1. Trade Solutions for the Automobile Industry 19 April 2005 David Koh Senior Vice President, Trade Services HSBC China

2. Trade Outlook In China  Growths of China’s import and export have been strong

3. China Auto Market Development  China is largely on track in implementing its WTO obligations, reducing import tariff, relaxing import quota and local content requirement.  Growth remains high in 2004 despite being lower than 2003  Recent price cuts have not yet provided the desired boost in overall sales  Sedan manufacturers continue to increase production capacity  All of the world’s top automakers have JVs in China  The market continues to consolidate as the number of manufacturers continue to reduce

4. China Auto Trade  Import and export continue to grow, esp. export

5.  Auto components are playing a larger role than auto vehicles in both import (67%) and export (75%) of auto industry  Total import and export of autos still account for only a small fraction of total auto market (4-5%) and China’s overall trade (2-3%)  Japan, Germany and South Korea remain the major car exporters to China  US, Western Europe, South East Asia are major overseas markets for export of China’s auto components China Auto Trade Development

6. Our Trade Solutions Exports: Electronic DC Advising and DC Safe Custody DC Confirmation DC Bill Negotiation / Collection D/A, D/P Bill Collection / Discounting Forfaiting / Non-Recourse Discounting Receivables Financing / Factoring Imports: DC issuance – FCY & RMB Loan against imports Shipping Guarantees Avalization Integrated Trade Solutions: Supply Chain Solutions Structured Trade Finance Project and Export Finance Domestic Trade: Domestic DC Bank draft discounting Commercial draft discounting We provide a full range of trade services:

7. Trade Solutions: Supply Chain Solutions New approach by the Bank in partnership with our major customers Provides continuous support to our customers and their suppliers in a fast growing and evolving environment A tailor-made solution unique to each customer’s business needs

8. The Auto Industry’s Supply Chain Plastic Leather/FabricDashboards/ Interior components Rubber Windshields Glass Sheet metal/Rolled Steel Panels/ Doors/ Rims Car seats Tires - OEM Electronic components Engines/ Gear boxesIn-car electronics Distributor Buyer

9. HSBC Trade Services A continuous presence in China since 1865 Largest branch network among foreign banks: 10 branches and 2 rep offices in key commercial centres Extensive local experience Comprehensive range of world-class trade services Supported by an international network of 9,800 offices that spans 77 countries and territories

10. Our Branch Network in China Shanghai Dalian Qingdao Shenzhen Wuhan Guangzhou Tianjin Suzhou Branches Xiamen Beijing  Chengdu  Chongqing  Representative Offices (approved to be upgraded to full service branches in 2005)

11. An Awards Winning Trade Bank Best Trade Finance Bank The Asset 2003 - 2005 Best Trade Finance Bank in Asia Global Finance 2002 - 2005 Best Regional Trade Finance Bank Asiamoney 2004 Best Regional Bank for Asia Trade Finance 2004 Best Trade Finance Bank Cargonews Asia 2003, 2004 Best Trade Finance Bank FinanceAsia 1997 - 2004

12. Thank You!