BRW
By David James - BMR
3-9 April 2008
Australian businesses that want to deal with China but have difficulty managing the higher risk may have a safer option. A finance facility for dealing with China that works on a method similar to a credit card has been established to provide unsecured finance.
The managing director of financier Octet, Clive Isenberg, says both parties are given the equivalent of a smart card. "It gets around financing the Chinese exporter direct", he says. "And it provides the Australian importer with open account terms. It is all geared to the SME in Australia."
Isenberg says that Australian companies dealing in China typically require a letter of credit, plus a hefty deposit on approval of a purchase order. "The Chinese exporter has to demand this payment structure because the banking system in China does not finance small to medium-size business."
Since China joined the World Trade Organisation, it has been required to open up its banking system. Foreign banks have especially targeted the fast-growing private sector, which is not served by the big state-owned banks.
The Octet system, which has been running for three months, seeks to target a similar market niche. Isenberg says he has signed up 30 Australian importers and 75 Chinese exporters. "The selling is different because in China the Chinese exporter wants to sell for cash. You have to convince them that this way they will sell more. On the Australian side, it is not such a hard sell."
The system was 18 months in the planning. "[Octet’s] backing is private equity, there is no link with the banks. We don’t take guarantees. It is just a straightforward, open account sale."
As experts and specialists in import trade finance with China, Octet provides importers from China with an innovative trade finance community network. With all the power of bank trade finance and the ease of a trade finance credit card, the Octet trade finance platform offers a completely interest free trade finance facility and unsecured trade finance, doing away with cumbersome Letters Of Credit, telegraphic transfers and without the need to tie up your assets for security.
Enquire about joining the Octet Trade Finance community online or Contact Us today to discuss your specific China import trade financing needs.