Trade Finance – Hong Kong

2024 Guide | Trade Finance Global

Trade Finance - Hong Kong

Welcome to the Hong Kong Trade Finance and International Trade hub. Find out how our Hong Kong-based team can help you access trade finance to increase your imports and exports, or find the latest research, information and insights on trade finance here.

What is trade finance?

Trade Finance is the financing of goods or services in a trade or transaction, from a supplier through to the end buyer. It accounts for 3% of global trade, worth some $3tn annually. ‘Trade Finance’ is an umbrella term, which includes a variety of financial instruments that can be used by an importer or exporter.

These include:

  • Purchase Order Finance
  • Stock Finance
  • Structured Commodity Finance
  • Invoice Finance (Discounting & Factoring)
  • Supply Chain Finance
  • Letters of Credit (LCs) and;
  • Bonds & Guarantees

The terms Import Finance and Export Finance are used interchangeably with Trade Finance.

In order to address some of the common issues and misunderstandings around Trade Finance, we have put together this short guide.

How can trade finance benefit my Hong Kong based business?

Trade finance facilitates the growth of a business by securing funds required to purchase goods and stock. Managing cash and working capital is critical to the success of any business. Trade finance is a tool which is used to unlock capital from a company’s existing stock or receivables or add further finance facilities based on a company’s trade cycles.

Why does this help? A trade finance facility may allow you to offer more competitive terms to both suppliers and customers, by reducing payment gaps in your trade cycle. It is beneficial for supply chain relationships and growth.

Other benefits of trade finance

  • Short to medium-term working capital, using the underlying products or services being imported/exported as security/collateral. It increases the revenue potential of a company, and earlier payments may allow for higher margins.
  • Trade finance allows companies to request higher volumes of stock or place larger orders with suppliers, leading to economies of scale and bulk discounts. 
  • Trade finance can also help strengthen the relationship between buyers and sellers, increasing profit margins. It allows a company to be more competitive.
  • Managing the supply chain is critical for any business. Trade and supply chain finance helps ease out cash constraints or liquidity gaps – for suppliers, customers, third parties, employees or providers. Earlier payments also mitigate risk for suppliers.

It is important to note that trade finance focuses more on the trade than the underlying borrower, i.e. it is not balance sheet led. Therefore, small businesses with weaker balance sheets can use trade finance to trade significantly larger volumes of goods or services and work with stronger end customers.

Due to the embedded risk mitigants that surround trade finance lending and instruments, it leads to the potential of a diversity of supplier base for trading companies. A more diverse supplier network increases competition and efficiency in markets and supply chains.

Companies can also mitigate business risks by using appropriate trade finance structures. Late payments from debtors, bad debts, excess stock and demanding creditors can have detrimental effects on a business. External financing or revolving credit facilities can ease this pressure by effectively financing trade flows.

 

Get started – talk to our Hong Kong team



If you have a trade finance enquiry, please use the contact form below.

 

Finance Queries:

hk.team@tradefinanceglobal.com

trade.team@tradefinanceglobal.com

Partnership Queries:

introducers@tradefinanceglobal.com

Find out more about partnering with us here.

 

Want to learn more about Trade Finance?

Look no further. We’ve put together our feature Hong Kong trade finance insights, research and articles, and you can catch the latest thought leadership from the TFG, listen to podcasts and digest the latest in international trade in the region right here.

From the Editor – Trade Finance Insights

Trade transactions: Remove the paper – keep the process The Middle East has recently thrived by capitalising on digital advancements across various sectors.
icc austria saibo jin web featured VIDEO | The Year of Dragon and the year of the guarantee: How ICC Austria’s Trade Finance Week helps perfect the SPC’s guarantee rules Hear from Jin Saibo, Attorney at Law, Beijing Jincheng Tongda & Neal Law Firm about the evolving landscape of trade finance, China’s integration of international standards and the country’s innovative transition towards digital negotiable instruments.
Kai Fehr Web Featured VIDEO | Unlocking global prosperity whilst running the ‘hamster wheel’ for trade finance Deepesh Patel spoke with Kai Fehr, Global Head of Trade and Working Capital at Standard Chartered Bank at FCI’s 56th Annual Meeting in Seoul.
HSBC launches just-in-time trade finance solution TradePay in Hong Kong, Singapore, UAE HSBC launches just-in-time trade finance solution TradePay in Hong Kong, Singapore, UAE HSBC today announced the launch of HSBC TradePay, an industry first, document free trade finance solution that enables clients to instantly drawdown trade loans and pay suppliers. HSBC TradePay is… read more →
New Guide to Payment Regulations unveiled for Asian markets A new Guide to Payment Regulations has been released, offering insights into the regulatory frameworks and licensing schemes for payments and e-money services across eight key Asian markets.  The guide,… read more →
Unleashing the power of CBDCs a new era for international trade and supply chain finance Unleashing the power of CBDCs: a new era for international trade and supply chain finance Central Bank Digital Currencies (CBDCs) have infiltrated the agenda of countless innovation meetings at the world’s central banks.
HSBC B2B HSBC launches B2B point-of-sale financing solution Today, HSBC unveiled a pioneering banking solution in Hong Kong, introducing point-of-sale financing for business-to-business (B2B) transactions. This offering will empower B2B sellers on online platforms to provide extended payment… read more →
Sponsored piece - 1 sponsor PODCAST | Dirty financing: the slow progression of ESG TFG interviewed ITFA and ADB about the financing of dirty commodities and fossil fuels, and what a sustainable transition means for trade finance.
Hong Kong issues HK $800m of tokenised green bonds Hong Kong issues HK$800m of tokenised green bonds The government of Hong Kong has announced the successful sale of the world’s first tokenised green bonds worth roughly HK$800 million ($102 million). The Hong Kong Monetary Authority (HKMA) launched… read more →

Videos – Trade Finance

Trade Finance – Frequently Asked Questions

What types of Trade & Receivables Finance does TFG offer?

TFG assists companies to access trade and receivables finance through our relationships with 270+ banks, funds and alternative finance houses.

We assist specialist companies to scale their trade volumes, by matching them with appropriate financing structures – based on geographies, products, sector and trade cycles. Contact us to find out more.

Trade Finance & Stock Finance

  • Trade Finance (Purchase Order Finance)
  • Stock Finance
  • Pre Export Finance
  • Import & Export Finance
  • Structured Commodity Finance
  • Letters of Credit
  • Bonds & Guarantees

Receivables Finance & Invoice Finance

  • Receivables Purchase
  • Invoice Finance
  • Discounting
  • Factoring
  • Supply Chain Finance

Specialist Trade & Receivables Finance

  • Borrowing Base Facilities
  • Back-To-Back LC Lines
  • Long Dated Receivables – Media, Sport
  • Revolving Credit Facilities (RCF)
What is the process for applying for trade finance?

1. Application

The initial ‘credit’ application drives the process when applying for credit.

Lenders will often ask for information on current assets or collateral that the business owns, including debt and overdrafts, assets that the company or directors own (property, equipment, invoices).

2. Evaluating the Application

The evaluation process will normally involve some kind of credit scoring process, taking into account any vulnerabilities such as the market the business is entering, probability of default and even the integrity and quality of management.

3. Negotiation

Eligible SMEs applying for trade finance can negotiate terms with lenders. An SME’s aim with a lender is to secure finance on the most favourable terms and price. Some of the terms that can be negotiated can include fees and fixed charges, as well as interest rates.

4. The Approval Process and Documentation of a Loan

Typically, the account officer who initially deals with the applicant and collects all of the documentation will do an initial credit and risk analysis. This then goes to a specific committee or the next level of credit authority for approval. If the loan is agreed (on a preliminary basis) it goes to the legal team to ensure that collateral can be secured/ protected and to mitigate any risks in the case of default.

Read our full ‘trade finance application process’ here.

Strategic Partners:

Get in touch with our Hong Kong trade team

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Latest Hong Kong feature from Trade Finance Talks

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Latest Hong Kong Trade News

19Sep

HSBC launches just-in-time trade finance solution TradePay in Hong Kong, Singapore, UAE

0 Comments

HSBC today announced the launch of HSBC TradePay, an industry first, document free trade finance solution that enables clients to… Read More →

06Sep

New Guide to Payment Regulations unveiled for Asian markets

0 Comments

A new Guide to Payment Regulations has been released, offering insights into the regulatory frameworks and licensing schemes for payments… Read More →

15Jun

Unleashing the power of CBDCs: a new era for international trade and supply chain finance

0 Comments

Central Bank Digital Currencies (CBDCs) have infiltrated the agenda of countless innovation meetings at the world’s central banks…. Read More →

24May

HSBC launches B2B point-of-sale financing solution

0 Comments

Today, HSBC unveiled a pioneering banking solution in Hong Kong, introducing point-of-sale financing for business-to-business (B2B) transactions. This offering will… Read More →

27Feb

PODCAST | Dirty financing: the slow progression of ESG

0 Comments

TFG interviewed ITFA and ADB about the financing of dirty commodities and fossil fuels, and what a sustainable transition means… Read More →

16Feb

Hong Kong issues HK$800m of tokenised green bonds

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The government of Hong Kong has announced the successful sale of the world’s first tokenised green bonds worth roughly HK$800… Read More →

09Nov

VIDEO | Digitising trade and supply chain processes: TFG contributes to ICC Academy’s new CDTS course 

0 Comments

With the trade ecosystem increasingly shifting towards technological advancements, and a market saturated with options in which to digitise trade… Read More →

08Nov

Into the depth—deep-tier supply chain finance as a driver for ESG development

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Deep-tier supply chain finance can be a powerful tool in the ESG toolkit––but implementing this innovative financing approach will require… Read More →

07Nov

Air cargo market nosedives under global economic conditions

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The air cargo market continues to unwind as the global economy slows and consumers tighten their belts in regard to… Read More →

10Oct

Data standards: a key to a truly sustainable trade

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For sustainable trade finance to scale, the industry needs a uniform model for ESG data that can be used by… Read More →

12Jan

HSBC arranges first sustainability-linked trade facility with garment maker Epic Group in Hong Kong

0 Comments

HSBC has completed its first sustainability-linked trade finance transaction with Hong Kong-based garment maker Epic Group. The pricing of the… Read More →

31Dec

2021 – A Year in Review with Trade Finance Global

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As the clocks struck midnight, we looked back at over 700 articles, handpicking our favourite stories that made the headlines… Read More →

21Apr

FCI reports 6.6% drop in global factoring statistics in 2020

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The first estimates for the factoring industry worldwide in 2020 have been announced today by the FCI’s Peter Mulroy. Factoring… Read More →

16Mar

Celebrating the TradeTech heroes of 2020

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In a year that shook the foundation of trade, these innovators rose to the challenge and helped the industry to… Read More →

16Mar

How disruption is accelerating inclusive innovation across the global supply chain

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A three pillar approach to achieving a more sustainable and inclusive future for global trade
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16Mar

The post-pandemic evolution of supply chain finance

0 Comments

As MSMEs are weaned off fiscal support, a radical new attitude to how they access working capital will be needed… Read More →

16Mar

The UK’s independent trade strategy: US, Asia, or the EU?

0 Comments

We should be careful not to underestimate the importance of geography in any plan for post-Brexit trade … Read More →

16Mar

Digitalisation and sustainability: two key trade finance trends in Asia

0 Comments

In early 2021, we are still emerging from the economic wreckage caused by the outbreak of the COVID-19 pandemic -… Read More →

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About the Author

Sheena is responsible for the TFG Weekly Trade Briefings at Trade Finance Global (TFG).

She loves the digitalisation of trade and is fascinated about its impact on day to day transactions.

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