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Nasdaq: EWBC

Nasdaq: EWBC. Your Bridge to Global Trade K . Y. Cheng Executive Vice President Director of International Trade Banking Email: kcheng@eastwestbank.com PH: 626-768-6833 Fax: 626-817-8860. East West Bank.

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Nasdaq: EWBC

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  1. Nasdaq: EWBC Your Bridge to Global Trade K . Y. Cheng Executive Vice President Director of International Trade Banking Email: kcheng@eastwestbank.com PH: 626-768-6833 Fax: 626-817-8860

  2. East West Bank • Largest Asian American Bank in the US with total assets exceeding $10 billion and market capitalization of $2.1 billion • Certified MOFI • Beijing Representative Office since 2003 Hong Kong Branch approved • 100 plus correspondent banks in the Greater China Region

  3. Global Trade Trend • US Global Trade Volume • Year 2000: $1,997 Billion • Year 2005: $2,575 Billion – 29% increase • US – China 2 Way Trade • Year 2000: $116 Billion • Year 2005: $285 Billion – 146% increase • Global LC Volume (per MT 700, excluding intro-company) • Year 2000: 4,150,000 (China/HK 12.3%) • Year 2005: 4,610,000 (China/HK 14.2%) 11% increase • Implications: Use of Open Account Due to Globalization • Physical Supply Chain • Financial Supply Chain

  4. China’s Maturing Banking System • Successful IPOs • Foreign capital injection e.g. • Pudong Development Bank • Bank of Communications • Reducing NPLs Trade surplus helps! • High savings rate • FX not a major issue??

  5. Key Components of Physical and Financial Supply Chains • Metrics – buyer / supplier collaboration • Reducing Product Complexity: Modular Production Line • Systems Enhancement • Distribution Network Optimization • Improve Working Capital

  6. Internationalization of Trade Finance Tools • Factoring • Creditworthiness of major U.S. Corporations e.g. Wal-Mart, GE • Factoring correspondent bank risks China’s invention (?) Chinese bank sells its usance draft to US banks – increase market liquidity.

  7. Internationalization of Trade Finance Tools • A/R Insurance • Discount of A/R insurance • On the more traditionalfront • Increasing D/P or D/A e.g. 20% down payment to Chinese factory 80% at D/P D/P funded by factored or non-factored A/R and inventory (A/P financing)

  8. Classify Products Store Product Information Determine Free Trade Preference Calculate Landed Cost Re: Settlement : Issue P/O (Replenish Inventory) Financial Supply Chain (Order) Buyer Apply Export License If Needed Insurance Application (Shipment) Acknowledge P/O Request • Pre Shipment Financing • P/O Financing • LC discount • Exim Supplier

  9. Request Booking Effect Shipment Create Shipping Document Track International Movement Financial Supply Chain (Shipment) Supplier Custom Clearance Domestic Movement

  10. Financial Supply Chain (Settlement) Buyer Open A/C L/C Determine Payment Type Pre-Shipment Financing FX Present Documents To Bank • Request Payment • Post Shipment Financing • (Invoice/AR) • Inventory Financing • (A/P Financing) Reconcile Documents Track Payment Reconcile Payment To Goods Receipt Supplier

  11. The Emerging Chinese Multinational Corporations • New Products testing in developing countries • Sizeable domestic market • Modular production / technology transfer • The role of Hong Kong and overseas Chinese communities • Unleashing the government’s R&D capabilities

  12. US – China Trade • China to develop domestic market via restructuring of banking system and to foster a vibrant capital market • US to reduce Federal Budget Deficit Redirect global liquidity Coordinated economic policy among the G8 consultation with China and India

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