1 The Bank of East Asia, Limited Financing The Deals How Can Foreign Invested Enterprises Obtain Bank Financing in China? Presented by : The Bank of East, Limited November 2002

2  Co-operative Joint Ventures  Equity Joint Ventures  Wholly Foreign-owned Enterprises Foreign Invested Enterprises Include :

3 Minimum Registered Capital Required: For Total Investment Amount Minimum Registered Capital Required Below US$3 million (inclusive)70% of the total investment Between US$3 million and US$10 million (inclusive) 50% of the total investment, with a minimum of US$2.1 million Between US$10 million and US$30 million 40% of the total investment, with a minimum of US$5 million US$30 million (inclusive) or above 33.3% of the total investment, with a minimum of US$12 million

4 Maximum Amount Of Foreign Currencies That A Foreign Invested Enterprise Can Borrow  Total Investment - Registered Capital $ $ $  Can be Financed by Shareholders’ Loans and/or Other Financing Channels  No such restriction on RMB financing

5  Shareholders’ Loan Agreement  Tenor (With Prepayment Clause)  Interests Charged  Registered With State Administration of Foreign Exchange (“SAFE”) Shareholders’ Loans

6 Bank Loans Trade Finance Facilities Leasing / Hire Purchase Receivable Financing / Factoring Bank Guarantees / Standby L/C’s Venture Capital Funds Financing Channels

7 Factors To Be Considered Guangdong ProvinceGuangxi ProvinceHunan Province Zhejiang ProvinceJiangsu ProvinceGreater Shanghai DalianTianjin Shenzhen Special Economic Zone  Currencies (RMB/ HKD/ USD) Only those approved foreign banks are allowed to extend RMB loan facilities to foreign invested enterprises incorporated in the following provinces / cities:

8 Factors To Be Considered (cont’d)  Loan Tenor  Interest Rate HKD / USD:LIBOR / HIBOR / Prime Rate Plus Basis RMB:PBOC’s Base Lending Rate

9 Current PBOC’s Base Lending Rate (For reference only) TenorInterest Rate (% p.a.) <= 6 months5.04  6 months & <= 1 year 5.31  1 year & <= 3 years 5.49  3 years & <= 5 years 5.58  5 years 5.76

10 Major Assessment Criteria  Management experience and integrity  Financial strength of the borrowers / guarantors  Repayment ability of the borrowers  Marketability of the project, industry business prospects and project viability  Past performance  Security

11 Acceptable Security  Time Deposits  Bank Guarantees or Standby L/Cs  Properties in HK or the PRC (Commercial units, residential units, factory plants or retail properties)  Quoted Shares  Corporate / Personal Guarantees  Machinery and Equipment

12 Acceptable Security (cont’d) Remarks:Not all the cities in the PRC allow the registration of the charge of properties by banks without branches in the PRC

13 ~ The End ~ Thank You