24 June 2019

The big bridge between Turkey and China

According to HSBC Group’s Trade Forecast Report, India and China will be the fastest growing export markets of Turkey between 2021 and 2030. Florence Tan, Country Head of Global Trade & Receivables Finance, HSBC China explained the new opportunities in Asia to Turkish firms during her visit to Turkey.

This interview was first published in June 2019 issue of China Today Turkey.

How does HSBC China see Turkey in terms of economy and market?

Turkey has a resilient economy which has grown more than three times over the past 15 years and is widely expected to further grow in the years to come. According to the OECD, Turkey is expected to be one of the fastest growing economies among OECD members during 2015-2025, with an annual average growth rate of 4.9 percent.

Infrastructure investment is still pouring in Turkish infrastructure and the country remains the 2nd biggest reformer among OECD countries with the most business-friendly investment climate. In the meantime, its ambitious Vision 2023 aims to put the country in the world’s top ten economies by making dramatic improvements to its trade, energy, healthcare and transport sectors. With these development plans, alongside its unique geographic location, dynamic and qualified labour force, Turkey offers significant trade and investment opportunities for companies and investors worldwide, in particular those from China as they have the expertise and capacity in sectors that Turkey looks to grow.

What was the purpose of your visit to Turkey? What is the scope of the business potential you aim to create?

As part of the customer event led by HSBC, we gathered with Turkish companies who are seeking new opportunities in Asia. Today, many Turkish companies are seeking access to new export markets, with the global attention turning to the East. According to HSBC Group’s Trade Navigator Report; the fastest growing export markets of Turkey will be India and China between 2021 and 2030. We have also observed that Chinese companies are increasing their investment in Turkey to pursue opportunities brought by the closer bilateral ties.

To help our clients in Turkey better understand China and capture growth opportunities, I paid the visit to Turkey in late April to provide them with an update on China’s economy, market potential, reforms and opening, as well as emerging trends. I also discussed with our clients on how to access the Chinese market and how HSBC can help.

Through the communication with the Turkey-based companies, I’ve gained first-hand insights into which sectors and aspects about China that they are interested in, what kind of support they need, etc. These are very valuable information for me as I can work with my colleagues to provide more tailored support to companies exploring opportunities along the China-Turkey corridor.

Our goal is to be the go to bank for BRI

Commenting on The Second Belt and Road Forum for International Cooperation held in Beijing in April and followed closely by all of the international investors:

“China demonstrated its commitment to evolving BRI into a more high quality, open, inclusive, sustainable and market-driven Initiative. With this direction set by China’s leaders, we expect more business opportunities for local and international firms. We also believe that the private sector will be an increasingly important source of financing for BRI projects as these adhere to internationally-recognised standards. HSBC’s ambition is to be the leading international bank for the BRI. In April 2018, we appointed our former Malaysia CEO Mukhtar Hussain as Head of Belt and Road Initiative Asia-Pacific. HSBC the first international bank to appoint a senior executive to a BRI leadership position. HSBC has one of the widest global footprints for the BRI, with a presence in about half of Belt-and-Road-related countries and territories.”

 

As HSBC China, is there any budget you have allocated to fund the opportunities in Turkey? With which business projects are you interested in Turkey?

Over the last decade, Turkey has invested $90 billion in infrastructure projects, including bridges, highways, tunnels, railways and airports, and a further $64 billion of investments are to be made through the 3,400 infrastructure projects in the pipeline. Due to this vast amount of investment, attracting Asian investors to these projects will be key to ensuring the healthy growth in infrastructure.

As a leading international bank, HSBC has the expertise in areas including trade, debt, equity and project financing, and can play an instrumental role in arranging and advising on funding for infrastructure projects and provide trade and receivables finance services to facilitate cross-border trade flows. We are closely working with our clients in China and Turkey to help them identify opportunities and capitalise on them.

What are the investment and trade opportunities as part of China/Asia-Turkey trade relations and Belt and Road project?

We have seen strong growth momentum in the bilateral cooperation in trade and investment between China and Turkey in recent years. China has become the 2nd largest trade partner of Turkey and its largest source of imports. Bilateral trade has exceeded US$21 billion in 2018, while the number of Chinese corporates with investments in Turkey amounted to more than 1,000. Remarkable growth has been seen in the project contracts signed by Chinese contractors in Turkey in 2018 – total value grew by 39.6% year on year to US$1.16 billion. Big increase was also seen in the non-financial direct investment made by Chinese companies in Turkey, which jumped by 237% year on year to US$160 million.

On the other side, Turkey has been involved in China's overseas investments in the recent decade. Energy, manufacturing, technology, telecommunications, transportation and automotive have been the most prominent sectors that shaped the ever-growing Turkish-Chinese economic partnership.

Turkey’s unique geographic location - partly in Asia and partly in Europe, between central China and West Europe – making it an integral part of BRI. In order to align China’s BRI with the “Middle Corridor” Project of Turkey, a Memorandum of Understanding was signed in 2016. We’ve seen closer collaboration brought by this alignment and expect it to generate greater potential in the years to come.

What kind of advantages and privileges will you provide for Turkish businesses looking for opportunities under BRI through your global expertise and network?

HSBC’s strong presence in China and Turkey means we are well positioned to help our clients reap opportunities from the trade, investment and project financing activities that BRI will generate. With a history of 154 years in the country, we have profound knowledge of the Chinese market and have been staying at the forefront of market reforms and open-up. Globally, HSBC's presence in 66 countries and territories covers 90% of global trade and capital flows, with 25 China Desks dedicated to serving China clients "going out". The combined strength of global network, cross-border connectivity and strong expertise make us uniquely positioned to support our Turkish clients as they look to expand under BRI.

What are the trade and receivable finance solutions HSBC offers that will support businesses to capture opportunities under BRI?

HSBC provides our clients with a full suite of trade and receivables finance solutions ranging from guarantees, trade loans, documentary credits, open account import and export solutions. We have experienced and dedicated trade teams in both China and Turkey, which collaborate closely to ensure we deliver tailor-made and seamless solutions that can best address our customers’ needs on a timely basis.

In addition, HSBC has taken the lead in digitising, re-shaping and evolving trade in a bid to offer our clients faster, simpler and safer solutions. We’ve completed the first cross-border Letter of Credit (“LC”) blockchain transaction in China earlier this year, taking the digitisation of China’s trade another step closer to becoming a commercial reality. Last year, we rolled out Mobile Trade Transaction Tracker in China to help our clients track their trade transactions with real time information on their smartphones wherever they are and whenever they want.

HSBC China and HSBC Turkey collaboration

Mentioning that with its global network and expertise HSBC supports companies in capturing international opportunities, Florence Tan gives an example in this regard:

“HSBC Turkey and HSBC China teams have worked closely to structure a deal for one of the existing HSBC clients which has operations in 12 countries and in various sectors including retail, energy and logistics. HSBC China provided the funding on the back of the SBDC provided by HSBC Turkey serving as the hold cover for the cash loan. This transaction was completed in a very limited period of time including the preparation of limit structures both in HSBC Turkey and HSBC China, timely movement of the funds. Hence this deal is an excellent example of how HSBC’s capabilities geared towards handling international transactions.”

 

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