The strategy of “One Belt, One Road” is proposed to realize the common construction of facilities, the flow of capital and the smooth flow of trade on the basis of the policies jointly formulated by various countries. Among them, the smooth flow of trade is the main content of the “One Belt, One Road” strategy, which refers to the commercial activities between the economies of each country along the route, which can greatly promote the development of each economy along the route.
At the same time, along with the close commercial exchanges, there is a greater demand for capital from both import and export sides, and higher requirements for the creditworthiness of both sides. Based on this, the form of capital financing came into being and became an important auxiliary work for the implementation of the “Belt and Road” strategy. The international trade financing business, as an important project of capital financing, has a very important and irreplaceable role for the economies along the route.
This work is carried out mainly by the major commercial banks as a carrier, which not only effectively solves the capital gap between the import and export sides, but also provides proof of creditworthiness for the trade financing between various entities.
The main way of repayment of the funds financed by the enterprises is through their future business income, so their risk is also effectively controlled to a certain extent. In addition, commercial banks have a wide range of income sources, including not only the interests of enterprise financing, but also exchange rate differences, discount income and various fees and charges, which can achieve a substantial increase in the intermediate income of commercial banks on the whole.
Problems arising from the international trade financing business of commercial banks at the present stage
1. Single form of commercial banks’ international trade financing business
The performance of this problem mainly includes the following three points: First, in recent years, China’s commercial banks mainly use the traditional financing methods, namely, the combination of letter of credit settlement and packaged lending and import and export charge. While the emerging factoring business and bill package buy, although in other countries has been more widely used, but in China is still in the nascent state, many places have not been promoted.
The reason for this is that China’s financial and trade market and international financing system are not perfect enough to provide a good market environment for these businesses to be widely promoted. In the process of promoting the “Belt and Road” strategy, many materials with long production and transportation time and high value are often involved, but commercial banks in China are unable to provide business services to match them, so they have to rely on foreign banks, so it is difficult for domestic commercial banks to develop rapidly.
Secondly, the traditional trade financing is often limited to one link in a trade process, without establishing a holistic financing structure, so the efficiency of financing is very low. In particular, if there is a problem in one of the intermediate links, the other links cannot be carried out smoothly. In this context, it is difficult to meet the financing needs of large trade transactions, which also causes the loss of business of commercial banks to a certain extent.
Finally, the financing method is often limited to a single business under a single settlement, for small and medium-sized enterprises, their business is often small in scale and large in number, if they carry out financing and use a single settlement, the procedures required are very complicated, which not only takes a long time and affects the normal trade activities of enterprises, but also requires a large amount of fees, so it is not conducive to Therefore, it is not conducive to the satisfaction of the financing needs of small and medium-sized enterprises.
2. Uneven supply of funds for international trade financing by commercial banks
The specific performance of this problem, on the one hand, is that the object of trade financing is very single. For larger, well-developed and better creditworthiness of large and medium-sized enterprises, they themselves have more than sufficient capital reserves, and banks to their relatively low threshold of loans, so financing is more convenient. However, for small enterprises, their production and operation scale are at a disadvantage in international trade, and they often face the situation of capital chain breakage, so they must seek help from banks from time to time.
However, the threshold of their financing is high, and it is difficult for the funds to arrive in time, which also affects their normal development to a certain extent. All the above situations, ultimately lies in the unbalanced supply of commercial banks’ international trade financing funds, on the one hand, does not achieve the effective docking of capital flow and social demand, resulting in the waste of resources; on the other hand, it is not conducive to the development of small and medium-sized enterprises’ financing activities, and cannot provide good material security for their expansion of production scale. In addition, commercial banks often lack the necessary risk prevention and control system for unexpected situations, so they cannot find problems and solve them in time, and they cannot control the loss of enterprises within a reasonable range, which brings great influence to the sustainable development of each enterprise.
3. Lack of effective preventive measures against risks
In the process of international trade finance business, the risks faced are more diverse, and the reasons for the formation of risks are also very complex, including both foreign exchange risk, interest rate risk, including a variety of fraud risks and national credit risk. In short, this is an era of high-risk economic development, so the relevant entities must have a high degree of risk prevention awareness in order to achieve their own sound operation and sustainable development. But the development of commercial banks in China, most commercial banks lack of attention to risk prevention work, let alone to seek professional guidance on risk prevention and control, and rarely to learn from advanced scientific preventive measures.
In general, the staff of the relevant departments of commercial banks often analyze specific risks based on their own work experience and subjective judgment, lacking scientific and comprehensive rational analysis. In addition, commercial banks in China often achieve risk control through a static management model, which greatly reduces the efficiency of risk control and makes the work not fit with the changes of the real economic situation.
It should be noted that in the process of carrying out this work, various departments of commercial banks often present a “solitary” state, and the lack of organic and efficient cooperation of various subjects makes it difficult to achieve rational use and efficient allocation of resources on the one hand, and the lack of information fluidity and hierarchical authorization on the other hand makes the work very inefficient. The efficiency is very low, which seriously restricts the expansion of commercial banks and the expansion of the scale of business.
Commercial banks’ international trade financing business development strategies
1. Broaden the international trade financing channels and realize the importance of import and export trade financing
In recent years, the main object of development of China’s international trade financing business is the exporters, but neglected for the economic development of the huge role of import business. The reason for this is that the national policy encourages exports, so the policy of trade financing business is also tilted toward exports. In this context, there is a serious imbalance in the structure of import and export trade financing, which restricts the healthy operation and sustainable development of China’s economy. Therefore, the state began to pay attention to the optimal allocation of the import and export trade structure, and the trade financing structure has also changed. For example, the Bank of China has introduced the foreign “cargo financing” business, i.e., the relevant enterprises can use the goods to be exported as a pledge and apply for financing from the bank, and then repay the money after the importer pays for the goods, so as to realize the normal operation of the enterprise.
In addition, the traditional international trade financing is mainly based on the letter of credit settlement, so as to achieve the effective avoidance of credit risk for enterprises. However, under the background of “One Belt, One Road”, various trade transactions involving large amounts and long project cycles are very common, which requires higher and higher requirements for enterprise financing, and enterprises often need to advance a large amount of margin for this purpose, which makes the cost of financing rising and enterprise financing more and more difficult. Based on this situation, commercial banks should develop different financing methods, so as to provide space for enterprises to choose from various forms of financing.
For example, banks can lend their own credit to enterprises, thus enhancing their creditworthiness and enabling them to obtain third-party financing without taking up the bank’s own capital reserves. For example, a standby letter of credit can be used to allow commercial banks to play the role of intermediaries, without having to use their own funds, and to obtain corresponding income, thus achieving a win-win situation for both themselves and the financing enterprise. In addition, banks should establish a good credit review system and strengthen the supervision of enterprises’ loan repayment behavior to achieve effective control of internal risks.
2.Establish a sound internal risk dynamic prevention system of banks
Under the influence of the financial crisis, the import and export trade of each country is a bit weak, and various risks appear more frequently. For commercial banks, it is necessary to change the management mode from static management to dynamic management, so as to realize the effective docking of work with the actual situation of economic development. For the financing behavior of major enterprises, commercial banks should consider not only the scale of operation, development status and creditworthiness of the financing enterprise, but also the specific situation of current economic and social development, including the fluctuation of raw material prices, changes in commodity prices, and the supply and demand relationship in the market …… It is necessary to strengthen the establishment of risk assessment and prevention system to minimize the losses caused by risks.
In addition, banks can classify different financing targets into different levels with reference to their creditworthiness, development and scale of operation, and implement differentiated management. For enterprises with good credit standing and development status, credit line management can be used to achieve effective improvement of work efficiency. However, for the general cooperative enterprises of the bank, they should still follow the traditional workflow and implement the principle of approval on a case-by-case basis.
In addition, the supervision of export financing activities should be strengthened to have a comprehensive understanding of the real logistics situation of the financing enterprises. There is also the possibility of establishing bilateral trade swaps with other countries to avoid the exchange rate risk brought by import and export trade to the greatest extent and achieve the sustainable development of commercial banks.
3. Realize the transformation of single financing business to structured financing
For small and medium-sized enterprises, they often fall into a rather awkward situation in the process of financing activities, i.e. the scale of financing is small, but the number of business is large. In this case, on the one hand, commercial banks need to go through cumbersome procedures, consume a lot of human and material resources, and go through layers of approval, thus serving the financing needs of enterprises.
On the other hand, for enterprises, they need to pay high processing fees and need a long time to wait for the arrival of funds, which sometimes adversely affects their normal trading activities. For this reason, commercial banks must change from single financing business to structured financing business, i.e. they should integrate their work procedures as much as possible, so that the approval of financing can be carried out efficiently and with high quality, which is a requirement for the modernization of commercial banks.
4. Strengthen the strategic cooperation with non-bank financial institutions
Nowadays, the international trade financing business is mainly carried out by major banks, but there are many non-banking financial institutions that can also assume the corresponding responsibilities. For example. Commercial banks can strengthen the cooperation with insurance companies, so that they do not have to spend too much energy on risk prevention and control, and can focus on business development and scale expansion. In addition, banks can also strengthen cooperation with various logistics companies, which can make use of their own work characteristics to effectively supervise the transportation of goods of financing enterprises, so as to avoid the financing risks of banks to the greatest extent possible, and achieve its sound operation and sustainable development.
Conclusion
In a word, under the new economic development situation, commercial banks are facing unprecedented opportunities and challenges. To achieve the sustainable development of international trade financing business, the process is not a handful of overnight. However, this does not mean that the development of commercial banks must be stagnant.
On the contrary, as long as commercial banks can broaden the channels of international trade financing, import and export trade financing; establish and improve the bank’s internal risk dynamic prevention system to achieve effective prevention and control of financing risks; realize the transformation of single financing business to structured financing, improve their own efficiency; strengthen strategic cooperation with non-bank financial institutions to achieve effective integration of various social resources, I believe In time, I believe that commercial banks in China will be able to grow and become an important driving force of the “Belt and Road” strategy.