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Developing Guanxhi

The IFG Conference in Beijing, 17-20 December 2004

The International Factors Group is enjoying a sustained phase of growth and positive change. This international business group recently held its annual meeting in the capital of the fastest growing major economy in the world.

You will have heard about the rings of Saturn, how about the ‘rings’ of Beijing? The fifth ring road of Beijing is under construction. The energy, investment and purpose were there for all to see – bring on the Beijing Olympic Games in 2008! The games are being counted in on a digital clock overlooking Tiananmen Square.

So, what is Guanxi? Technically it stands for any type of relationship. You cannot succeed in China without giving recognition to the investment of time (more important than the investment of money). The Chinese market is the most relational market in the world.

The International Factors Group was warmly welcomed by Beijing. The beautiful weather set the scene for appreciation of a truly remarkable city. Modern in many parts, yet retaining powerful cultural qualities and historic sites. All arrangements were handled ‘in a Chinese way’, emphasising courtesy and friendship.

These are really exciting times for the International Factors Group, with record numbers of members and sponsors. The conference welcomed six new members and seven new sponsors. Over 50 members and sponsors attended the conference, which commenced with a spectacular opening reception including traditional Chinese dancing and the opportunity to see in action many other traditional Chinese crafts. Delegate’s names were transformed into their Chinese equivalents, through wonderful Chinese calligraphy. Working demonstrations were also seen for sugar moulding, kite and chop making – oh yes, the fine wines and traditional Chinese food were enjoyable as well. Guanxi – the Chinese concept of networking – was in full flow!

The chairman, Tony Cox, opened the conference. His progressive address outlined the great strides made by the group in the previous year, noting the valuable increase in members and sponsors. Tony emphasised how this progress benefited members, either through trade or contributions to the Group Education Programme. Tony’s opening also included the appointment of a new deputy secretary general, the encouraging results of a recent marketing survey, improved education performance and the commencement of new Asian and the eastern European chapters.

The conference was honoured by the presence of two important Chinese guests. Madame Hu, assistant governor of the People’s Bank of China, gave a fascinating talk on the developments in Chinese business markets. She outlined the underlying economic environment and confirmed the intention of the People’s Bank of China, to ensure there is stable growth in the economy over the coming years.

This was followed by a fascinating presentation by Mr Ben Shenglin, country manager, working capital, ABN AMRO, who provided real insight into developments across the various regions of China. Ben highlighted growth across individual industrial segments, and the very real needs of Chinese exporters. Inadequate funding for SMEs in China was mentioned as a real concern.

Delegates then heard from the various committees. The IT Committee report covered the significant improvements being made to the IF Exchange System. Martin Ward, of Lloyds TSB, gave details of the Education Committee achievements, which were aided by the involvement, skills and expertise of a number of sponsors from the legal and accountancy professions. Edward Wilde, Hammonds, reported for the Legal Committee detailing important improvement in the wording of the various operational documents between members, including ‘General Rules for International Factoring’ and the introduction of an ‘Inter Factor Agreement’.

Andrew Watson, Hammonds, conducted a legal forum addressing the future direction of European Union and insolvency legislation, and its potential effect upon members. The forum also provided an insight into Basel 2, and possible effects on the SME market. Edward Wilde followed up the report on the progress made by the UN Convention on Receivables Finance.

Jan Becher, secretary general of the International Factors Group, opened the conference on Tuesday, highlighting achievements in 2003/2004. Jan commented upon the real growth enjoyed by the members of the group in both two factor international factoring and in domestic factoring/ invoice discounting.

Presentations followed from Choo Boon Tiong, Asian chapter, and Mikhail Treyvish, eastern European chapter, describing positive developments and the strategy of their respective chapters. Delegates warmly received this information, demonstrating real progress in the group’s presence within these developing economies.

Innovation is important for all business. Martin Ward and Edward Wilde introduced a new product to the conference – the ‘Hot & Cold Back Up’. This product will be a valuable new tool for international trade, facilitating the future transfer of undisclosed invoice discounting, export ledgers to fully disclosed ledgers. This will enable localised collections from debtors, improving the security of members conducting undisclosed invoice discounting on an export basis.

All transactions can be handled through the group’s IF Exchange System. Members proudly applauded the initiative, which provides a significant improvement in the security of export invoice discounting. Further details can be obtained from Jan Becher, Edward Wilde or Martin Ward.

Lionel Blackledge and Derek Woolf of Numerica presented to the delegates on turnaround opportunities, following which Mr Rolf Lai of Coface, Hong Kong, gave an insight of the opportunities and problems of providing credit insurance in Asia.

Tuesday evening saw a return to pure Guanxi! A gala award dinner was held in the official reception room of the Beijing Hotel (those central Beijing hotels visited really were wonderful). A stunning event with no less than 10 courses with few people prepared for Chinese food.

On Wednesday the conference completed the election of officers, with Tony bringing the formal proceedings to a very positive close. Then lock stock and barrel, off to visit the Great Wall of China, complete with police escort on the way – you see, Guanxi really does work! All those who visited the Great Wall will never forget the experience. Finally an excellent closing dinner with many positive memories of a wonderful conference.

Steve Websdale, Venture Structured Finance