CEF sees great potential for factoring in China
(China Daily)Updated: 2007-01-16 10:54
There is a margin which SMEs can benefit from by speaking directly to the end customers, but it's hard to estimate how large that margin is.
Today's Chinese market is not what it was 10 years ago, when you had to go through an agent if you wanted to enter China. At this stage the role of sourcing agents is becoming less and less relevant.
Buyers will access the market and find their own exporters and other relationships in China because of improved access to the country in this modern age. Our role is to help them create a very smooth trade process financially, logistically and documentarily once they have identified from whom they are buying.
Q: Few companies in China are engaged in your business. What makes you see an opportunity and how do you feel about the prospects for the factoring business in China?
A: The key thing is to look into some statistics. In 2005, there was about $750 billion worth of exports from China, about 55 percent of which was specifically from the SME market.
So with about $400 billion worth of exports from SME markets, right now there's only an 0.2 percent factoring rate for exports from China, while in the international market the rate stands at 2.5 percent, and is growing annually by 35 percent.
The market should reach or have the opportunity to rise to at least 2.5 percent of this $400 billion, giving an addressable opportunity of $10 billion, and growing each year.
China is one of the most advanced exporting and manufacturing countries and will have to catch up on financial solutions to support its level of exporting.
We believe we can be a very major player.
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