Industrial And Commercial Bank Of China International Trade Financing Product Research And Risk Management

During her three decades of reform and opening up, China’s total volume of import and export rose rapidly from US$20.6billion in1978up to US$2.97276trillion in2010; the total volume of import and export increased by34.7%in2010, with the export volume growing by31.3%to US$1.57793trillion and the import volume by38.7%to US$1.39483trillion. Since2001, the year of its joining into the WTO, China’s foreign economy has maintained its momentum of rapid growing.In comparison with the traditional credit business, the international trade financing features low risk, high profit and short term, garnering particular attention of banks. Especially after the economic crisis in2008, on the one hand, the traditional international trade financing with single characteristic unable to adapt to the rapid market changes and well satisfy various customer demands; on the other hand, with the time passing, with the continuous opening up of Chinese financial areas and the constant influx of foreign financial institutions, the profit margin of Chinese banks shrinks increasingly which solely rely on extension of loans. Therefore, commercial banks need to unceasingly innovate and develop new types of international trade financing business on the basis of the traditional international trade financing products, to strive for the new profit growth points, better adaptation to the competitive financial areas, win a place in the "customer tug of war" and keep and expand the market share of the international business.The financial development is vital to the economic development of a country, meanwhile banks, as key financial institutions are undertaking substantial risks. Although the international trade financing is welcomed by more and more banks and becomes a key development area, it is intrinsically loan and since each international trade financing product depends on a basic settlement method, in addition to face some commonplace risks inherent in loans, international trade financing also needs to overcome the peculiar risks of international trade financing products. So, the thesis that we need to study is how to better control risks with high profit and to minimum the risk of our bank. This paper comprises five chapters:Chapter one is the introduction that describes the purposes and significances of the topic, the major study method of this paper and the contents of the main chapters.Chapter two firstly introduces the origins and developments of the international trade financing, summarizes several popular theories of international trade financing and theories and methods for trade financing risk control; secondly elaborates the foreign trade development over the past decade in china, and then specifically analyzes the development of Chinese international trade financing based on the development of the foreign trade.Chapter three analyses the basic situations of ICBC international trade financing, generalizes the main international trade financing products of ICBC traditional imports and exports as well as our issues existing in the international trade financing business.Chapter four studies the applicability of the import and export international trade financing developed by ICBC during recent years.Chapter five illustrates the risks of the commercial bank and the international trade financing, comes up with risk control programs on international trade financing products; ends with conclusive risk control recommendations.This paper elaborates the thesis via considerable figures and diagrams, summarizes and concludes the practical working problems to a theory level. It also collates traditional ICBC international trade financing products and the features and applicability of the new international trade financing products which are developed for satisfying the market changes and customer demands. As it should be, banks have to pay more attention to risk management as they are innovating products, control the risk of international trade financing in a scientific and systematic way and make the bank development of international business even faster and better.