new methods in international trade for smes – application of supply chain management and...
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New Methods in International Trade for SMEs – Application of Supply Chain Management and Electronic Data Interchange中小企國際貿易新方法-應用供應鏈及電子資訊交流方案Connie LeungHead, Trade & Supply Chain Markets, Asia PacificSWIFT
HKTDC World SME Expo Dec 2008
Agenda
Setting the sceneSetting the scene
Collaboration with TradelinkCollaboration with Tradelink
Supply Chain financing bySupply Chain financing by
What is the Trade Services Utility (TSU)?What is the Trade Services Utility (TSU)?
HKTDC World SME Expo Dec 2008
Worldwide
Society
Interbank
Financial
Telecommunication
Leader in secure global financial communication
SS
WW
II
FF
TT
A co-operative organisation serving the financial industry
A provider of highly secure financial
messaging services
The financial standardisation body
HKTDC World SME Expo Dec 2008
3.5 billion messages per year (2007)
8,612 customers
209 countries
Average daily traffic 16 million messages
Peak day of 17.1 million messages , 30 Sep 2008
SWIFT figures (December 2008)
HKTDC World SME Expo Dec 2008
0
5000
10000
15000
20000
25000
1970 1980 1990 2000 2005 2006 2007
US$ billions
CAGR
E.Europe 25%
Asia 15%
US 5%
EU 3%
Sources: The Economist
Setting the sceneGrowth in international trade
HKTDC World SME Expo Dec 2008
International trade continues to grow as economies around the globe strengthen
SWIFT messaging shows an increase in Cat 1 / 2 payment volumes whilst Cat 4 / 7 trade volumes are stagnating. This is a visible confirmation of the global shift to open account
Source: SWIFT Traffic Watch
SWIFT Volumes
43 43 44 47 47 46 47 48
930
1,1001,210
1,350 1,3551,442
1,577
1,831
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2000 2001 2002 2003 2004 2005 2006 2007
Mill
ion
s
Trade SWIFT Volumes Payment SWIFT Volumes
Setting the sceneMigration to Open accounts
HKTDC World SME Expo Dec 2008
Raising ambitionsThe TSU focuses on Open Account
ExporterExporterImporterImporter
Payment inPayment inadvanceadvance
OpenOpenAccountAccount
L/CL/CCollectionsCollections
Increased risk for the exporter
Increased risk for the importer
Traditional trade finance
Business Business opportunitopportunit
yy
TSU
Open AccountL/CsCollectionsOther81 %81 %
HKTDC World SME Expo Dec 2008
Invoice ReceiveMake Ship PayOrder CollectSell
PROCESSING EFFICIENCY
LIQUIDITY MANAGEMENT
Risk- Compliance
- FX hedging
- PO authentication
Services- Cash forecasting
- Discrepancy handling
- Dispute management
In-Sourcing- Document preparation
- Managed a/c payables
- A/c Reconciliation
Pre-shipment finance
Post-shipment finance
Receivables finance
Inventory finance
Setting the sceneDrivers to Open account
HKTDC World SME Expo Dec 2008
Globalisation
Open Accoun
t
Cost PressureInternet
Harmonisation
LESS BARRIERS TO TRADE BETTER UNDERSTANDNG OF MARKETS
BUYER / SELLER COLLABORATION SHAREHOLDER VALUE REQUIREMENTSDEMAND FOR SUPPLY CHAIN EFFICIENCY
Setting the sceneDrivers to Open account
HKTDC World SME Expo Dec 2008
Seller’s bank
Buyer’s bank
MT-based
MX-based
TSU
TSU messages TSU messages
Lodge / Push Through
Guarantees (MT 76x)
Collections (MT 4xx)
Documentary Credits (MT 7xx)
Setting the sceneSWIFT trade services market offering
HKTDC World SME Expo Dec 2008High transaction visibility reduces risk and cost of finance
Vendor’s bankVendor’s bank
5. Acceptance of
documents by buyer
3. Do
cum
ents
Logistics
BuyerBuyer VendorVendor
Trigger points
Buyer’s bankBuyer’s bank
6. P
aym
ent 4. P
aymen
tRisk mitigation
Information
Financing
Settlement
4. Settlement
3. Documents
2. Shipment of goods
1. Creation of PO and transmission to vendor
Setting the sceneTraditional documentary credit workflow
HKTDC World SME Expo Dec 2008
5. Acceptance of
documents by buyer
Logistics
BuyerBuyer VendorVendor
Trigger points
Low transaction visibility increases risk and cost of finance
Vendor’s bankVendor’s bankBuyer’s bankBuyer’s bank
Settlement
2. Shipment of goods
1. Creation of PO and transmission to vendor
4. Vendor presents documents to be checked by buyer
3. Documents
Setting the sceneOpen account workflow
HKTDC World SME Expo Dec 2008
Agenda
Setting the sceneSetting the scene
Collaboration with TradelinkCollaboration with Tradelink
Supply Chain financing bySupply Chain financing by
What is the Trade Services Utility (TSU)?What is the Trade Services Utility (TSU)?
HKTDC World SME Expo Dec 2008
TSU Pilot Banks – 2004/5
Asia Pacific
18 Trade Banks8 countries
EMEA
Americas
HKTDC World SME Expo Dec 2008
Buyer Seller
Bank
SWIFTNetKey data Key data
SWIFTNet Trade Services Utility: Industry standards, shared application, community engagement
PO Inv
TSU
Transport document
Transport document
Transport document
Match Match
Bank
HKTDC World SME Expo Dec 2008
TSU Benefits to Bank and Corporate (Release 1.0)
TSU Feature Benefit to Bank Benefit to Corporate
Data Matching Handling Exceptions only Earlier Detection of Discrepancies
Utility Approach Lower Barrier to Market Entry More banks providing supply chain services
New Client Referrals Referrals from other TSU banks New Client Referrals for Corporates
Defend Own Clients Ability to Offer Supply Chain Services will help to retain clients
Corporates will benefit from TSU banks who will have a wider product offering
Idea Sharing TSU banks can share best practices
Best practices learned from other TSU banks can be passed on to corporates whose banks are on TSU
New Revenue Stream Incremental revenue for offering s.c. services
Cost reduction for corporates shifting to OA
HKTDC World SME Expo Dec 2008
TSU Benefits to Bank and Corporate (Release 2.0)
TSU Feature Benefit to Bank Benefit to Corporate
Bank Payment Obligation Easier for Seller’s Bank to Arrange Financing
Buyer: Secure Seller’s Supply of Products
Seller: ease of financing
Notice of Intent to Pay Helps to Get Credit Approval for Pre-shipment financing
Buyer: Secure Seller’s Supply of Products
Seller: easier access to financing
Risk Sharing Portfolio/Balance Sheet Management
Alternative arrangement to get financing
More Document Data: Insurance and Certificate
To reflect current business requirement
Provides holistic view of the open account transaction
Linking Payment With TSU Transaction
Provides Data Mining Foundation
Reconciles treasury and accounts receivable
HKTDC World SME Expo Dec 2008
Trade Services Utility A Growing Community of Banks and Vendors
82 Trade Banks95 BICs30 Countries / Territories
1
1 3
6
2
1
21
1
4
3
49
2
1
2
11
1237
5 2 1
2 3
3
7
1
HKTDC World SME Expo Dec 2008
TSU banks in the Americas (13)
•Banco do Brasil•Bradesco•Bank Itau
•Laurentian Bank•Bank of Montreal
•The Bank of New York Mellon•Citibank•First National•PNC•JP Morgan•Branch Banking and Trust Co.
•Banco Galicia
•Banco Credito del Peru
HKTDC World SME Expo Dec 2008
TSU banks in Asia Pacific (28)
• KEB• Shinhan Bank• Hana Bank• Woori Bank
•Bangkok Bank•Kasikornbank
•Standard Chartered
•Bank Danamon •Bank Mandiri (Persero)
•ANZ
•Hang Seng Bank
• ICICI Bank
• Bank of China• Bank of Communications• China Construction Bank• China Citic Bank • China Merchants Bank• China Minsheng Banking Co.• Hua Xia Bank• Industrial Bank• Industrial & Commercial Bank
• Bank of Tokyo Mitsubishi UFJ• Sumitomo Mitsui Banking Co.• Mizuho Corporate Bank
• Hua Nan Commercial Bank• Chang-Hwa Commercial Bank• First Commercial Bank • Chinatrust
HKTDC World SME Expo Dec 2008
TSU Banks in EMEA (41) – CEE, BENELUX, Nordic, UK (19)
•Bayerische Landesbank•Commerzbank•Deutsche Bank•Dresdner Bank•HypoVereinsbank•LBBW•Sparkasse Bremen
•UBS•Swiss Re
•Bank Austria
CEE BENELUX, Nordic, UK
•ABN Amro• ING•Rabobank
•DEXIA•Fortis•KBC
•Handelsbanken
•RBS•HSBC
HKTDC World SME Expo Dec 2008
•Calyon•BNP Paribas•Société Générale•Crédit Agricole Ile-De-France•Crédit Mutuel-CIC
•Banca Popolare di Sondrio•Banco Popolare•Unicredit
•Banco Popular•Caja Madrid•Banco Santander•BBVA•La Caixa•Banco Sabadell•Bankinter
•Garanti
•BMCE
•FirstRand•Standard Bank
TSU Banks in EMEA (41) – Southern Europe, MEA (22)
France, Italy, Greece Spain, Turkey, MEA
•Commercial Bank of Dubai
• National Bank of Greece• EFG Eurobank
HKTDC World SME Expo Dec 2008
Agenda
Setting the sceneSetting the scene
Collaboration with TradelinkCollaboration with Tradelink
Supply Chain financing bySupply Chain financing by
What is the Trade Services Utility (TSU)?What is the Trade Services Utility (TSU)?
HKTDC World SME Expo Dec 2008
Market situation
• Buyers/Sellers– Too many trade options : LC, OA, TT, Collections
– Manual vs technology : own/banks systems, third party
– No inter-operability of data, re-enter most of the time
• Banks – Loss of revenue : LC vs Open Account
– Lack of automation in OA, system only good for LC
– Supply chain services are in demand
• SWIFT– Bank-to-bank Document matching engine i.e. TSU
– Bank need to build customer front end
• Issues– High costs to invest into the customer front ends– Uncertain about the requirement from the industry
HKTDC World SME Expo Dec 2008
Possible business model: Trade hub for OA business
Forwarder
Bonded WarehouseTransaction
Warehouse AirlinersShippers
Transport/CY
InspectionQuarantine
Government Services
Trade Services
Utility
1. PO
Overseas Buyer Seller in HK1.1 P O
1.2 PO 1.2 PO2. Established baseline2. Established baseline
3. Doc preparation
4. Match report4. Match report
Seller’s bank in HKBuyer’s bank
1.1
PO Status update
Accept/reject
Bridge between
Trade hub and banks
26
New Trends in International Trade for SMEsNew Trends in International Trade for SMEs
A Seamless Global Supply Chain Management A Seamless Global Supply Chain Management SolutionSolution
11 December, 2008
27
Established inSep 1988
Government becomesa shareholder
Granted exclusive franchise (1997– 2003)to provide e-submission services for certaintrade-related documents
Selected by the Government as the developerand operator of DTTN
1992
2003
1988
19942004
Granted license (2004-2008) to continue provisionof government document e-submission services
2005
Publicly listed and traded on the Main Board of The Stock Exchange of Hong Kong
About TradelinkAbout Tradelink2008
Tradelink Beijing Established
28
The HK SAR Government
Key players in the trading sector, including trade associations, terminal operators & financial institutions
43.80%43.80%
12.29%12.29%
Public Shareholders
43.91%43.91%
Digi-Sign CertificationServices Limited
Digital Trade and Transportation Network
Other Shareholders: -
•21% The HK SAR Government
•28% Trade Associations
Government and Industry Expert SupportGovernment and Industry Expert Support
100%100% 51%51%
The digital express link to you business partners worldwide
Building trust in electronic services with Digi-Sign security solutions
29
Document checking and validation
Secure communication channel
7 x 24 electronic interface
Document status tracking
Hotline & onsite technical support and other customer services
“Paper-to-electronic” conversion service
Over 20 million transactions in 2007
LogisticsServicesProviders Importers
Exporters
Freightforwarders
Carriers
Manufacturers
Tra
din
g C
om
mu
nity
Tra
din
g C
om
mu
nity
e-confirmation e-confirmation
SecuritySolution
Tradelink’s Operating ModeTradelink’s Operating Mode
The HKSAR The HKSAR GovernmentGovernment
TradelinkTransaction fee
+Gov’t fee
+e-submission of
trade related documents
Gov’t fee+
e-submission of trade related documents
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Services Details
Import or Export Declaration (TDEC) e-lodgment of import or export declaration with Customs
Production Notification (PN)e-lodgment of notification to the Trade & Industry Department about cut-and-sewn garments manufactured in HK
Certificate of Origin (CO) e-application for CO to the Trade & Industry Department or other government approved organisations
Dutiable Commodities Permit (DCP)e-application for DCP to Customs for import, export, manufacturing or storage of dutiable commodities
Electronic Cargo Manifest (EMAN) (excluding road mode)
e-submission of manifests for air, rail, water cargo to the Census Department and the Trade & Industry Department
e-receipt of notice / voucher from Customs ande-communication with other government departments
Notifications under Textiles Trader Registration Scheme (TTRS)
e-submission of notification to the Trade & Industry Department for textile trading under TTRS
Tradelink’s Government ServicesTradelink’s Government Services
31
Tradelink’s Commercial ServicesTradelink’s Commercial ServicesServices Details
Trader Documentation Services (TDS)
web-based & client-based application solutions
facilitates secure electronic document exchange for international trade transactions
Electronic Shipping Orders (SO)
platform that assists shippers and forwarders to prepare and submit shipping orders and obtain draft bills of landing
Automated Manifest Services (AMS)
e-solution for carriers and non-vessel operating common carriers
meets the requirements under the “24-hour Rule” imposed by the US Customs and Border Protection
Advanced Commercial Information (ACI) for Canadian Customs
Digital Certificatesupports digital signatures
ensures secure electronic transactions
DTTN
E-platform for the trade and logistics communities to enhance their operational efficiency and reduce cost
An e-business connector for the entire supply chain
A super electronic document conversion engine
A mega electronic data store (2 years online + 7 years offline)
32
Industry Challenges:
Disjoined Communities
Enhance Competitiveness:
A Common Digital Platform to Facilitate Information Exchange
DTTN – the Solution Meeting the Industry DTTN – the Solution Meeting the Industry ChallengeChallenge
33
Community Role of the Community Role of the DTTNDTTN
Electronic message transformation services
Statistical and analytical reporting services
Data inheritance services
Information security services
Electronic message routing services
Portal services
SellersInspectionAgencies
Banks &Financial
Institutions
FreightForwarders
Buyers
Government& Agencies
CarriersInsurance
InstitutionsTerminals
DTTN Key Services Offering
34
Purchase Process Purchase / Sales Order, Order Confirmation
Packing List / ASN, Commercial Invoice,Inspection Certificate, InsuranceDelivery
Booking, Shipping Order, Arrival Notices,Transport Documents - Master / HouseWaybill - Sea / Air, Cargo Receipt,Transport Set, EIR, Delivery / Release Order
Local and OverseasTransportation
Government Trade DocumentsExport / Import License,Customs Clearance,Certification of Origin etc.
Financial Settlement Letter of Credit, Company Guarantee, Bill of Exchange,L/C collection Letter; Document Arrival Notice
Support over 88 major documents related to trade, logistics and finance for both import and export business processes
DTTN to Support the Whole Supply-ChainDTTN to Support the Whole Supply-Chain
35
DTTN Interconnection ExampleDTTN Interconnection Example(Purchase to Delivery)(Purchase to Delivery)
Goods Tracking Locations
Buyer 1 DTTN
1. PO (X 12)
Buyer 2
Forwarders
Seller
ApplicationService
Provider 2
1. PO (Excel)
2. SO, CI, PL (Excel)
2. SO, CI, PL (XML)
SO - shipping orderCI - commercial invoicePL - packing listBL - bill of lading
ApplicationService
Provider 1
Carriers
3. Master SO (XML)
3. Master SO
3. Master SO(EDIFACT) 6. Shipment
Status (Web)
5. BL (XML)
5. BL (Excel)
6. Shipment Status (XML)
4. Shipment Status(X 12)
4. Master BL, Shipment Status(XML)
4. Master BLShipment Status
4. Master BL,Shipment Status
(EDIFACT)
6. Goods / Shipment Status(Web Services/XML)
Goods Status (RFID / EPCGlobal)
Physical Delivery
36
Case Study: A Buyer in UK Case Study: A Buyer in UK and its suppliers in H.K. and Chinaand its suppliers in H.K. and China
Goods Delivery
TDS
FreightForwarder
FreightForwarder
Buying Office
UK Buyer
1. Purchase Order
2. Purchase Order10. Clean Document set
3. Purchase Order7. Bill of Lading
4. Invoice, Packing List, Shipping Order8. Invoice, Packing List, Bill of Lading
5. Invoice, Packing List,
Shipping Order
6. Bill of Lading
9. Invoice, Packing List, Bill of Lading
11. Invoice
, Pack
ing
List, B
ill of L
ading,
e/CO
11. Invoice
, Pack
ing
List, B
ill of L
ading,
e/CO
12. Invoice, Packing List, Bill of Lading,
e/CO
12. Invoice, Packing List, Bill of Lading,
e/CO
Suppliers
Physical
Data
37
Pan Asian E-Commerce Alliance Singapore, PRC, Thailand, Korea, Japan, Macau, Malaysia
Other Regions: Australia, France, Spain, Mexico, United States, The Netherlands
Extending Our Reach with Partners around Extending Our Reach with Partners around the Worldthe World
38
Trading ProcessesTrading Processes
E-Document Exchange
BusinessMatching
ReceivePO Production Inspection Insurance
Chamberof
CommerceCustoms
OutboundLogistic
FreightForwarder Terminal Payment
The Missing Piece – Financial Services,
e.g. Payment
39
The Enhanced Payment Layer The Enhanced Payment Layer ––Collaboration with SWIFT Collaboration with SWIFT
DTTN to provide possible docs/messages supporting transactions for payment/LC/open account related transactions
40
Buyer Seller
Bonded WarehouseTransaction
Warehouse AirlinersShippers
Transport/CY InspectionQuarantine
Forwarder Government Services
Enable electronic document exchange between banks and traders
BankBank
E-Trade (from PO to Payment)E-Trade (from PO to Payment)
41
The Bridge between the Trading Industry The Bridge between the Trading Industry and Banks and Banks
Tradelink/DTTN-SWIFT connection– An electronic gateway for the communication between banks and traders
Documents can be submitted to banks via the connection– E.g. Purchase Order, Commercial Invoice, Shipping Documents & etc
A single channel to communicate with all trading parties, including banks
Minimize data entry efforts
Minimize data entry error
No constraints on collection time and collection location
42
Benefits to Banks’ CustomersBenefits to Banks’ Customers
A one-stop service for the whole trading process
Facilitate data exchange among the involved parties
Provide data inheritance and avoid duplicated data input
Keep track of trading document status and invoice/payment status at a glance
Increase transaction visibility
Improve cash flow management
Improve productivity throughout the supply chain
Obtain more comprehensive services from bank
43
Thank You!!
HKTDC World SME Expo Dec 2008
Agenda
Setting the sceneSetting the scene
Collaboration with TradelinkCollaboration with Tradelink
Supply Chain financing bySupply Chain financing by
What is the Trade Services Utility (TSU)?What is the Trade Services Utility (TSU)?
HKTDC World SME Expo Dec 2008
Trade Services Utility Trigger points for liquidity management and processing efficiency
Invoice ReceiveMake Ship PayOrder CollectSell
PROCESSING EFFICIENCY
LIQUIDITY MANAGEMENT
Risk- Compliance
- FX hedging
- PO authentication
Services- Cash forecasting
- Discrepancy handling
- Dispute management
In-Sourcing- Document preparation
- Managed a/c payables
- A/c Reconciliation
Pre-shipment finance
Post-shipment finance
Receivables finance
Inventory finance
TSU TSU TSU TSU TSU TSU TSU
S T
R I
C T
L Y
P R
I V A
T E
A N
D
C O
N F
I D E
N T
I A L J P M O R G A N - G L O B A L T R A D E S E R V I C E S
Supply Chain Financing - Supplier Presentation
S T
R I
C T
L Y
P R
I V A
T E
A N
D
C O
N F
I D E
N T
I A L
HKTDC World SME Expo Dec 2008
Thank You