In the last few years ICBC has taken the support for service sector to its full swing. The strategic move is a response to the China's economic restructuring and transformation of the growth pattern. Aggressive programs have been launched to support the modern service sector financially. Today, ICBC is a commercial bank in the country extending the most credit to this sector.

Director Mo Fumin of ICBC Corporate Business has witnessed the history of the Bank in tapping the loan market of modern service sector. The business continues to power ahead since 2008 when modern service was taken as the target sector of ICBC loan service. ICBC's balance of loans extended to modern service sector increased 30% or around RMB 100 billion from the beginning of 2010 to over RMB 410 billion by end-November, representing 14 percentage points (approx) higher than corporate loan in all branches. Modern service sector is now an important growth point of ICBC's loan business.

Modern services that ICBC targeting are culture, tourism, modern logistics, medical and health, new type of commerce, information services and software, said Mo Fumin. These are industries of high added-value, high growth, high technology or knowledge-intensive which exert strong potential for industry restructuring and escalation of consumption. However, different categories of sub-industry segments under modern service sector mean a wide range of financial services is needed. Besides, modern service sector is mainly made up of small and medium enterprises, which determines weak capability of the sector's business operation and market risk resistance. Some companies are not transparent enough in financial standing. Low credit worthiness, unclear profitability model, asymmetric information between bank and enterprises are some of the problems for banks to investigate and evaluate their business. Some emerging modern service companies take knowledge, technology, and creativity as their production material. Services are their products. These are "light assets" implying low physical protection on the company assets. Unsound evaluation practices and market system on the ownership of such intellectual property rights (copyright, trademark right and invention patent) and intangible assets brings more uncertainties and risks for banks to extend credit.

Facing such a situation, it is synonymous to give up this "blue sea" market if just sitting and waiting for modern service companies to meet the rules for conventional loans from commercial banks. In view of this, ICBC looks at the best delivery of financial services and products for different categories of modern service companies through innovation in products, services and business process. ICBC achieves win-win with modern service companies by its unique product offering which caters to the needs of most of the top customers in the sector and has been recognized and warmly received.

Mo Fumin mentioned that ICBC has carried out detail study before the launch of financial services for modern service companies. Based on the first-hand knowledge, tailored solutions are prepared for companies engaging in production services and consumer services, who can obtain ICBC loans easily nowadays compared to the initial attitude of "do not wish, do not dare, do not know" when applying for bank loans.

Modern logistics companies are the most typical production service companies. Logistic industry is moving to integrated logistics based on information technology. To them, ICBC leverages its extensive network, expertise in business and system to offer a full range of products encompassing intermediary services from loan services to settlement, electronic banking and bank card. Financial services and logistics service are combined for new services such as merchandize finance to meet specific needs of the logistics companies and their upstream/downstream customers for integrated financial products. An example is the "TransFar Express Loan", a unique financial service for small and mid-range logistics enterprises launched by ICBC to Zhejiang TransFar Road-port Logistics Development Co., Ltd, one of the largest logistics base companies in China. Through flexible guarantee options, ICBC has extended a record of more than RMB 300 million of loans to thousands of small and mid-range logistics enterprises under TansFar. Besides, ICBC opens internet banking to meet the increasing demand of financial services from the logistics companies in TansFar's logistics bases, allowing them to apply online loans anytime.

In terms of the lending to modern service companies engaging in consumer services, especially those in creative business featuring "light assets" which "can be seen, no way to touch, cannot be mortgaged", ICBC takes a different approach. Instead of using fixed assets as mortgage as in conventional industries, ICBC differentiates the riskiness of the company's management capability, experience and performance, professional team, or even the key company person. Risk assessment is concentrated on the company's real core asset - "people". ICBC introduces an innovative guarantee option - "joint guarantee of copyright pledge + actual control person" to control risks. In 2009, ICBC scored victories by releasing a loan of RMB 120 million to Huayi Brothers Media Corporation for the production of four films "Tangshan Earthquake", "Direnjie Tongtian Empire", "The Sound of Wind", "Tracing Shadow". Moreover, according to the restructuring in the cultural sector, ICBC embraces innovation to introduce supply chain finance products for the growth of culture industry. TV drama production companies are a case in point. Most of them are not qualified to get bank loans, yet their downstream TV stations have plenty of liquidity for reliable payments. In view of this, ICBC designs a new business model using account receivables factoring, where these TV drama production companies can sell the account receivables from TV stations to secure immediate working capital.

In extending credit to modern service companies mainly engaging in hardware facilities, ICBC adopts a business model with flexible combinations of project loans, liquidity loans, financial leasing, bond underwriting. ICBC release loans to support the hardware infrastructure of modern service sector, industry park/base, warehousing facilities, medical places and facilities, scenery zone, culture stadiums or cable TV network.

To modern service companies of high growth which show high expectation on profitability but is riskier in extending credit to, ICBC attempts a new model of "direct investment + credit facility", where ICBC lends assistance to introduce investors directly investing in the companies in order to increase their capital strength and build up the capability of risk prevention. Loans are released once they meet the borrowing conditions.

In providing services to modern service companies besides credit facility, ICBC also place attention on all products/services such as investment banking, electronic banking, settlement and cash management, company deposit, corporate annuity and asset custody services. ICBC makes use of its extensive network to set up a ticketing and transaction platform for piaowutong.com for their art performances nationwide, TV-bank (digital TV bank) services for many cable TV including Beijing Gehua CATV Network. The service is well received in the public.

Mo Fumin said that progress of modern services is an important index to measure a country's modernization. It plays an important role to drive current economic restructuring, industry development, job creation and consumer spending. Commercial banks lending great support to modern service sector boosts the upgrading of China's industry structure and ensures stable and fast economic growth, as well as an internal requirement of commercial banks to align with the economic progress, expand market, strengthen risk control capability and seek maximum return to shareholders. In the next step, ICBC will continue the efforts to improve service system and mechanism, build professional marketing team and set up various schemes for performance assessment through innovative product/service models in different market segments. ICBC aims to loom large this business and bring strong force to drive the healthy growth of ICBC during the Twelfth Five-Year period.