1 The current situation of the development of international trade financing in China
1.1 Financing methods and structures have changed
In terms of the way of financing, today’s financing methods have become more and more numerous. The traditional financing mainly uses the letter of credit transactions, but nowadays the letter of credit transactions are restricted and the economic environment has changed, and settlement methods applicable to a variety of financing product transactions have started to emerge, such as orders and the way of financing the goods charge, which allows enterprises to use letters of credit and import and export trade remittances to meet the needs at the same time.
In terms of financing structure, China’s original financing supply unit is mainly domestic banks, foreign banks also provide certain financing services for China, but only for simple items such as lending packages. A closer look at the international situation today reveals that the rapid development of the international market economy and the increasing number of international trade activities have led to the traditional financing model gradually failing to adapt to the needs of the times; international trade financing is not only dependent on domestic and foreign banking enterprises, but also some financial companies and commercial enterprises have begun to participate in it, which means that it has become possible for enterprises to participate in trade financing and broaden their Financing channels, so that the enterprise trade activities have a more solid guarantee.
1.2 Small and medium-sized enterprises gradually become the target of financing
Small and medium-sized enterprises (SMEs) in China have been given better development opportunities due to the rapid development of the market economy, and the momentum of development of SMEs, which are the main components of China’s national economy, has been extremely rapid. The development of SMEs is based on the industrial chain of large enterprises, so with the development of trade of large enterprises, SMEs will sooner or later also face the world; on the contrary, if large enterprises want to develop healthily, they must also take the good development of SMEs as the basis.
In other words, if we want to make our industrial chain develop comprehensively, promote our internationalization process, and thus improve our comprehensive competitiveness, it is an inevitable trend to add SMEs to our trade financing development plan. If we want to avoid such a situation, we need to try to alleviate the financial problems in the development of SMEs, so that SMEs can clearly position themselves in the economic market, thus ensuring the stable development of our economic market.
1.3 Parallel development of import and export of trade finance
In the past, China’s trade financing only appeared in the export, with the development of the market economy and changes in the international situation, the parallel development of international trade financing import and export has become the new direction of China’s trade financing development. China’s traditional export trade financing is mainly manifested in the form of red entry letter of credit and acceptance, order accommodation, etc., but its specific methods are not many, only trust receipts and import charges, open levy credit and several other. With the increase of surplus in the national trade process, the competitive pressure faced by China at home and abroad are increasing, so China has made certain adjustments to the relevant trade policies. Up to now, China’s import and export trade financing has basically achieved parallel and balanced development, which has a very positive role in promoting international trade for Chinese enterprises.
2 International trade finance development trend
2.1 The development of trade finance will be integrated into the various links of the supply chain
The development of trade finance will be incorporated into each link of the supply chain to achieve overall cost reduction. International banks want to synchronize with the supply chain of international trade, as in the past, can not simply adjust the local financing according to a certain link and stage of customers in the international trade process, but to focus on the needs of customers in the whole trade process, from the signing of the contract between the buyer and seller, to the final sale of the house, to track the goods and funds in the supply chain. Therefore, some experts in the financial sector have made a series of adjustments to their institutions.
For example, JP Morgan first acquired the U.S. Vastera logistics company, and then a note management company called Zine, in order to improve their own supply chain financial services. This case of cross-industry M&A broke the traditional deadlock of banks, logistics companies and manufacturers working separately, and realized the one-stop service from importers to exporters in a real sense. In short, this case is a typical example of integrating trade finance into the supply chain, and the impact on international trade finance projects can be far-reaching.
2.2 The imminent formation of a secondary market for international trade
Although today’s international trade finance is more conducive to the development of enterprises, the current market for financing activities in international trade is not standard, and its liquidity and transparency are not high, so many considerations arise when enterprises carry out financing. At present, some developed countries have gradually established an Internet-based financing market, so as to mobilize the enthusiasm of enterprises to finance, so that enterprises can more confidently join the international trade financing. This new financing market includes the secondary market in addition to the traditional financing market in the new era.
The secondary market, which refers to the market with the integration of advanced network technology, has the advantage of transmitting information easily and quickly, and can provide more financing opportunities for investors, who can use it to grasp a large amount of information and promote the transparency of the financing market, so that enterprises can compete in a relatively fair financing environment, and therefore the secondary market has gradually received attention and development. In addition, the secondary market has also used automated management systems and other high technology, which has also improved the liquidity and transparency of international trade finance to a certain extent.
2.3 More active forms of financing for market economy development
Due to the diversified development of national economies, the market of traditional international trade finance is not very active, the form of financing is relatively single, the method is less flexible, and the cycle is shorter, because of this, the traditional financing model can not meet the financing needs of high-risk areas or industries, especially the economic system is not sound, the economic level is low, and the overall consumption level of the market is not high. If you want to solve these problems, we must gradually integrate the financing means into international trade, such as in the larger amount of trade, you can implement the package buyer to provide bills, through the financing amount to spread the way to reduce the risk of financing institutions. This will be able to meet the financing needs of different enterprises and different regions, and drive the dynamics of the global trade market.
3 Implications of international trade financing
3.1 Improve the knowledge of international trade financing risks
A comprehensive and accurate cognition of the risks of international trade financing is the first and foremost task of controlling the risks of international trade financing. Therefore, in the international environment where the world market economy is constantly changing and the pressure on various industries is gradually increasing, enterprises should conduct in-depth and detailed research and analysis on the current development trend of their industries and the types of risks they may face, and use the final analysis results as the basis to explore effective control measures and implement them to efficiently prevent or avoid the risks that may occur.
3.2 Improve the financing credit evaluation system
In general, the source of risk of the first financing repayment and the creditworthiness of the enterprise are the elements that financing institutions attach more importance to. Therefore, banks should include information about enterprises’ production, payment ability and credit records in the financing credit system, so that each financing institution can understand the specific situation of enterprises and decide the credit limit of enterprises accordingly. In addition, a special guarantee mechanism should be established for new corporate clients to minimize the risk of financing institutions and thus provide reliable guarantees for trade financing.
4 Conclusion
In a word, international trade financing can effectively make up for the gap between the import and export trade funds of enterprises, and can help enterprises win business negotiations, which has a very positive significance for the long-term development of modern enterprises.
At present, with the progress and development of the times, international trade financing will have more and more diversified investment methods, and its liquidity and transparency will be gradually improved, and thus integrated into the production chain of international trade. Therefore, financing enterprises want to get long-term development in the current international situation, it is necessary to supplement and improve themselves according to the international development trend, improve their knowledge of the risks of international trade financing, and reduce their own financing risks.
