SINGAPORE: Companies are rethinking their supply chains as the global economy becomes less connected – a process that will carry on despite the upcoming change of government in the United States, says a senior banker.

Tan Teck Long, OCBC’s head of global wholesale banking, said businesses will likely continue diversifying their operations and beefing up logistics to guard against geopolitical uncertainties.

“Deglobalisation will still be a big theme, and therefore it requires a change in investment,” he told The Straits Times.Singapore’s second-largest bank is especially focusing on a growing number of Chinese companies that are expanding outside their home market.

Tan said: “I think we will see that trend accelerate over the next few years.”

OCBC has already been ramping up investments in Greater China – mainland China, Hong Kong, Macau and Taiwan – in recent years, and considers the area a core market alongside Singapore, Malaysia and Indonesia.

The bank said in 2023 that it aimed to lift its revenue from Greater China clients doing business in Asean by more than 50% by 2025.

It has already surpassed this target.

More firms are building additional capacity outside of China to serve various markets, partly due to lower costs, said Tan, adding: “That means you make in China for China, and make elsewhere for elsewhere.”

Natural resources are a big draw for firms growing their presence overseas.

This is behind Chinese investments in Indonesia’s nickel industry. China is the world’s largest maker of electric vehicles batteries, of which nickel is a raw material.

“Many customers want to tap the South-East Asian market as part of their growth strategy,” said Tan.

A key part of OCBC’s Greater China strategy is its partnership with its associate company Bank of Ningbo (BoN), a Zhejiang-headquartered commercial bank. The Singapore lender holds a 20% stake in BoN, and in 2017 inked a 10-year strategic cooperation agreement with it.

OCBC taps BoN’s network of customers eyeing South-East Asia, and serves these clients through relationship managers in places like Malaysia, Indonesia, Vietnam and Thailand who help Chinese customers bridge language and cultural differences.

Tan added: “BoN is also well known for its fintech, and we work with them to upgrade our systems and make further investments so that we can serve their customers more effectively.”

For example, OCBC has linked up with BoN’s onshore treasury management system.

This allows BoN customers whose expansion plans OCBC supports to get a holistic view of their onshore China accounts and OCBC accounts in Asean, and transfer funds more seamlessly between these accounts.

OCBC has also upgraded its transaction banking capabilities, including allowing firms to transact in more currencies and toggle between their bank accounts in various markets without having to sign in to multiple platforms.

In July 2023, the bank said it aims to achieve more than 500 regional mandates for cash management by 2027.

It has already secured more than 250 new regional mandates, and is on track to hit its target early.

A regional mandate allows the bank to process and convey a business client’s financial and transactional data from the company’s various subsidiaries to its head office, via a regional centre in Singapore or Hong Kong.

It also acts on the head office’s instructions for other markets, in areas such as account opening and payments.

OCBC is also setting its sights on Hong Kong’s capital markets, as deal flows are set to increase on the back of falling interest rates. 

 - ANN