IBOS Association and Bank of Shanghai Examples of customer type and service requirements February 2016

Introduction The objective of this PowerPoint deck is to show five different profiles of Foreign Investment into China and the resulting banking needs The profiles should represent how typical customers of IBOS would engage to the Chinese market Then we can show how Bank of Shanghai can provide the banking services IBOS BD Group will be asked to confirm that the profiles are indeed representative of their clients and that BOS’ services would be suitable to their clients

1. Non-resident sourcing company Company profile Banking needs BOS services Sourcing office set up as a non-resident to buy goods and ensure shipment to Europe, the home market No local staff All their suppliers are in China RMB NRA “Non-Resident Account” (“NRA”) to pay suppliers Foreign currency NRA account to receive money from European headquarters in order to pay general expenses Foreign exchange to RMB E-banking in English to make the RMB payments and conduct batch money transfers throughout China Headquarters want to see daily statement in English Bank of Shanghai can offer RMB/foreign currency NRA account. NRA account cannot be used to execute FX to RMB. E-banking in English is available through Cash Management Platform for NRA accounts. Daily statements in English are available. Payments can only be made at the counter according to Chinese regulations SWIFT MT940 in English alphabet is available to the Host Bank of Headquarters

2. Resident manufacturing company in Beijing Company profile Banking needs BOS services Wholly foreign owned company to be set up in Beijing to manufacture game consoles The company will invest in China, e.g. purchase fixed assets, factories with potentially 100 local staff Company will also export out of China to the rest of the world Company registration RMB account in China to receive sales proceeds from the distribution network RMB account in China to pay staff, suppliers, and general & operating costs Local financing A centralized point of contact from the bank to coordinate daily activity Parent company’s supervision over Company’s accounts in China Complimentary recommended Third Party Partners to fulfill customer needs, e.g. legal & tax advisor RMB basic account Payroll, money transfer in China through Cash Management Platform in English version. Working capital facility subject to risk approval A specific team in Headquarter coordinating all the branches and working with local RMs SWIFT MT940 in English alphabet available to the Host Bank of Headquarters

3. Manufacturing joint-venture in Shenzen IBOS Value Proposition 3. Manufacturing joint-venture in Shenzen Company profile Banking needs BOS services Company set up as a JV between a UK company supplying technology and a Chinese enterprise All off-take is exported, being invoiced first to the UK company’s Singapore entity Staff of up to [8] RMB accounts in Shenzhen to pay staff, suppliers, and factory costs E-Banking tool to transfer payments in RMB Letter of Credit advising and document processing service FX service RMB/USD Personal Banking services for company’s employees RMB account for payroll and settlement services. Cash Management Platform in English for balance in English and RMB payments within China1 LC negotiation FX services Retail Banking Services to company staff. E-banking in English version for retail clients. Comparing orders 1. Current regulation does not allow to effect cross border payments remotely.

4. Wholesale and retail company in Shanghai Company profile Banking needs BOS services Company is a foreign firm aims at distributing and selling their audio equipment throughout China Before they registered in China, they had Chinese distributors to sell their products At the initial stage, only two managers from the parent company came to China to set up the Chinese subsidiary Capital Account in EUR for capital injection RMB account to pay staff, suppliers, and operating costs Issuing import Letter of Credit Financing against Standby Letter of Credit Company’s liquidity management from Headquarter Capital Account in major foreign currencies including EUR RMB Basic Account for payroll and money transfer Issue LC to the exporter’s bank Import Refinancing Financing backed by SBLC issued by parent company’s bank Cash Management Platform in English for payments and collections within China1 Automatic MT940 to the Host Bank 1. Current regulation does not allow to effect cross border payments remotely.

5. Cross-border Cash Management Platform through Free Trade Zone (FTZ) Company profile Banking needs BOS services A EU based multinational has factories in China and a sale hub in HK for its international buyers. The group wishes to utilize the funding from the parent company to reduce financial cost of the Chinese subsidiaries. The finance department in China also wants to make effective use of its funding via cash pooling. Upon the establishment of a new company entity in the FTZ, the company can open an FTZ account with BoS. A cross-border cash pooling can be offered to the company, to make use of the oversea funding to support the Chinese entities1. 1. China has a strict FX control policy and the regulation is dynamic. This is not an off the shelf product and needs to be analyzed case by case.