Financing Options in Hong Kong

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  1. #1

    Join Date
    Jun 2012
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    Financing Options in Hong Kong

    Hi,

    We are a HK registered trading co. with a rep office in a major city in China. We have manufacturers for a product that has very good demand as well as buyers who are keen on purchasing from us. However we are facing two main financing problems:

    1. Many of our buyers want to buy on 60 Days LC.

    2. Most of our buyers pay 30% upfront and balance against BL Copy. This means, we have to pay the manufacturer first, get possession of goods and only get paid once goods are on-board. This can mean a time lag of about 10 days between paying upfront and getting payment. We can offered to do this, when we only a few orders on hand, but when we have multiple orders due to go out at the same time, we get stuck in a serious cash crunch.

    I was wondering, what sort of finance options, do I have available as a HK based company and what sort of interests should I expect to pay? I would appreciate any help on this matter.


  2. #2

    Join Date
    Dec 2009
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    I would have thought talking to your local bank a good place to start?


  3. #3

    Join Date
    Mar 2007
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    13,099

    Ask your bank about back to back LC

    https://www.google.com/search?q=back+to+back+LC


  4. #4

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    Jun 2010
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    Tuen Mun
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    Sounds pretty damn risky to me. Try to push your customers harder.


  5. #5

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    Jun 2012
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    Hi Howard.

    We have discussed back to back LC's before with our bank (hsbc hk) but they are not willing to do back to back LC's. The best they can do is, open a new LC in the suppliers favour, which needs to be backed 100% by equivalent funds in our account which defeats the entire purpose.

    Any other ideas?


  6. #6

    Join Date
    Jan 2008
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    1,966

    SME

    HSBC is advertising that they want to lend to SME.
    Why not ask them, what kind of banking facility they can grant you.
    Most banks want security of a property. They behave more like pawn brokers these days.

    Quote Originally Posted by gz_expat:
    Hi Howard.

    We have discussed back to back LC's before with our bank (hsbc hk) but they are not willing to do back to back LC's. The best they can do is, open a new LC in the suppliers favour, which needs to be backed 100% by equivalent funds in our account which defeats the entire purpose.

    Any other ideas?

  7. #7

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    What sort of turnover are you looking at?

    I may have a solution (we operate a HK trading Company in a similar position to you) but it needs to be worth their while

    Last edited by Trebor; 27-06-2012 at 03:06 PM.

  8. #8

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    Jun 2012
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    Thanks Oldtimer, I will check with them, but as I am not a HK Citizen, usually property as collateral is an issue for me.

    The turnover, would totally depend on the interest rates we get, because we need to calculate how much our product quote would go up by (as this in return would effect possible sales). However, we have several potential customers, who would jump at the opportunity to buy at 60 days LC. Value of most containers of our prodcts ranges from $30,000 - $60,000 each.

    We would like to start small, see how the arrangement works and ideally then go big, if the funding is available.


  9. #9

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    Is that HKD or USD?


  10. #10

    Join Date
    Jun 2012
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    USD/20 Feet Container. Ideally, we would like to test with the arrangement on a few containers, and if the arrangement is feasible, we could offer this to a lot more prospective customers, who have approved our product, are happy with pricing and just need 60 days LC to confirm their orders.


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