DBS partners JD Logistics to offer supply chain financing to Hong Kong-based SMEs

DBS on Tuesday said it is teaming up with JD Logistics (JDL) to provide supply chain financing to Hong Kong-based small and medium-sized enterprises (SMEs) in the "fast-growing cross-border e-commerce import business".

JD Logistics is the supply chain and logistics arm of Chinese e-commerce giant JD.com.

This is DBS's first digital solution for e-commerce merchants on a logistics platform, the bank said in a press statement.

Through this partnership, DBS will provide supply chain financing to JDL's e-commerce SMEs that place their inventory in JDL's bonded warehouses and sell the imported goods on JD Worldwide. This will improve the merchants' cash flow needs to meet the growing demand from Chinese consumers for a variety of imported products from international suppliers, DBS noted.

In addition, the bank will integrate its [2][3]digital service into JDL's blockchain platform to enable the real-time exchange of data. JDL will be able to refer e-commerce merchants that require financing to DBS.

The bank will then approve these applications based on real-time supply chain transaction data, such as inventory and sales proceeds collected from the end consumer, reducing the physical documentation required, DBS said.

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Amid the Covid-19 pandemic, DBS can conduct remote account opening and customer identification and verification via video conference.

Once onboarded, merchants will be able to view their available balances and outstanding loans, as well as initiate drawdown[4] on a pool of eligible assets on the JDL supply chain platform, with funds disbursed quickly, the bank said. [/4]

Tan Su Shan, group head of institutional banking at DBS, said this partnership will strengthen the bank's Greater Bay Area strategy by growing its cross-border SME franchise.

According to DBS, merchants that will benefit from this tie-up are typically Hong Kong-based SME trading entities with Chinese parentage.

"They import goods from overseas markets such as the US, Japan, Germany, Europe and South Korea, and sell them onshore in China. Most popular products include baby and maternal care, fashion and lifestyle, nutritional supplements as well as electronic products," the lender added.

As at 2.39pm on Tuesday, DBS shares were trading at S$25.32, up S$0.25 or 1 per cent.