Cash Management Solutions in the China Market Possibilities Best Practice

1. Cash Management Solutions in the China MarketPossibilities & Best Practice

2. The Collection Cycle - Tips and Best Practice The Payments Cycle - Tips and Best Practice Liquidity Management - Tips and Best Practice

3. What Are Your Options For ETF Settlement in China? A. PBOC China National Payments Network (CNAPS) B. Settlement through traditional channel of local and/or foreign banks’ internal branch clearing networks

4. An Overview of CNAPs

9. Tips for Best Practice in Routing Customer Payments Undertake a ‘PAYER BANK ANALYSIS’ with your Bank partner Your Bank partner will help select a the payment route that will result in the quickest settlement time Your Bank partner will also assist in communicating any change in payment routing to your customer base This systematic approach to reviewing payer behavior will ensure that your EFT collections are routed in the most efficient manner possible

20. Pooling of Funds - “Virtual Pooling Structure” When to use vs. bilateral entrustment loan? When group has BOTH multiple cash surplus and cash deficit entities spread around the country Benefits groups of companies with net working capital requirements Reduces borrowing costs at individual and overall group level Pockets of excess cash better remunerated at individual and group level

21. Virtual Pooling - Implementation Participating entities and bank enter into master entrustment loan agreement Transfer funds from cash rich to cash poor entities through a designated Pool Header At any one time only the exact amount required can be borrowed by the operating entities from the Pool Header Pool Header enjoys beneficial conditions on credit line and more flexibility to invest excess cash Backstop line of credit provided to pool participants to ensure liquidity available at all times

23. Cost/Benefit of a Virtual Pool Costs Stamp duty - at least 0.015% of principle amount (assuming 3 parties to the entrustment loan agreement) Business tax on interest earned by cash surplus entities - 5% Trust loan fees Arrangement fees Individual drawdowns and repayments are exempted from stamp duty Benefits Reduction in loan interest paid to banks for working capital requirements