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SunTrust Bank - Global Trade Solutions DID YOU KNOW ? …INTERESTING FACTS AND TRENDS IN THE WORLD OF GLOBAL TRADE South Carolina International Trade Conference Charleston May 27, 2008
Agenda SCITC Did you know? – Interesting Facts about Global Trade International Products & Service
Market Factors Driving Export Demand SCITC Dollar Declines / Exports Rise • With the dollar declining by 21% since the beginning of 2006 and 14% since the beginning of 2007, exports are increasing at a faster rate than imports. • 95% of the world’s consumers live outside the U.S. • International trade represented 40% of U.S. GDP growth in 2007 21% Dollar Decline since the beginning of 2006 Marginal decrease in the trade deficit has coincided with the USD decline.
A World of Change: Trends in Export Growth(in billions of dollars) Export Trends Exports – SunTrust Footprint (Southeast and Mid-Atlantic) U.S. Exports TradeStats Express™
Trade’s Impact on Small/Medium U.S. Companies The importance of exports to the U.S. economy • More than 700,000 U.S. jobs are supported by the $117 billion in manufactured exports • 70% or more of the businesses involved in global trade are small or medium size. • 95% of the world’s consumers live outside the U.S. • Jobs related to exports pay 13-18% higher than non-exporting • International trade gives the average U.S. household $9,000 more in spending power • 97% of U.S. exports are from small to medium sized businesses • More than two-thirds of U.S. exporters have fewer than 20 employees • One in three acres of U.S. agricultural production is exported
China: Challenge or Opportunity? • “Over the past 15 years, bilateral trade in goods and services between the U.S. and China has increased by some 1200 percent. Over the past six alone, bilateral goods trade has nearly tripled and services trade has more than doubled.” (USTR) • “China’s economy has grown by nearly ten percent a year for the past 20 years…US exports of manufactured goods, agricultural products, and services have grown an average of 23 percent a year since 2001.”(USTR) • U.S. factories account for more than 20 percent of the world’s added manufacturing value. By comparison, Chinese plants account for about 8 percent. (Cato Institute) • “China is today our fourth largest export market, and the fastest growing export market for the U.S in the world” (USTR) • In 2006, the United States exported $55 billion in goods to China. Exports to China grew by 32% from 2005 to 2006, making it the fastest growing major market for U.S. products. (U.S. Chamber) • China's tariffs on goods of most interest to U.S. exporters have dropped from 25 percent in 1997 to 7 percent, thanks to its entry into the World Trade Organization. As a result, China has become a major market for American-made semiconductors, aircraft, chemicals, plastic materials, and other manufactured goods along with soybeans and cotton. Surging demand in China and other emerging markets is a main reason why American farmers and manufacturers are enjoying record output, sales, and profits.
Did You Know ? SCITC Our mission is to help people and institutions prosper. U.S. exports to China could soon boom even more: • China will spend billions in months to come • Remake hospitals • Communication and power networks • Roads and infrastructure • Dams and water-treatment facilities • Factories, schools and houses • Many of the goods and services needed are not produced in China. • China is our 3rd largest export market behind Canada and Mexico. • 406 out of 435 Congressional Districts in the U.S. have seen triple-digit export growth to China from 2000 – 2007. • U.S. exports to China are growing 5X faster than any other export market. • This is less a function of the falling dollar and more of rising Chinese demand for U.S. products
Did You Know ? SCITC Our vision is to be the bank of choice for businesses. China • They need what we make… • Chemicals • Turbines and Telecommunications • Drugs and Medical Devices • Sewage and Sanitation Equipment If a product requires modern technology and precise engineering, chances are, China needs it • China’s large currency reserves and strong demand allowed it to weather the Southeast Asia currency crisis in the 1990s. • More than a decade later, China has even more savings. • Which means… • China will keep buying more from the U.S. China’s Yuan • China couldn’t ask for a better time to buy American… • The falling U.S. dollar • The appreciation of the Chinese Yuan
Did You Know ? SCITC Our strategy is to deliver big bank capabilities with local delivery and response. And, it’s not just China… • The world’s tallest building is in Taipei, and soon to be Dubai. • The largest publicly traded company is in Beijing. • The biggest refinery is being constructed in India. • The largest passenger airplane is built in Europe. • The largest investment fund on the planet is in Abu Dhabi. • The biggest movie industry in Bollywood, not Hollywood. • The largest ferris wheel is in Singapore. • The largest casino is in Macau, which overtook Las Vegas in gambling revenues. • The Mall of America, once the largest in the world, today doesn’t crack the top ten. The facts reflect a seismic shift in power and attitudes The opportunities are boundless for U.S. exporters to provide the products and services to meet this demand.
Did You Know ? SCITC SunTrust backs its relationships with nearly two centuries of commitment, leadership and trust. We know what it takes to grow a business. In 2006 and 2007, 124 countries grew their economies at over 4 percent a year …That includes more than 30 countries in Africa • In a list of growing global companies, four companies EACH are from Brazil, Chile, Malaysia and South Africa. • At the military and political level, the U.S. is the world leader… But…on the industrial, financial, social and cultural level… the level of U.S. power is being challenged. It is the rise of the rest of the world… …that can lead to opportunity for the U.S.
International Products and Services- Risk Mitigation- Trade Finance
Products and Services Global Trade Solutions Understanding our clients needs allows us to recommend the appropriate solution
Global Trade Solutions Exporting often = working capital needs Global Trade Solutions Working Capital Finance Cycle • US exports are excess of $1 trillion; 7% of those are on LC; 81% are on open account; • 18% of U.S. exports are credit insured • DSO for exports: 68 days/DSO for domestic: 40 days – depicting additional WC demands to support export activity Order Make Ship Invoice Receivable Collect Pre-shipment finance Post-shipment finance Receivables finance Liquidity Management
Global Trade Solutions: A full suite of international trade capabilities Our broad capabilities serve your business through every phase of its international trade growth. • International wires • Online Information andControl Services • International Cash Position Management • Card Programs • Merchant Services Trade ServicesSolutions Treasury &PaymentSolutions • Import Financing • Trade Letters of Credit • Standby Letters of Credit • Documentary Collections • Currency Risk Management • Non-USD Interest Rate Management • Spot, Forward, NDF & Swap Contracts • Options (vanilla and structured) • Online FX • Foreign Currency Transaction Accounts* • Foreign Currency Investments • Canadian Lockbox • Export Credit Insurance • Letters of Credit • Substituting SunTrust risk for foreign bank risk under letters of credit • Issuance of standby letters of credit to support bid/performance bonds Risk Mitigation Foreign Exchange Global Solutions foryour business Trade Finance Solutions Inbound Foreign Investment • Assistance to subsidiaries of foreign corporations expanding into U.S • Banking services to expatriates working for foreign owned subsidiaries • International Receivable financing • Export Working Capital Financing • Foreign Buyer Financing • Small Business Financing Advisory Services • Foreign Market intelligence • Export Marketing strategies • Import strategies • Referrals to other trade advisors • Trade Seminars InternationalCorrespondentBanking • Over 1500 international correspondent banks world wide • Referrals for in-country foreign banking relationships * Deposit products are offered through SunTrust Bank, Member FDIC
SunTrust Global Trade Solutions Team To truly understand your business and what drives it, we believe in the value of a dedicated relationship manager along with a team of product and industry specialists with local decision-making power.