New links between Malta and China are making the news every week and the prospects for more exports are encouraging ­ but with trillions of dollars wiped off the value of Chinese stock exchanges – 30 per cent of their value – in just three weeks, it helps to have a trusted advisor who can see past the short-term knee-jerk reactions.

“The current volatility in equity markets in China is one part of the story. The other part is international trade, which is growing at a faster rate than the GDP in most countries. We at HSBC Bank believe the longer term trend – which is what we focus on – is the trade story,” James Woodeson, the head of global banking and markets at HSBC Bank Malta, explained.

“The longer-term outlook for China investing – into Europe in particular – is an ongoing story that we see developing positively.”

Information is the key at such volatile times, and HSBC has a global research platform which it provides readily to its customers, offering up to date information on the economic situation.

“Our customers, like us, typically take a long-term approach. As with trade in any country, I would recommend that you do your research and build relationships, because trade is a relationship business.

“Being the most established international bank in China and obviously also having such a presence in Europe, helps us make introductions to group customers. We therefore have the knowledge, expertise and tools to help customers make informed decisions. That is not to say there isn’t risk, but we can help clients make the best possible connections.”

HSBC Malta is well aware that its clients in Malta are usually experts in their field – but once they start to export to non-euro countries, they venture into new territory, involving risks like currency exchange and even interest rate fluctuations.

“We have a team of risk consultants who can engage with clients and look at their forecasts for an entire year so that we can help them manage that risk on a forward looking basis rather than on a reactive basis.

“We try to take away uncertainty and speculation. Any finance director knows that if you do not manage risk, it could manage you. So it is very important for clients to think about risks that could impact their financials when they enter foreign markets,” he said.

“Traditionally trade in China was done in dollars but we are increasingly seeing trade in renminbi. It can be quite complex to negotiate with the Chinese side as to what currency to deal in. Sometimes there can be discounts if you accept renminbi.”

Currency volatility is still a particular issue for renminbi, which is set to become the reserve currency for the future. The bank recently handled its first transactions in renminbi, via its HSBC Net – a platform aimed at businesses.

HSBC Bank Malta also launched an electronic foreign exchange platform handling 18 currencies at the end of last year, Get Rate, which forms part of the HSBC Net platform.

Head of commercial banking Michel Cordina said there has been fantastic take up, thanks to the ease it offers customers: “A good portion of our local turnover in foreign exchange goes through this platform now – representing $150 million worth of local transactions since launch. We believe it will get up to 75 per cent as clients feel the value of a simpler platform with a live price – and they can negotiate pricing with their relationship manager to reflect their needs for the entire year.”

The bank has a number of other tools to help prospective traders, including a specific product aimed at boosting trade.

“We launched the €50 million Malta Trade for Growth fund in late 2013, and it was fully subscribed within nine months, much sooner than we anticipated.

“This represents around 40 existing or new-to-bank customers, most of whom would not have been able to get traditional financing because they did not have sufficient collateral to offer as security. The fund is unique because it is not money to set up a business but to actually cover the whole of the trade cycle through structured finance – which means we can offer a discount on the interest rate too.

We launched the €50 million Malta Trade for Growth fund in late 2013, and it was fully subscribed within nine months

“For the bank it reduces risk as we are aware of the customer’s operations and know what is going on,” Mr Cordina said.

The success of the first fund encouraged the bank to launch a second wave, this time offering €75 million.

“International trade is in our DNA. We started as a trade bank and have been around for 150 years. We have specialists on the ground in 60 countries. The main advantage of the group that we are trying to maximise is connectivity. We know about three million importers and exporters so it is actually very easy to find a counterpart for a Maltese exporter in another country,” Mr Cordina added.

HSBC Bank Malta’s Michel Cordina (left) and James Woodeson believe that information is the key before seeking to trade overseas.

The concept of connectivity is not just words but also action. HSBC Bank Malta launched a video on Malta, called Why Malta?, which was recently on the front page of the HSBC global intranet – viewed potentially by its 275,000 staff.

“Putting Malta on the map is important as you often get blank faces when you mention Malta in Asia – although the Shanghai Electric Power investment into Malta enabled us to raise the profile.

“We need Malta to spring to mind when they have an exporter interested in the EU or someone looking to base a company there. We can see the difference already. Last year, after the first video was released, the number of FDI potentials we met in China, South Africa, Middle East, even the US, was the best we have seen in the past three or four years.”

The video is now available in several languages and is also available on You Tube for the public. The bank also has a publication dedicated to Malta as part of its Doing Business series on 20 countries.

“The HSBC global economic forecast showed that from an average of 1.5 per cent annual growth between 2012 and 2014, world merchandise trade should increase by about 8 per cent a year from 2017, according to the report.

“We believe that there are many sectors where Malta could benefit from some of that growth. Emerging markets for Maltese exporters are so rich, if you find the right partner,” Mr Cordina said.

“A good portion of the €50 million taken up was by customers doing hubbing from Malta. There is huge scope for more but better infrastructure is needed. We should have a ‘show’ warehouse near the Freeport which we can show customers who are interested in Malta as their hub.

“And hubbing does not only mean transhipment, storage or global distribution but also value-added such as assembly, packaging and so on. Malta is in a very good location for American or Chinese companies looking at both European and African markets. Malta means much shorter lead times for delivery,” Mr Cordina stressed.