Dual driver for regional expansion

Bank branch gains business by providing services to local companies

A Chinese bank is expecting good prospects in South Africa through strengthening its commitment to local companies and tapping into emerging financial services resulting from Chinese enterprises flooding into the continent.

"We used to rely on one pillar for business expansion: providing services for big companies in local markets. But early last year, we restructured our business and improved services for Chinese enterprises entering South Africa and other markets in Africa," says Zhang Pu, head of marketing and relationship management at the China Construction Bank's Johannesburg branch.

China Construction Bank, China's second-largest lender, set up its only African operation branch in Johannesburg in October 2000, serving as the base for expansion in Africa. The branch covers 46 markets in sub-Saharan Africa and concentrates on offering merchant, wholesale and investment banking products and services to the South African business community.

The branch also plays an instrumental role in promoting trade and investment between the Southern African Development Community, sub-Saharan Africa and China, as well as related global business opportunities in the region.

The branch has about 60 employees in total, with 10 from China, Zhang says.

"We have built a localized multicultural team that is closely cemented to local clients. Among the 14 overseas branches of the parent company, the Johannesburg branch is the most successful in localization after the Hong Kong branch," Zhang says.

He adds that the branch follows a bottom line to develop clients out of the top 50 or top 100 companies listed in local markets and those playing key roles in the economic growth of the host country, including Transnet SOC Ltd, a large South African rail, port and pipeline company; Sasol, an integrated oil and gas company in South Africa; and MTN Group, a South Africa-based multinational mobile telecommunications company.

"Our advantage lies in the professional and localized team, which enables us to follow the rules and practice of local markets and build a good reputation," Zhang says. "Second to the team advantage is the orientation and accurate targeting of potential clients, which depends on the outstanding offering and financing schemes."

The branch attracted deposits of 20 billion rand ($1.93 billion) and held loan assets of $1.8 billion by March, making it a forerunner among the parent company's overseas branches, Zhang says.

"The business prospects are very bright as South Africa is the bridgehead of the continent and China-Africa business is expanding quickly," Zhang says. "China and South Africa, part of the BRICS group with Brazil, India and Russia, strengthened economic ties after the fifth BRICS Summit held in Durban in March last year.

"Meanwhile, more Chinese enterprises are coming into South Africa and the whole of Africa, with some in energy and resources sectors, which is bringing us enormous opportunities."

China has been Africa's largest trade partner for five years and bilateral trade has reached $210.2 billion. The figure in 2000 was $10 billion. The continent is China's second-largest market for overseas project contracting. Experts envision an annual investment of $38 billion for infrastructure improvement in the continent, creating huge opportunities for Chinese businesses.

While continuing to strengthen local commitment, the China Construction Bank's Johannesburg branch started to increase financial support for Chinese businesses in Africa early last year to "follow the tide", Zhang says.

"The personnel are in a good place and the guidelines are set down. The client group also expanded with the inclusion of China Nonferrous Metal Mining (Group) Co Ltd, China Railway Resources Group Co Ltd, Huawei and ZTE."

Earlier this year, the Chinese bank beat its rivals to provide financial services for China's two largest rolling-stock manufacturers, which had won the lion's share of a 50-billion-rand deal to manufacture more than 1,000 locomotives for Transnet. China South Rail Zhuzhou will supply 359 electric locomotives to Transnet and China North Rail 232 diesel locomotives, giving them a collective 56 percent of a tender for the manufacture of 1,064 locomotives.

In March, the bank received a 2.05-billion-rand down payment from CSR Zhuzhou and provided foreign exchange trading services to avoid currency risk. The lender also provided a 2-billion-rand mortgage loan for the South Africa subsidiary of CSR Zhuzhou and its Johannesburg branch received a 995-million-rand down payment from CNR's South African subsidiary.

"Though our business committed to South African enterprises accounts for the lion's share of overall business, we are now on a dual-wheel for business expansion."

Contact the writers through lijiabao@chinadaily.com.cn

(China Daily Africa Weekly 05/23/2014 page20)