As he sailed along the South China coast in 1864 on board the steamer SS Manila, Thomas Sutherland suddenly had an idea. Sutherland – who was the Hong Kong superintendent for the Peninsular & Oriental (P&O) Steam Navigation Company and a proud Scotsman – had been reading an article in Blackwood’s Magazine about the strengths of the Scottish banking system. And that’s when the idea hit him.
Sutherland decided to launch a bank in Hong Kong that would be founded on sound Scottish banking principles and which would serve the growing number of businesses being set up all along the Chinese coast. A year later, the Hongkong & Shanghai Banking Corporation (HSBC) was born, with offices in its two eponymous cities and a mission to fuel the increasing trade between Asia, Europe and North America.
Fast-forward more than 150 years and Sutherland’s bank is still going strong. Today, HSBC has 48 million customers served by around 6,100 offices in 72 countries and territories. The bank’s footprint gives it access to 87% of the world’s trade routes and in 2013 the lender helped facilitate more than US$500 billion of trade.
With such huge numbers involved, trading internationally can seem daunting for many small and medium-sized enterprises (SMEs) in Scotland. Breaking down the complexities of global trade into bite-sized chunks – “What should I export?”, “Which countries should I choose?”, “Do I sell direct or use an agent?” – is a challenge for many companies.
It’s a problem that’s all too familiar to Leigh Briggs, director of global trade and receivables finance (GTRF) for HSBC in Scotland, but one that her bank has worked hard to solve. “You could be in a remote part of Scotland, wondering how on earth you’re going to get your product to market, but we have staff who can meet you and talk about the help you need,” she explains.
“If a customer from Scotland wants to go out to visit Dubai or France or the United States then we can organise for an HSBC representative to meet them and even introduce them to local companies. That person-to-person contact can be really powerful and can help lots of businesses to take their first steps in exporting or help others to expand their existing international trade.”
Meeting customers in Scotland to talk to them about exports and then putting them in touch with its network of contacts around the world are only two of the ways that HSBC can help companies to trade internationally. The lender’s trade specialists can also speak to clients about what support they might need to finance and support their overseas trade.
“We offer financial services that can help customers of all sizes and sectors,” Briggs says. “We sit down with them and put together a bespoke package to fit their specific needs, whether they’re a small business turning over less than £10 million or a big company turning over £200m. It’s not about telling our customers to tick boxes A, B and C on a form – it’s about working out which are the financial solutions that will best suit their business.
“One of the challenges that companies face is ensuring they can protect each transaction, making sure they insure their goods while they’re in transit and then get paid for them. We can help mitigate those risks and we can also assist when it comes to financing those sales, because often an export sale has a much longer trade cycle than if you’re selling a product to a customer who’s just down the road.
“Nowadays, with the increase in financial crime, it’s also becoming even more important to understand who the person is that you’re doing business with at the other end. You
need to know that they are who they say they are. By helping to do that, we’re making sure that we protect our customers’ reputations overseas too.”
As well as the help that HSBC can provide, Briggs also points to the range of advice and information on offer from government agencies such as Scottish Development International (SDI) – which is the overseas arm of Highlands & Islands Enterprise and Scottish Enterprise – and UK Trade & Investment (UKTI), along with credit agency UK Export Finance, which can provide insurance policies to exporters and guarantees to banks to share the risks of providing export finance.
Targeting overseas markets is becoming a focus for an increasing number of companies. HSBC’s UK small and medium-sized enterprise (SME) survey found that a third of SMEs already trade or operate internationally with a further 9% likely to start doing so in the next 12 months.