Even in the face of persistent uncertainty, Tradewind Finance supports the rapid expansion of global foreign trade (Published in Hong Kong Economic Journal Monthly (June 2022))
The global epidemic has eased, with the recovery of consumption and manufacturing increasing, contributing to the rapid growth of international trade finance. This year, Tradewind Finance, which has been in business for more than 20 years, expects its global trade finance business to grow significantly, especially in Hong Kong, which is expected to increase by over 40% this year.
Tradewind Finance, headquartered in Germany, has over 20 offices in 14 countries.
"Despite the impact of COVID-19 in the past two years, Tradewind Finance has been able to find a number of new high-quality trade finance relationships in Hong Kong. Last year, we provided $70 million to clients in Hong Kong, and we expect it to increase to more than $100 million this year," said Peter Maerevoet, CFO and Regional CEO Asia.
He explained that the company's clients in Pakistan and Bangladesh are garment exporters while those in Hong Kong are more diversified. Last year, the company gained a new customer in the consumer electronics industry in Hong Kong. Initial financing requirements were only $800,000, but have since grown to $6 million. The factoring facility of another client, a supplier of tableware for a well-known American brand, has increased from $2 million a few years ago to $7 million today, demonstrating that there are huge potential opportunities for business growth with support from Tradewind Finance.
Providing customers with cost-effective capital so they can expand their businesses
Tradewind Finance, headquartered in Germany, has over 20 offices in 14 countries, servicing industries such as food and beverage, seafood, electronics, automotive, chemical, and consumer goods. For many years, the company has offered liquidity to international SMEs. The firm is also able to help qualified clients finance their purchase orders and entire supply chains in addition to factoring accounts receivables.
In addition to developing trade finance solutions, Maerevoet said that the firm helps clients maximize liquidity and meet capital needs with its bookkeeping, collection, and press for payments solutions that promote international trade.
He said the company has gathered a lot of valuable experience since its early days of factoring Turkish textile trade to Europe, and expanded its international business ten years ago, including opening offices in Shanghai, Pakistan, and Bangladesh. The credit-insured nature of the product and the high level of trade finance expertise of the staff, fortunately, kept the business growing despite the epidemic.
“China saw growth of 50% last year, while Hong Kong saw a growth rate of 20%. The growth rate in mainland China has slowed down due to the epidemic and prevention measures, but Hong Kong's growth rate has significantly accelerated," said Peter Maerevoet. In addition, he said that the company extended the funding period from 90 days to 130 days for overseas buyers of mainland Chinese manufacturers, who have requested delayed payments due to shipping issues. The company anticipates facilitating $200 million in financing requests this year to clients in mainland China.
Even with shifts of manufacturing facilities overseas, local value-added production in the US and Europe continues to drive demand
Tradewind Finance, which provides non-recourse international export factoring for cross-border trading companies, offers cost-effective financing solutions bundled with trade risk management. With this solution, companies can improve collections, accelerate cash flow, and manage bad debt risk.
A variety of settlement methods can be used with the company's trade finance products, including open account (O/A), Cash against Documents (CAD), and Letter of Credit (L/C). Within 24 to 48 hours of receiving an invoice, funding can be released, with an advance ratio of up to 90% and the rest returned after the buyer returns the payment to Tradewind.
Maerevoet said that many garment companies have moved from mainland China to Vietnam, Pakistan, and Bangladesh in the past decade, and this trend is expected to continue. "At the same time, many European and American clothing companies have started completing their post-processing locally, such as laser engraving of jeans, which will bring us new business opportunities."
Moreover, due to the recovery in demand, he expects the company's global business to grow from $2.5 billion it currently has to $3 billion by the end of this year, although different regions will experience growth differently. Vietnam has been studied in terms of the development of its business, however, the manufacturers there are mostly Chinese, Japanese, Taiwanese and Korean manufacturers with strong capital, so there is limited demand for trade financing.
Peter Maerevoet, CFO and Regional CEO Asia at Tradewind Finance
The expansion of the business with no fear of the competition in the industry
Maerevoet supervises Tradewind Finance's global finance team and its management in Asia. He has extensive experience in international trade sourcing and supply chain financing operations from his previous positions at P&G in Belgium and Levi Strauss in the US.
In comparison with competing companies such as large banks, emerging Fintech firms, and other international trade finance companies, Tradewind Finance has a number of advantages, the most important of which is the ability to handle more complex cases and a reputation for providing quality service.
"We can't compete with the big banks on fees, but we can cater our solutions to meet each client's specific needs," he said. We also have greater visibility and more operational experience than our rivals as customers are more likely to choose lenders with a longer history and better track record of operations."
At present, the company has a total of 18 and 7 employees in Shanghai and Hong Kong, respectively, and will hire additional staff as needed to identify new clients in mainland China, while strengthening relationships with existing clients. Further, it currently has 200 employees worldwide and is expected to add 15 to 20 by the end of this year.