China Merchants Bank: a case of cross-border financing facilitation for high-tech enterprises
01
Case background
Customer A is a pilot high-tech enterprise registered in Zhongguancun Haidian Park, and has many cutting-edge technological innovation capabilities such as cloud computing, Big data, artificial intelligence technology, etc. The company plans to borrow foreign debt from its Hong Kong parent company to expand its product line, but the net asset size of the enterprise is relatively small, and the borrowing amount exceeds the policy limit of the borrower's cross-border financing risk weighted balance.
02
Policy basis
On May 31, 2022, the State Administration of Foreign Exchange issued the Notice on Supporting High tech and "Specialized and New" Enterprises to Carry out Cross border Financing Facilitation Pilot (Hui Fa [2022] No. 16), which stipulates that Shanghai Branch, Jiangsu Branch, Hubei Branch, Guangdong Branch, Beijing Foreign Exchange Management Department, Chongqing Foreign Exchange Management Department, Hainan Branch, Shenzhen Branch Qualified high-tech and "specialized, refined, and innovative" enterprises within the jurisdiction of Ningbo Branch can independently borrow foreign debts within a limit of no more than the equivalent of 10 million US dollars. Qualified high-tech and "specialized, refined, and innovative" enterprises within the jurisdiction of Tianjin Branch, Shandong Branch, Sichuan Branch, Shaanxi Branch, Zhejiang Branch, Anhui Branch, Hunan Branch, and Qingdao Branch can independently borrow foreign debts within a limit of no more than the equivalent of 5 million US dollars.
03
Banking services
After the launch of the pilot policy, China Merchants Bank immediately publicized and promoted it to customers, and with the strong support of the local foreign exchange bureau, it registered a foreign debt facilitation line of 10 million dollars for the enterprise, which met the capital needs of enterprise A. Enterprises stated that the implementation of pilot policies supports enterprises in breaking through financing bottlenecks, helping them open up domestic and overseas financing channels, significantly improving the flexibility and convenience of cross-border financing, reducing the cost of funds for enterprises, solving the problem of funding for research and development and market expansion, and effectively promoting the development and growth of enterprises.
04
Case inspiration
（1） When banks handle foreign exchange business under capital account, they should closely follow the development pace of regional cross-border financing business, actively seize the opportunities of cross-border financing facilitation pilot policies, understand the difficulties and business development needs in enterprise operation, and help enterprises make good use of two markets and two resources.
（2） The foreign debt borrowed by pilot enterprises participating in the pilot business should, in principle, be transferred back to China and used within their business scope. Banks should strictly follow relevant regulatory documents and business development principles to handle business, and review the compliance of the use of foreign debt funds.
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