Trade finance and global trade are as inseparable as light and shadow. With increasing demand for trade finance services as a result of positive economic growth, prospects look positive both for banks and talents.
When it comes to evaluating facts and analysing emerging trends, it is always a good idea to do at least some research into the history of the subject so that a more informed judgment can be made. In the 19th century, tradesmen concluded domestic deals based on a "word of honour" code. However, such an honour code was impractical in international trade because in most cases the buyer was a total stranger from a different culture. In those days, exporters bore undue risks, specially non-payment. Through trial and error, and the need to devise a practical system, arrangements were gradually improved to evolve into today's trade finance services.
Hong Kong has always been a trading port and still is, though now adhering to a new order. It has the world's most services-oriented economy in which service sectors account for 90 per cent of GDP. Its four backbone sectors are: trade and logistics (27.6 per cent of GDP in terms of value-added in 2004), tourism (2.9 per cent), financial services (12.2 per cent), and professional services and other producer services (10.5 per cent). Because of the highly significant role played by trade and logistics in Hong Kong's economy, the trade finance business is near to overflowing with opportunities.
Taking up the story, Xu Cheng Fa, deputy general manager, Bank of Communications Co Ltd, Hong Kong Branch says, "While financial planning products are in the spotlight these days, trade finance is making little noise, and many people think it has reached its final chapter, soon to be replaced by other instruments and products in the market. But the reality is quite the opposite. Services provided by banks are very different from procedures in the old days. We must closely follow developments and customer needs in the ever-changing market. Rather than being in decline, trade finance is a foundation for the development of services for businesses in the trading sector."
In response, Bank of Communications is allocating more resources to develop its trade finance business. The bank seeks to provide customised services for importers and exporters, thereby increasing non-interest income. And it is quite positive about the future of the local trade finance business.
Basically, trade services reduce the financial risks between buyers and sellers, and Bank of Communications facilitates this process. It provides full-service solutions for importers and exporters such as inward/outward bills, back-to-back L/C, forward exchange contracts and trade insurance. The bank has sustained favourable growth in both volume and income. Its proven track record in trade finance business has helped it earn the loyalty of its customers. It provides them with cutting-edge trade solutions, and its clientele includes both SMEs and multinational corporations.
The bank appreciates the significance of employee performance in achieving corporate objectives. It uses various channels to recruit talents possessing different professional skills. Its strategy is to constantly enhance the quality of its personnel.
Despite keen competition from other players in the financial sector, the bank is confident that trade finance will maintain its competitive edge for recruiting the best brains. It cites the strength and ongoing growth of banking in keeping with Hong Kong's position as a global financial centre that also enjoys continuous support from the Central Government in Beijing. This means that prospects of a career in banking are promising. Competition in attracting talents is reflected by the ever-increasing salary levels in the industry resulting from increased demand. The two main attractions being offered by banks today are good money and good prospects — the two values job seekers are most fond of.
The customers of trade finance services are corporations and companies, not individuals. This means that while consumer banking and financial planning require a person with the sensitivity to respond to the needs of individual customers, in trade finance the professional must look at matters from a macro perspective due to the more complex nature of his or her job. A trade finance professional should be able to build trusted relationships with corporate/company customers while at the same time providing services related to financial analysis and planning.
Knowledge and skills
The bank is looking for talents who possess professional knowledge and skills in finance, accounting, business administration and accrual accounting. Mr Xu adds, "While analytical power and global view are the basics, an appreciation of the importance of the China factor in trade finance is a particularly important trait. The bank has noticed a general improvement in academic qualifications among candidates."
Bank of Communications has a vast network of branches and sub-branches in 137 major cities in China. It has overseas branches in New York, Tokyo, Singapore and Seoul, and representative offices in London and Frankfurt.
According to data compiled by the Trade Development Council, the world economy will continue to expand at a steady pace, and the outlook for 2007 remains encouraging. It follows that mainland China's economy will remain the key driver of growth in intra-Asia trade. As the mainland's most important entrepot, Hong Kong can be expected to benefit further from the steady world economy and ongoing intra-regional trade.
Also evidential in pointing to a promising future is the continued support of the mainland's Central Government. "The possibility of using RMB deposited in local banks to pay for direct imports from the mainland is being discussed at the Central Government level," says Mr Xu. "If such a policy were introduced, it would provide new opportunities in the trade finance business."