Breakthrough in cross-border settlement of “offshore trade” in Shanghai Free Trade Zone

Nigeria Zonglue Hydropower Project, Angola Cabinda Port Project, Kenya Monnet Railway Project, Pakistan Karakoram Highway Phase II… In the “Belt and Road” construction, Chinese companies are in full swing to carry out various large-scale projects when they need When ordering various equipment products from multinational companies, it is undoubtedly the most convenient and quick way to choose the order of the company’s China headquarters. However, if the goods are not sold or leased to overseas customers directly by the company’s overseas manufacturers, the company’s China headquarters cannot complete the settlement of the offshore trade.

In the context of deepening the construction of the Shanghai Free Trade Zone, in July last year, Volvo China headquarters formed a preliminary pilot program and reported to the competent authorities, successfully carried out the offshore trade business under the first “One Belt, One Road” project, breaking through Shanghai The cross-border settlement problem of the trade zone for many years has become a successful pilot of deepening the financial open innovation of the free trade zone and a typical case of trade and investment facilitation and upgrading of the free trade zone.

30-ton excavator shipped directly from South Korea to Nigeria in July last year, the China Hydropower Eighth Bureau Nigeria Zonglue Hydropower Project ordered two 30-ton excavators from Volvo China headquarters. The equipment was shipped directly from the Korean factory to Lagos Port, Nigeria. All the transportation took place overseas, and the funds were settled. The Volvo China headquarters is operated by a dedicated account opened by the Industrial Bank Shanghai Branch.

In fact, this single cross-border settlement business is the first in the country. This is the investigation of the competent authorities of the People’s Bank of China and the foreign management department. Based on the needs of enterprises, they will jointly explore and solve problems. On this basis, provide policy guidance and support, and establish a normal state. Communication mechanisms, etc.

The Industrial Bank Shanghai Branch took effective measures to ensure that the flow of goods was traceable and the flow of funds was controllable. At the same time, the relevant formalities were institutionalized and modularized, and a cross-border performance bond business was handled for Volvo China headquarters, and the company was assisted to complete the pilot project on time. Prepayment terms. After that, the bank gradually assisted the company to settle the payment settlement business. By the beginning of November last year, the first payment and payment process of this single cross-border settlement business was completed.

“In the past, if we received such an offshore trade order, it could only be operated by our Singapore company.” Zhan Xu, vice president and director of Volvo Construction Equipment Investment (China) Co., Ltd., said, “Now our local bank can complete the cross. Financial services such as settlement, settlement, and sale of foreign exchange are more efficient and convenient.”

As the world’s third-largest construction equipment manufacturer based in Sweden, Volvo Construction Equipment is committed to further development of its business. In 2012, Volvo established an investment company in Jinqiao, specializing in international trade. Zhan Xu said that in the past because the Chinese headquarters could not make offshore trade, the annual turnover of about 3 billion yuan and the various taxes of nearly 1 billion yuan failed to land in Shanghai.

Let companies and regulators achieve information symmetry “In the past, due to the restrictions of China’s customs supervision system, our company can only engage in import and export trade, and it is impossible to carry out offshore trade where goods are not declared for entry.” Zhan Xu, vice president and director of Volvo Construction Equipment Investment (China) Co., Ltd., said that the customs Because the goods cannot be seen, the relevant entry and exit documents cannot be provided, and the cargo rights cannot be proved in the traditional way. The bank is worried that there is no non-compliance risk according to the regulations, and it is not easy to try, resulting in the failure of the enterprise to accept and pay. Domestic fund settlement.

How to establish mutual trust and verification mechanisms between enterprises, banks, and regulators to ensure the authenticity of offshore trade and the legitimacy of the use and source of funds?

In fact, the Jinqiao Management Committee of Pudong New Area has started to crack the bottleneck of “offshore trade” cross-border settlement since 2016. It has visited Volvo China headquarters several times to analyze and study the problem and clarify the problem and to cooperate with the city, district customs, and the Chinese people. The Shanghai headquarters of the bank, the Shanghai Branch of the State Administration of Foreign Exchange and other regulatory departments communicate. On this basis, the Jinqiao Integrated Information Platform was developed and constructed. The enterprises located in Jinqiao are connected to the platform according to the voluntary principle. 

According to their own business development needs, the relevant data generated in international trade, manufacturing, and maintenance are sent to the platform in real time. Supported by big data technology, the platform accumulates, analyzes and compares data such as “flow of funds, goods flow, document flow, and information flow” in business operations, and generates node data required by customs, pedestrian, and external management departments. And promote data transmission and interaction, and ultimately eliminate the information asymmetry between enterprises and regulatory authorities, and open up barriers for pilot enterprises.

Government endorses Volvo for whitelistingTransaction settlement is faster, bank procedures are compressed to hourly, costs and costs are significantly reduced… Today, the FTA has implemented cross-border settlement and trade functions, eliminating the need to rely on overseas companies to support domestic business operations. Today, Volvo China headquarters has settled all overseas settlement operations in Shanghai, with a cross-border turnover of 200-300 million yuan. Among them, the “One Belt, One Road” offshore trade volume is expected to reach 600 million yuan, and various taxes are expected to reach 500 million yuan. With the successful pilot of Volvo China’s offshore trade, it also allowed banks to expand and upgrade new businesses, expand new customers, and better achieve financial support for the real economy.

As a reputable company, Volvo China has now been included in the “white list”, and the government endorses the integrity of enterprises through big data technology. It is understood that the Shanghai Municipal Commission of Commerce regularly provides a “white list” to the PBOC, strengthens the overall coordination and build a platform through internal support, and supports enterprises to expand the business innovation model of the FTZ. In addition, the use of scientific and technological means to innovate regulatory verification methods and explore the establishment of mutual trust and verification mechanisms, that is, to enable innovative enterprises, banks and regulatory agencies to cooperate with verification mechanisms to ensure the authenticity and legitimacy of transactions and funds.

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