OREANDA-NEWS. July 20, 2011. Large professional markets (clothing, leather, hardware, building materials, aquatic products, flowers) have been gathering steam in all corners of China on the back of the rising living standard of urban and rural residents and further division of labor in production and logistics over the past few years. They are the important forces in driving the transformation and upgrade of consumer spending and coordinated economic development. These professional markets are clusters of small enterprises, reported the press-centre of ICBC.

In view of this special point, ICBC rolls out innovative products and services well-suited to their conditions and focuses on extending loans to small business owners leveraging the intensive operations of professional markets and industry clusters. ICBC Guangdong Branch is a case in point. In view of the rich customer resources in local professional markets and industry clusters, the "Xiashan Aquatic Products Loan" and "Zhongshan Huangpu Cured Meat Loan" are some of the 36 loan products launched in a series for the professional markets by the Branch catering to the unique local economy. By end of May this year, ICBC has disbursed a total of nearly RMB 7 billion of loans under this series to 500+ small enterprises in Guangdong. As related, ICBC loans for the professional markets appeal to the funding needs of small enterprises in these markets, Many small enterprises no longer need to rely on borrowing from the private markets. This translates to greater saving in cost of borrowing, stronger business presence, faster development in later steps, as well as a driving force for the healthy growth of the local professional markets.

The main hurdle for small business owners in professional markets to get loans was guarantee, said an executive with ICBC. To address this issue, ICBC brings a complete change on the conventional way of releasing loans guaranteed under collateral. Instead ICBC takes various measures on guarantee such as credit enhancement by third party, third party guarantee, joint-guarantee between enterprises or combined guarantee. ICBC designs solutions for small enterprises based on their business characteristics and transaction models. Special efforts are spent in the monitoring of post-lending logistics, cash flow and information flow. While addressing many major issues facing the small and micro enterprises such as lack of guarantee, information asymmetry, uneconomic use of loan, "small, frequent, urgent" in the use of funds, ICBC solutions also support the growth of small enterprises and stay focus in taping such emerging markets as professional markets and industry clusters.

The "Zhongshan Huangpu Cured Meat Loan" is a unique product launched by ICBC in Guangdong's Zhongshan Huangpu, targeting at the small enterprises in local agricultural by-product market. Zhongshan Huangpu is an important town in Zhongshan or even in China specialized in the production of cured meat, the largest processing base of Cantonese cured meat in the country. The assets of these cured meat production companies are mainly machinery equipments, transportation vehicles, self-built cold storage, frozen meat and cured meat products, which are not suitable as collateral. Moreover, these companies settle the company funds through personal accounts, lacking vouchers for the buying/selling of cured meats.

Their downstream distributors are not well-known enterprises. There is no way to obtain credit enhancement through third-party. Hence it is difficult for them to get bank loans. In light of these, ICBC chooses target customers from some of the top small enterprises in a large wholesaling market in Huangpu engaging in cured meat business and recommended by local Cured Meat Industry Association. ICBC designs funding solutions based on their business models and transaction flows. Main emphasis is placed on their sources for first repayment, determination of their credit lines, their uses of loans and management after lending.

By working with the market management party and borrowers' joint-guarantee groups, ICBC closely monitors their post-lending logistics, cash flow and information flow. This effectively addresses the issues of local small enterprises to get funding for their businesses. By end-May 2011, ICBC has a balance of loans to cured meat enterprises in Huangpu to around RMB 50 million.