Trade Solutions for the Automobile Industry

19 April 2005

David KohSenior Vice President, Trade ServicesHSBC China

Trade Outlook In China

295.2

412.8

561.4

325.6

438.4

593.4

0

100

200

300

400

500

600

700

2002 (A) 2003 (A) 2004 (A)

Year

US

D B

n

Exports

Imports

Growths of China’s import and export have been strong

China Auto Market Development

China is largely on track in implementing its WTO obligations, reducing import tariff, relaxing import quota and local content requirement.

Growth remains high in 2004 despite being lower than 2003

Recent price cuts have not yet provided the desired boost in overall sales

Sedan manufacturers continue to increase production capacity

All of the world’s top automakers have JVs in China

The market continues to consolidate as the number of manufacturers continue to reduce

China Auto Trade

4.7

8.2

14.4

16.3

0

2

4

6

8

10

12

14

16

18

2003 2004

US

D B

n

Export

Import

Import and export continue to grow, esp. export

Auto components are playing a larger role than auto vehicles in both import (67%) and export (75%) of auto industry

Total import and export of autos still account for only a small fraction of total auto market (4-5%) and China’s overall trade (2-3%)

Japan, Germany and South Korea remain the major car exporters to China

US, Western Europe, South East Asia are major overseas markets for export of China’s auto components

China Auto Trade Development

Our Trade Solutions

Exports:

• Electronic DC Advising and DC Safe Custody

• DC Confirmation

• DC Bill Negotiation / Collection

• D/A, D/P Bill Collection / Discounting

• Forfaiting / Non-Recourse Discounting

• Receivables Financing / Factoring

Imports:

• DC issuance – FCY & RMB

• Loan against imports

• Shipping Guarantees

• Avalization

Integrated Trade Solutions:

• Supply Chain Solutions

• Structured Trade Finance

• Project and Export Finance

Domestic Trade:

• Domestic DC

• Bank draft discounting

• Commercial draft discounting

We provide a full range of trade services:

Trade Solutions: Supply Chain Solutions

• New approach by the Bank in partnership with our major customers

• Provides continuous support to our customers and their suppliers in a fast growing and evolving environment

• A tailor-made solution unique to each customer’s business needs

The Auto Industry’s Supply Chain

Plastic

Leather/Fabric Dashboards/ Interior

components

Rubber Windshields Glass

Sheet metal/Rolled

Steel

Panels/ Doors/ Rims

Car seats

Tires - OEM

Electronic components

Engines/ Gear boxes In-car electronics

DistributorDistributor

BuyerBuyer

HSBC Trade Services

• A continuous presence in China since 1865

• Largest branch network among foreign banks: 10 branches and 2 rep offices in key commercial centres

• Extensive local experience

• Comprehensive range of world-class trade services

• Supported by an international network of 9,800 offices that spans 77 countries and territories

Our Branch Network in China

Shanghai

Dalian

Qingdao

Shenzhen

Wuhan

Guangzhou

Tianjin

Suzhou

Branches

Xiamen

Beijing

Chengdu Chongqing

Representative Offices (approved to be upgraded to full service branches in 2005)

An Awards Winning Trade Bank

Best Trade Finance Bank The Asset2003 - 2005

Best Trade Finance Bank in AsiaGlobal Finance2002 - 2005

Best Regional Trade Finance Bank Asiamoney2004

Best Regional Bank for AsiaTrade Finance2004

Best Trade Finance Bank Cargonews Asia2003, 2004

Best Trade Finance Bank FinanceAsia1997 - 2004

Thank You!