DO not get too excited when you secure a contract with a Chinese entity because many foreign banks are unwilling to fund projects in China, says Trilease International managing director Olivier de Gromard.
Foreign investors are flocking to do business with Chinese enterprises but the realisation rate for contracts in 1993 was below 40 per cent because many of the investors could not find enough funding.
Mr Gromard said that while companies were eager to do business in China, it was important for the necessary funding be secured in order to close contracts.
Raising loans from foreign banks was difficult because many banks doubted the ability of clients to pay back loans in hard currencies if their businesses were mainly engaged in domestic sales, he said.
'It is just a question of credit,' he said.
'It is very difficult for small and medium-sized enterprises to raise funds from foreign banks.' Mr Gromard suggested cash-strapped companies could save money by leasing capital equipment rather than buying it. His company, a joint venture of the Bank of China, Bank of East Asia and the Societe Generale, advises on and arranges finance for leasing in China.