The "EC-Loan" - the Innovative E-commerce Product

The B2B electronic trading (e-commerce) strategic alliance formed by Bank SinoPac demonstrates the Bank's achievements

April 12, 2000
In the early stage of B2B e-commerce development, the alternatives for cash-flow solutions were few. However, after overcoming several difficulties, Bank SinoPac today announced the formation of strategic alliance with the following companies in different fields in order to offer advanced and complete cash-flow service to its customers: Best3C (US)(http://www.best3c.com); Cyber Merchant Exchange (C-ME); ECnet; Lily Distribution Center; and Wellan System. The resulting innovative e-commerce product -- "EC-Loan" -- shall take the Bank further with regard to the development of e-trading. Besides generating an estimated turnover of more than NT$200 billion for Bank SinoPac this year, the addition of cash-flow products will quicken the Bank's development of B2B e-commerce and make its service more complete.

Last year, Bank SinoPac began promoting B2B e-commerce by introducing accounts receivable factoring and Financial Electronic Data Exchange (FEDI) as the initial step. In Taiwan, Bank SinoPac was the first bank to provide the service of accounts receivable factoring and is cooperating with several world-famous international banks on the international credit information service. Last year the total amount of accounts receivable factoring was worth over NT$220 billion, of which international accounts receivable factoring accounted for over US$5 billion, ranking the Bank sixth in the world in this regard. As the total amount of accounts receivable factoring of the first season of this year is already over NT$120 billion, the total annual amount of accounts receivable factoring for the whole year is estimated to be over NT$500 billion. In addition to the global accounts receivable factoring, the number of FEDIs has reached over 100 with a market share of 7.3% and more than 20 functions. The bakn estimated that over 250 additional FEDIs will be promoted this year, showing that the technical capability and the level of globalization is growing fast and making great achievements.

According to a market survey conducted by the International Data Corporation (IDC), 70.3% of on-line trading is carried out between enterprises and is worth US$190 billion. This figure is estimated to grow to over US$3,270 billion by 2002 and to have a more-than 80% market share as it becomes the mainstream of e-trade development. Bank SinoPac regards this as a great business opportunity and since the second half of 1999 has been preparing and planning operations related to e-commerce. Based on the successful promotion of the factoring and FEDI, and on its numerous supportive clients. Its highly effective team is doing its best to take advantage of the great business opportunity offered by inter-enterprise e-trade. Today, it holds an advantageous position in the formation of global financial alliance and has laid a good foundation for the cash-flow service of inter-enterprise e-trade.

At present, the B2B e-trade of Bank SinoPac can provide services such as global buyer credit information, quick-response to the financial needs of both sellers and buyers and on-line account management. The present-stage strategy is to develop mutually beneficial alliance with foreign corporations by which both parties will have more resources, allowing inter-enterprise e-commerce to develop more smoothly. This also will enable the corporation to conduct on-line transactions to give more flexible rearrangement of funds and create a win-win-win situation for the cooperative partners, the participating corporations and Bank SinoPac. The achievement of the present stage strategic alliance includes Best3C, an Internet platform which trades mostly 3C products; C-ME, a trade Internet platform which offers mainly clothes and accessories; ECnet, a supply-chain service provider; Lily Distribution Center; and Wellan System, a provider of complete solutions to small and medium-sized enterprises. Its methods of cooperation with each strategic partner are as follows:

1. Best3C: Bank SinoPac provides Best3C with domestic cash-flow services such as buyers' on-line credit applications, buyers' credit guaranty and sellers' short-term loans. With regard to international cash-flow services, Bank of America (BOA) provides Best3C buyers with credit guaranty and Bank SinoPac provides Best3C with short-term loans.
2. C-ME: Buyer's credit guaranty is provided by the CIT Group, a worldwide account receivable factoring institution, while Bank Sinopac offers the cash-flow service for the seller.
3. ECnet: Bank Sinopac provides order finance to the supply chain sellers and buys out all the accounts receivable during e-trade transactions from the supply chain's sellers.
4. Lily Distribution Center: Lily cooperates with Bank SinoPac in the B2B cash-flow service to construct the account management and the paying system. Together, they develop the on-line accounts receivable and accounts payable management system between the supplier, the buyer and Lily. The Bank also provides transaction financing such as short-term loans on order, invoice and inventory.
5. Wellan System: Bank SinoPac and Wellan System together provide complete financial services and the integrated financial operating system needed by small- and medium-sized corporations.

   In the first stage, the focus is to provide complete financial system management services to existing and potential clients of both parties, from internal financial and accounting operations to external turnover of funds. In the second stage, we will move toward the integration of the existing products of both parties and the combination of the internal financial and accounting operations and the external turnover of funds. This will make the rearrangement of funds more flexible. Some companies, such as Broton Inc., are participating in this cooperation project.