China Export Finance (CEF) has become China’s first independent trade financier to be awarded a factoring license and to obtain regulatory approval from SAFE (the State Administration of Foreign Exchange).
CEF was awarded the factoring license by the Tianjin Trade & Industry Bureau.
The new entity was registered as CEF (Tianjin) Supply Chain Financial Service (CEF(TJ)) in TEDA (Tianjin Economic Development Area), Tianjin, on November 16. As a wholly-owned subsidiary of China Export Finance (CEF), which provides trade finance to support Chinese companies exporting to western markets, CEF (TJ) will operate the license in China.
CEF purchases a Chinese seller’s receivables and makes an advance payment to the seller against the approval of a western buyer, who settles directly with CEF when the debt falls due for payment. CEF(TJ)’s factoring license will allow the firm to grow its supply chain finance footprint in China by establishing a banking hub in Tianjin under the same model as that developed in the company’s UK headquarters.
In addition to this, CEF(TJ) has secured regulatory approval from SAFE (State Administration of Foreign Exchange) for handling export/import transactions in foreign currencies within China, as well as transacting with Chinese sellers domestically. This approval is key in allowing the company to actively operate from a banking base within the domestic market. CEF (TJ) is expected to transact significant volumes from this base within a short period of time.
“Having successfully built a world class trade finance operation, CEF recognises that in order to truly realise its long-term goals of being the leading independent trade finance house in China, the company must establish a central operations and banking hub within the country’s most progressive municipality,” comments Karl Alomar, CEO of CEF.
“CEF is seen as a leading independent trade finance company that is one of the pioneers of this industry. Its outstanding performance in the past three years and its professional teams have proven that CEF(TJ)’s establishment is a milestone in the Chinese factoring industry. We’re delighted to have selected CEF(TJ) as the pilot for factoring in China,” adds vice-chairman Ni Xiang Yu, on behalf of TEDA, Tianjin.
CEF has chosen to establish its financial hub in TEDA, Tianjin, because the special economic development area is quickly becoming a centre of excellence for supply chain finance in China. CEF(TJ) plans to share its expertise and work closely with other relevant authorities to help develop new regulations around factoring and trade finance, as well as grow these activities.
TEDA’s vice-chairman concludes: “I am very pleased with the establishment of CEF(TJ) in TEDA. TEDA is at the forefront of Chinese reform and has been continuously encouraging new business models and new products. TEDA believes that with CEF’s success, it will attract even more talent and foreign investment in helping Chinese exporters increase their export volume. CEF(TJ) is also actively assisting other government authorities regarding regulations and policies for the Chinese factoring industries. TEDA is looking forward to working closely with CEF(TJ) in achieving further progress.”
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