China’s uncertain economy opens doors to stronger trade flows with Asean: OCBC

Meanwhile, foreign banks there such as OCBC can help Chinese companies expand into new markets abroad, he said.

“These companies’ home market is still going to be significant. But if things aren’t growing that fast, and they are ambitious… they will come out. It won’t be because they’re running away, but more because they see opportunity outside while their domestic market might not be growing as fast as it used to,” said Mr Low.

IG International market analyst Hebe Chen said the beleaguered Chinese economy may prove to be a double-edged sword for OCBC.

“On the one hand, institutions like OCBC could be viewed as a bridge for businesses seeking to diversify their market exposure. On the other hand, the woes in China’s domestic market could potentially lead to tighter control over capital within the mainland, raising barriers for capital outflow,” she said.

OCBC’s plan is to engage Chinese companies in its twin hubs of Singapore and Hong Kong, and bring them into markets such as Malaysia, Indonesia, Thailand and Vietnam. 

Tourism, e-commerce, logistics and high-tech manufacturing are several sectors where Chinese clients will deepen their global footprint, noted Mr Low.

The bank’s largest Chinese clients include Shanghai-listed conglomerate Xiamen ITG and its subsidiary ITG Resources (Singapore), which specialises in trading commodities such as ferrous metals and petrochemicals.

Hong Kong presents much potential for growth, added Mr Low, whose team plans to shorten the time taken for small and medium-sized enterprises in Hong Kong to open an account, similar to how such customers here can set one up within minutes.

It takes an average of seven to 14 days for firms to open an account in Hong Kong due to know-your-customer and other requirements.

“How do you drive that down, in a digital environment, to even within the same day? We are positioning ourselves to be the leader in this kind of digitalisation move,” said Mr Low.

OCBC’s transaction banking business built most of its digital solutions in Hong Kong based on the city’s Faster Payment System, and is therefore unencumbered by legacy systems, said Mr Low.

He was referring to Hong Kong’s real-time payment solution that was launched in 2018 and is similar to Singapore’s PayNow service.

“Regionally, we think Hong Kong plays an increasingly important role. The Chinese corporates coming out will naturally choose Singapore or Hong Kong, or even both…

“This dual economy is quite interesting for us. Hong Kong is a domestic market, but it is also a regional hub (that serves as a company’s) launch pad,” he added.

Digital push

Mr Low said digital transformation is a key part of capturing more business. Nearly 70 per cent of OCBC’s trade finance customers in Singapore have done away with traditional paper applications and now use the lender’s Internet banking platform to apply for trade solutions such as import letters of credit, banker’s guarantees and trade loans.

Monthly transactions on the bank’s OneCollect platform, which lets merchants collect payments through a QR code, also grew by 2½ times from January 2023 to December 2023. The number of merchants registered on the platform grew by about 30 per cent in the same period.

Mr Low said: “That’s only with the domestic QRs. When cross-border QRs come in, we expect the growth to be a lot more.

“The real value is going to be in the cross-border space… Truth be told, it’s been very difficult.

“If you look at the way that trade platforms have come and gone, there’s no one that has really taken shape and been able to handle the kind of cross-border flows (the industry is seeing).”

He added: “I think the cross-border elements of digital currency, particularly in the areas of payments and trade, will be the next big thing. We are experimenting and playing in that space.”

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