Banks innovate to offer new loan services

The 4 trillion yuan fiscal stimulus plan launched just over a year ago has been largely funded by generous loans from Chinese banks. But actual lending has taken different forms, allowing companies with varying needs to get the funding they need to survive and expand.

Workers at Dongfang Electric Corporation are busy preparing for an order from Indonesia, worth 800 million yuan, the largest ever received by the company. But there have been hitches in making up the order, with the Indonesian buyer falling short of capital amidst the global financial crisis.

Huang Wei, Vice President of Dongfang Electric Co. said "We face risks when buyers have problems with funding."

But Dongfang is getting help from the Bank of China. After talks, the lender offered 460 million yuan in loans to the overseas buyer, as well as a series of proposals to improve cooperation.

Bai Zhizhong, President of Sichuan Branch, Bank of China said "The buyer lacked capital, but I think banks can help to negotiate between buyers and manufacturers."

And it's not just overseas buyers who are getting assistance. Domestic companies are also getting a helping hand. Guoguang Electric is a private company producing stereos for overseas companies. But it's been finding it difficult to make its name on the domestic market since it has yet to set up its own brand.

He Weicheng, Department Manager of Guoguang Electric Co. Ltd. said "We need three to five years to establish our own brand, and the cost will also be high, at about 200 to 300 million yuan."

But Guoguang managed to get an M&A loan from China Construction Bank, allowing the company to cut costs and spend just 100 million yuan to merge with a stereo company that already has three brands and more than 1,000 outlets around the country.

He Weicheng said "After the merger, domestic sales will increase from 2 percent to 30 percent in the future. "

With the fiscal stimulus plan still in play, new yuan loans hit close to 9 trillion yuan in the first ten months of this year, up 5 trillion from last year.