Editor’s foreword

The origin of the bonsai tree, illustrated on our cover, is slightly controversial, as most people think it originated from Japan when historians suggest it actually came from China more than 1,000 years ago. Chinese exports have obviously become much bigger business since then and are increasingly directed towards Latin America rather than Japan.

This time last year we reported that China was becoming more export-oriented and this trend looks to continue, although the country is a long, long way off from rivalling its neighbour Russia as a hotbed for trade and commodity-finance activity. Many financial institutions and investors are still cautious about China, and rightfully so. But there are signs that the Chinese government is ploughing ahead with its agenda of economic reform, even if it is not always at a pace and in a fashion Western observers would like.

China had already begun to ease regulations on exporting and then on project finance, but it is lately turning its attention to the capital markets. A new bankruptcy law, which is expected to be passed before the end of this year, continues along this vein and will not only have a positive impact on trade and project finance in China but will also facilitate the development of the country’s capital markets.

At the heart of this reform is a growing recognition of the need to attract foreign capital, rather than rely on its own government to supply capital and finance to Chinese companies. China surely realises it must reduce red tape and loosen up the regulatory environment if it is to attract the outside capital that it now seeks. This is the necessary approach if China is to become as successful at attracting finance as it has in attracting foreign direct investment.

On that subject, it is here that I sign off from Trade & Forfaiting Review and trade finance and move on to covering foreign direct investment and broader international trade issues. I would like to take this opportunity to thank our many readers and contributors, and especially our editorial advisers, for your support of both me and the magazine over the past two years. I have enjoyed my time in the trade-finance community immensely and it is not without some sadness that I leave it, but I hope that I have the opportunity to work with some of you again in my new role.

I also hope you’ll give an equally warm welcome to the new editor, Michele Martensen, who joins us from Trade Finance magazine and who I have no doubt will do a fantastic job and continue the success TFR has experienced for the past eight years.

Features

Taxing issues Free
Although some have criticised the United States’ new corporate-tax bill for not being as export-friendly as it could have been, it does contain significant international tax reform provisions that address very sore topics for US exporters, including the liberalisation of foreign tax credit rules and new incentives for US companies to repatriate earnings from foreign subsidiaries. Erika Morphy reports.

China: Growing Chinese finance Free
As the Chinese government tries to slow its economy down a bit while still encouraging growth, it is looking to outside capital for nourishment. A new bankruptcy bill, in particular, should facilitate the development of the country’s capital markets, spur greater innovation in structured finance, and make the business and legal environment friendlier and more open to asset-backed finance and securitisation. Erika Morphy reports.

Japan: The other Asian giant Free
When clients approach John Malott for advice about investing in China, he asks them a simple question: why China?

South-East Asia: When Basel meets Bangkok Free
As the 2006 implementation date looms for Basel II, now is the time for trading companies to evaluate their banking needs and begin positioning themselves for the new environment. Craig Dimmick, resident associate at EuroFin Asia, a Singapore-based provider of financial, trade and merchant advisory services, analyses how the capital-adequacy requirements will affect South-East Asian trading companies in particular.

Dutch bank survey: Upward trends and an upbeat outlook Free
With the emergence of new markets for structured deals, an upsurge in transactions and a higher usage of lines over the past 12 months, overall business has been good for Dutch banks, particularly commodity finance, the demand for which still appears to be on the up. Kathleen Williams reports on market trends during 2004 and the outlook for 2005.

Cutting the costs of trade processes Free
A recent Gartner G2 report estimated that the cost of processing trade documentation is well in excess of 5% of the total annual value of world trade. To many in the trade world this will probably not come as a surprise. However, there are means of substantially reducing these costs by use of the latest trade services and finance solutions, as Andrew Tagart, vice president and head of trade product management for EMEA at JPMorgan, writes.

Regulars

60-second interview: Pavel Andrle Free
The current review and revision of the UCP diagnoses four maladies affecting documentary credit practice: restrictive/ defective LC applications; erratic/vague LC issuance; erratic LC compliance presentation; and controversial compliance examination.
In a chat with TFR contributing editor Ravi Mehta, Czech LC specialist Pavel Andrle explains.

Market view: Holger Kebernik Free
In November 2003, this magazine published my article “China – ready to perform?” taking a look at the forfaiting and factoring business in China. Now, after 15 months of active operations for China Trade Solutions Ltd in this market, it seems a logical time for an update.

Letter from Hong Kong: David Sullivan Free
I recently attended a “North Asia Private Equity” conference in Shanghai. I am not exactly sure why I went because the idea in my head before I attended was to find somebody who would invest in some of the small, privately owned metal producers that I come across on my travels in China.

Company profile: Gaining ground steadily but quietly Free
Following an intensive period of hiring across its equities, debt and M&A businesses this year, HSBC is turning its attention to the structured trade business as part of a massive revamp of its corporate and investment banking sector. Kathleen Williams speaks with Robert Dungey, head of group trade services, about the origins and development of one of the bank’s lesser-known divisions.

Personal profile: Four decades of financing Free
With 45 years’ experience in banking and stints in the US, Latin America, Britain and Europe, Peter Belmont has a depth of knowledge of emerging markets and trade finance that few can rival. Most recently a principal at Ecoban Finance, he retired this summer at the age of 67. Just weeks into his retirement, he sat down with Courtney Fingar to reflect on his long and successful career.

Country-risk appetite Free
The analysis from Standard Bank London

Emerging-market debt prices Free
Omni Whittington Commentary, October 2004