Money Moves

Pioneering a new era between trade and export financing

by Mariejean Li

This is a special edition outlining current trends in international trade finance

Ove Weiseth (right), senior vice president, head of Asia Pacific operations
Gilbert Lee, vice president, head of trade services operations
Wachovia Bank, National Association Hong Kong
Photo: Johnny Kwok

Finance and credit facilitate trade at both the micro and macro levels. In recent years though, international trade has become increasingly complex as markets expand and competition intensifies. Conducting business in unfamiliar countries with multicultural business partners, whether on a one-off or regular basis, can prove overwhelmingly difficult. Globalised trade also maximises exposure to economic and political risks such as non-acceptance or non-payment of goods, exchange rate volatility, buyer insolvency, order cancellations and national turmoil — the effects of which can prove catastrophic for a corporation's finances.

Reducing risk through implementation of sophisticated security protection is essential to safeguard trade transactions. One solution is to look to experienced and trusted financial institutions possessing the requisite acumen to advise, check, negotiate and finance, alongside collect and confirm guarantees, letters of credits, documentary collection and ensure their safe-keeping. These products and services facilitate quick and efficient trading without global restrictions, while simultaneously minimising risk.

Wachovia Bank NA, a world leader and expert in the field of international trade finance, boasts more than 200 years of experience and enjoys a firm global foothold. The company specialises in trade solutions ranging from negotiating to financing a transaction for both importers and exporters.

Leader of the pack

Wachovia Bank provides several methods of settling international trade including open accounts, documentary letters of credit and documentary collection. The offerings are typically used to provide assistance and support to an exporter to secure prompt payment following the terms of agreement once goods have been shipped. Any potential importer benefits from Wachovia Bank's expert documentary transaction processing to ensure goods are obtained in an efficient way. Financing options such as securing the working capital for raw materials, labour or inventories and extending the credit terms of importers are also available to support open accounts.

Traditional payment methods such as documentary and standby letters of credit were often used historically providing a firm guarantee and payment assurance to the supplier. However, this method depends on the customer's credit rating and one drawback is the expense involved. Recently, the less secure method which has gained popularity within the industry is the aforementioned open account augmented with banker's financing. This method usually attracts customers who are looking for short-term financing in which no guarantee is offered. Buyers and sellers are left to trade with each other bilaterally. Ideal customers are long-time trading partners who are familiar and comfortable with each other due to risks being minimised and costs reduced. "There is always a need for traditional products, but my prediction for the near future is definitely more open accounts which are less expensive," says Ove Weiseth, senior vice president, head of Asia Pacific operations, Wachovia Bank, National Association Hong Kong.

Wachovia does not compete locally with other banks but rather offers its products and services to them instead. "We're number one in terms of in-sourcing in trade operations where our clients use our products and services to sell to their corporate clients," he adds. "We are very good at what we do and we currently have around 70 global clients outsourcing their trade operations to us. Therefore, scale is very important as it justifies our investment capabilities. We're the experts of the experts, with a low profile, but offering high quality."

People business

Currently the company is looking to expand its trade service operations. Wachovia already employs over 350 staff members in Hong Kong trade operations alone and more than 600 overall in its Hong Kong office. Across the Asia Pacific region, there are more than 1,100 staff with the company and 110,000 employees globally. "In terms of US banks, Wachovia is the fourth largest and our branch here in Hong Kong is the primary operation centre in the Asia Pacific region," says Mr Weiseth.

Offering a business-casual atmosphere in a high performance environment, staff can enjoy the benefits of a smaller and more focused organisation that is keen on offering comprehensive training to both new and existing staff members on a regular basis to improve skill sets, career path, and overall job performance and satisfaction like any sizeable organisations do. Always striving to improve the work environment for staff members, regular surveys are conducted to gain feedback and opinions. The company also encourages community involvement such as volunteer work and hosts staff events and outings to maintain a work-life balance.

For its trade operations, Wachovia targets candidates holding a higher diploma or graduates from vocational schools with specific disciplines in trade, business and law. Candidates proficient in English who are able to work in a team-oriented environment are chosen for the frontline jobs. Gilbert Lee, the bank's vice president and head of trade services operations says, "Ultimately, we want people who are committed, loyal, professional and ready to take on challenges and serve our customers' needs."

Keeping the edge

  • Products and services facilitate quick and efficient trading
  • More than 200 years of experience and a firm global foothold
  • Low profile offering high quality

Taken from Career Times 30 November 2007, p. A16
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