.

With support from parent company Mizuho Financial Group, the bank can also arrange through its sister companies to provide investment banking and other financial services.

"Corporations in Japan have a growing appetite for investing in China. Food-manufacturing, retail and wholesale companies are particularly prominent in this regard, but a number of automobile component businesses are also tapping into the market in view of greater mainland affluence and the resulting demand for cars," Mr Oka points out.

"Japan's government has also recently encouraged technology-based firms to explore business opportunities related to environmental protection in China where Mizuho really would like to focus on," he says.

The bank's China operation has enjoyed remarkable business growth and, with domestic business activities and outbound cross-border investments increasing, it is confident that opportunities for international finance providers will multiply.

Local leverage

Currently, Mizuho operates a strategic network of 10 branches in coastal mainland cities and regions such as Shanghai (Head Office), Beijing, Shenzhen, Dalian, Wuxi, Tianjin, Qingdao, Guangzhou, and Wuhan. More branches are planned in line with the Chinese government's policy of encouraging foreign companies to help develop second-tier cities, Mr Oka explains.

"Our workforce will expand as our branch network extends. We've always focused strongly on staff training and we have an array of comprehensive programmes in place for both our Chinese and Japanese employees across the border," he says.

The bank's Hong Kong branch also plays a major part in the design and implementation of in-house and external training on products, credit analysis and legal matters for mainland staff.

Other employee development activities include seminars and joint marketing ventures between Hong Kong and mainland branches.

Although Shanghai is rapidly growing as a financial centre, Mr Oka believes Hong Kong's well-established legal system and sophisticated financial infrastructure will help the city retain its status as international finance hub. "Our Hong Kong and Shanghai operations complement one another and serve as pillars for our Asian banking platform," he concludes.

Taken from Career Times 06 November 2009, p. A13
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