intermediaries at an early stage in their negotiations. A list of banks and leasing companies who might be interested in leasing to China is at Annex B.
14 No leasing deals involving counter trade have yet been considered so to an extent companies will be breaking new ground. However Annex C lists existing counter traders who might be interested in acting as lessors. Companies are also advised to consult the Department of Trade's Counter Trade Information Note which gives further details of the factors to be borne in mind when considering this type of transaction.
HONG KONG INTERMEDIARIES
15 Companies might wish to consider using Hong Kong intermediaries as counter trade lessors. Hong Kong has become a major gateway into China and there are a number of organisations based there who command trust on both sides of the border. They are also experienced in exercising considerable ingenuity in arranging counter trade deals and have proved adept at managing complicated transactions between China and exporting countries. UK goods could be either sold or leased to Hong Kong companies for on lease to China.
16
However the tax advantage to leasing (quoted in 5(a) above) would not be available to Hong Kong lessors without UK tax liability. Moreoever, any ECGD support would relate to the UK/Hong Kong "leg" of the transactions only (ie the sale to the lessor). The only possible exception to this would be if the Hong Kong lessor was a wholly-owned sub- sidiary of a UK company.
17 Hong Kong lessors would have to satisfy ECGD's creditworthiness criteria. In practice this means that they would have to be rather more substantial than many counter trade agents and would probably be limited to banks and major trading companies.
18 A list of appropriate Hong Kong institutions is at Annex D. It is by no means exclusive however and companies wishing to use other intermediaries are advised to contact ECGD (Mr J Brown Tel: 606-6699 ex 7469) at the earliest opportunity.
GOVERNMENT EXPORT SERVICES
m19
The full range of Government export services including the advice of Commercial Departments in British Embassies and the Export Services and Commercial Relations and Exports Division of the Department of Trade, is available to help exporters who wish to sell or lease.
FURTHER ENQUIRIES
20 This note will be revised from time to time. Anyone needing further advice, or with suggestions for making this note more useful to exporters is invited to contact the China Unit, CRE4/2, Department of Trade, 1 Victoria Street, SW1, or telephone 01-215-3860.
China Unit
Commercial Relations and Exports Division 4/2
Department of Trade
No comments yet.
Private notes are available after approval.