Financial institutions bank on trust

The flood of Chinese businesses into Africa has opened up a market for those who handle money

Zhou Bin may have felt his bank was giving him the-customer-is-always-wrong treatment when he tried to open an account several years ago.

Zhou, managing director of Tiens Health Products Company (Kenya) Ltd, was trying to open an account in Nairobi, as his company set foot in Kenya for the first time.

"I talked to a lot of client managers at local banks and got really negative, hesitant responses. That's because the customers we are looking for tend to be fairly low-profile companies and the amounts we would be dealing with are not that big. The client managers said straight out that the business involved was so small it was almost not worth their trouble."

So he opened many separate bank accounts for particular purposes: local banks to receive money from local clients, and international banks to receive funds from China or to repatriate funds.

"With all the currency conversions and other transactions, over time a lot of money trickled out, adding up to a lot, and it really affected my business. Moving money between accounts can cause all kinds of problems."

Zhou is among many Chinese business people who have faced such problems with financial services in Africa. They say that what they urgently need is more convenient and low-risk financial services appropriate to their growth in the continent.

One of the big international banks, Standard Chartered Bank Limited, has answered that call and offers a series of financial services targeting Chinese businesses, particularly small to medium-sized ones.

The services have been on offer for several years, but have recently been fine-tuned, says Vera Zhan, Standard Chartered's development manager for the Chinese segment in East Africa.

The bank had discerned burgeoning Chinese private-sector investment early on, particularly against a backdrop of calls in Africa for industrialization, she says.

"So we are dedicated to making more convenient transactions available to our customers, helping with better cash flow, risk control, and personal banking and corporate salary systems."

Zhou says Standard Chartered has made his business easier, and is considering giving it all his business.

"Previously it was very difficult to persuade my local customers to open an international bank account, which is more convenient for my cash flow, because the bank would levy certain fees. But now I can give the bank a list of my customers, and it can waive their fees, which obviously helps me, too."

But Chen Zhidong, manger of a tire dealer in Nairobi, says it would be premature to shift all his financial activities to one bank because he does not know exactly how much he would pay.

"We are a relatively small company and don't have a lot of business in Africa, so we have no idea how seriously the international banks would take us with their tailored services. Some of our customers are in really remote regions that don't have international banks, so we'll have to keep relying on local banks for a while."

Standard Chartered's services to Chinese in Africa to a large extent rely on its strong global network, especially its presence in both China and Africa. But many local African banks have also spotted the opportunity and are trying to expand their business to serve this customer base.

Banks such as Equity Bank of Kenya and Exim bank of Tanzania have set up desks that deal specifically with China-related businesses and Chinese customers.

Standard Bank of South Africa, one of whose shareholders is a big Chinese bank, is the fastest growing bank in the continent.

Industrial and Commercial Bank of China, one of the Big Four state-owned banks and also the largest bank in the world by profit and market capitalization, bought a 20 percent stake in Standard six years ago, bridging two important markets.

Jiang Jianqing, chairman of the ICBC, has said the two banks working together is ideal for their mutual interests in the two regions.

"ICBC and Standard have large institutional networks and good client bases in their own countries, so their resources complement one another, and they are ideal partners."

Cao Min, head of the Chinese Desk for Standard Bank in East Africa, says the bank has two main priorities for growth: to focus on Africa and local business, and to do business with China.

The 150-year-old African bank spotted the potential of strong ties between the continent and China about 30 years ago and recruited Chinese graduates to manage customer relations with Chinese customers.

In East Africa more than 70 percent of big Chinese companies, especially infrastructure contractors and telecommunications companies, are the bank's customers, and some have signed group strategic cooperation agreements, Cao says.

"It's natural that in doing business in Africa they realize they should work with the largest African bank, and that has encouraged us to keep on giving our Chinese customers close attention."

Standard regards reminbi transactions as an important gauge of its performance with China-related business.

"Last year alone the bank's renminbi transactions totaled 2.4 billion yuan," Cao says.

Among all the African countries in which Standard bank has a presence, 18 have set up specific renminbi accounts.

Given that most Chinese investments in Africa are still tied to large-scale projects, Standard says it places great value on working closely with its partners.

"Each bank has its own specialty and advantages. Ours are the mining industry, oil and gas, infrastructure, agriculture and international organizations," Cao says.

As Chinese business expands in Africa, banks are trying to attract customers from every sector, but the most important element they are focusing on is to form a specialized team to serve their clients.

Cao says it is impossible to readily recruit Chinese staff familiar with both China and Africa, so those the bank does employ represent a very mixed bag.

"For instance our VIP client manager in Tanzania is an African but has been communicating with our Chinese customers for more than seven years. She has a Chinese name, Hua Mulan, who was the most renowned female general in Chinese history."

The manager has a Chinese assistant and staff from other parts of the world. When they work with their team in Beijing, there is a support network made up of people in China and Africa.

Although Standard is an African bank, its partnership with ICBC has given it great access to China.

"We have a very special service for our Chinese clients in Africa called the China-Africa Network Direct Connection," Cao says. "Headquarters of Chinese companies in China can check all the bank details of subsidiary companies in Africa through ICBC's account."

Apart from that, the bank also provides services to Chinese companies including group credit.

"We can spring into action very quickly with all our resources," Cao says. "Once it took 72 hours for us to open an account and issue it with a guarantee for a Chinese company in Angola. Our record is four hours in Kenya."

Beside its fleetness of foot, Standard's service is based on its understanding of the credit, capability and culture of the partner company that its teams have been following, Cao says.

Services provided by international and African banks to Chinese business reflect increasing bilateral trade and the commercial relationship between China and Africa. They also point to the fact that big Chinese companies have had a relatively large proportion of the local share in infrastructure and other large-scale projects, even before the boom in commercial ties of recent years.

"We still need to foster trust with our customers and try to indentify what their needs really are," Cao says.

lilianxing@chinadaily.com.cn