E-Trade Finance as a competitiveness enhancement for SME's in developing countries Presentation to UNCTAD Geneva, 22-24 October 2001
Cost and need for credit are higher for companies in emerging markets <ul><li>poor information </li></ul><ul><li>high perceived risk </li></ul><ul><li>low credit management expertise in companies and banks </li></ul>
<ul><li>supplier credit (in intercompany trade) is the first source of funding for </li></ul><ul><li>a significant number of companies and countries </li></ul>This is true for trade credit
<ul><li>higher cost for import </li></ul><ul><li>lower value for export </li></ul><ul><li>financial constraints for companies and economies </li></ul>Consequences are very negative for companies in emerging markets and for their national economies
<ul><li>more information available at lower cost, </li></ul><ul><li>more financial services available, </li></ul><ul><li>but tomorrow … credit refusal can be “at a click”... </li></ul>Internet could make it better … or worse
Coface enhances the credit of companies in emerging markets, through ... its expertise on companies in emerging markets its tradition of shared expertise with institutions in emerging markets its innovative Solution
Trade credit with SME's in emerging countries can be protected <ul><li>Coface has pending trade credit risk on 220,000 companies in emerging markets, most of them SME's (out of a total of 2.2 million) </li></ul><ul><li>These covers represent $15 Bn turnover in emerging markets (out of a total of $150 Bn) </li></ul><ul><li>We have on line data on 1.2 million companies in emerging markets (out of 41 million in our database) </li></ul><ul><li>Our credo: there are good companies in every country </li></ul>
Trade Credit management expertise can be shared with institutions in emerging countries <ul><li>Coface shares its credit system with partners in 47 countries, a majority being emerging countries </li></ul><ul><li>Among our partners: national eximbanks or national credit insurers of Algeria, Brazil, China, Czech Republic, Egypt, India, Kuwait, Morocco, Malaysia, Oman, Poland, Romania, Singapore, Thaïland, Tunisia … </li></ul><ul><li>All these institutions are linked through Internet to our "Common Risk System", through a CreditAlliance </li></ul>
The Solution The @rating credit opinion on a company tells if one can extend trade credit to this company @rating Protection covers the credit risk on a company, up to its @rating credit opinion level A company can certify its quality worldwide through the @rating Quality Label . <ul><li>Confidence in commercial partners </li></ul><ul><li>Easier access to credit </li></ul><ul><li>Enhanced credit worthiness </li></ul><ul><li>is the first insurable company rating, rating 41 million companies worldwide . It is the basis of 3 exclusive lines. </li></ul>
@rating solution is available on line <ul><li>Though 300+ @rating partners, in 80+ countries </li></ul><ul><li>And via cofacerating.com </li></ul>
<ul><li>It indicates on line to any interested party if one can safely extend trade credit to a company and, if so, how much : </li></ul><ul><ul><li>1@, 2@, 3@, 4@ for recommended outstandings of 20 K€, </li></ul></ul><ul><ul><li>50 K€, 100 K€ or more </li></ul></ul><ul><ul><li>or X if there is an element of weakness </li></ul></ul>What is the credit opinion?
Quality Label: the only way to certify its creditworthiness for an emerging market SME You are a company, you have a contact with a new partner, a prospective supplier or a customer; how can you tell him that you deserve credit in a quick , understandable , free and reliable way? Just by telling him, "my company deserves the Quality Label, which you can check for free on cofacerating.com.”
Trade Finance on line : how it works @rating protection, single risk, 100%, on line, without recourse, worldwide Coface CUSTOMER Trade Finance on line BANK VENDOR Credit opinion
Some E-Commerce / E-Finance platforms with "@rating inside" used by SME s in emerging markets <ul><li>Trade Card, end to end foreign trade e-management (members in Hong Kong, Korea, Taiwan…) </li></ul><ul><li>Sino Pack, e-factoring (members in Saudi Arabia, Brazil, Romania…) </li></ul><ul><li>VFM (Fruits) or Go Trade Sea Food (Fish), e-market places (members in South Africa, Turkey, Hungary, Angola, Vietnam…) </li></ul>
Integrated Solution for factors - i.e. Bank SinoPac
Some projects under development <ul><li>Indian Eximbank Factoring JV </li></ul><ul><li>IFC Securitization of Trade Finance for emerging markets exporters </li></ul>
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