FinTech startup found cause for celebration after tracking trade payment collection by small and medium trading firms since last December.
China's small and medium-sized exporters have steadily regained their vibrancy after emerging from the depths of the Covid-19 pandemic, an industry index has found.
The XTransfer foreign trade advance index (hereafter referred to as the "index"), compiled and released on July 22 by XTransfer, China's top-tier cross-border financial services provider, shows that many small-scale exporting firms went through a rollercoaster ride in order volume in the two months through February this year – the height of the coronavirus outbreak – followed by a strong rebound since March.
At the Foreign Trade Inclusive Finance Festival Annual Gathering in Shenzhen, held under the auspices of XTransfer, Bill Deng, co-founder, and chief executive of XTransfer, explained that the index, which documents trade payments received by domestic exporters, indicates that China's foreign trade is well on its path toward a sound recovery.
The index looked at "tens of thousands" of exporters within mainland China from December 2019 through June 2020. Due to the Spring Festival holiday and the viral outbreak, trade payment to these SMEs slid by 29 percent and 36 percent in January and February.
But following the imposition of strict quarantine measures, the epidemic receded at home, and payments surged by 89 percent in March, the index shows.
Amid a global wave of infections in April, China's export sector took a beating. SMEs, however, was resourceful enough to reduce the impact by exporting quarantine-related medical kits as well as comfort items meant for people cooped up at home. As a result, trade payment collection growth only dipped by 2 percent month-on-month, Deng says.
Although the outbreak raged on in May and June, payments to SMEs continued to climb, recording double-digit growth for two months in a row – increasing by 11 percent and 10 percent, respectively.
According to Deng, the index's findings roughly correspond with statistics announced by the Ministry of Commerce and General Administration of Customs. Traditionally, exporters would proceed to manufacture for overseas customers only after receiving advance payment. In this sense, XTransfer's industrial index is a barometer of the export sector's well-being and dynamics.
"XTransfer will keep working on and issuing the trade index based on our payment records to provide a reference for SMEs in the next month or two, " Deng noted.
The latest results came after XTransfer introduced the index on February 27.
Back then, figures showed that China's supply chain was affected for a mere ten working days, as XTransfer reported a spike in payments to SMEs since late February. The new XTransfer foreign trade index unveiled at the Shenzhen conference is further proof of the speedy turnaround of China's international trade.
Deng says the better-than-expected SME performance is remarkable given the highly uncertain global trade outlook. "This is a testament to their resilience and flexibility," Deng told a packed audience. "The index also sent out positive signals about China's long-term economic momentum."
He added that it is incumbent on XTransfer, a leading one-stop financial services provider aimed at supporting SMEs, to track changes and trends in foreign trade while providing its clients with inclusive finance products and solutions.
XTransfer was founded in May 2017 by six ex-Ant Financial and Alibaba employees. XTransfer cooperates with banks from various countries to set up a globally unified B2B financial network and intelligent risk management system and launches comprehensive solutions of various cross-border financial services, such as global account opening, foreign currency exchange, and foreign exchange declaration. XTransfer strives to remove the hurdle for small and medium-sized enterprises (SMEs) to enter the global market and improve its world-wide competitiveness.
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