Trade financing and letter of guarantee business do not include investment financing, securities trading, and venture capital.

1. Investment Financing

The focus of trade financing and letter of guarantee business is to provide financial support for trade transactions, rather than other types of investment financing. This includes equity investments, bond issuances, private equity funds, etc.

2. Securities Transactions

Trade financing and letter of guarantee business are related to the company’s trading activities and do not involve securities transactions. This means they do not include the buying, selling, trading and investing of stocks, bonds, futures or other securities.

3. Risk investment

The goal of trade financing and letter of guarantee business is to provide financing and guarantees for trade transactions, rather than making venture investments. As such, they typically do not involve investments in start-ups or high-risk projects.

The difference between trade finance and venture capital

Trade finance usually involves buyers and sellers, banks or financial institutions, and other relevant intermediaries, such as insurance companies or credit guarantee agencies. Buyers and sellers seek financing support to complete the transaction and negotiate corresponding financing arrangements with banks or financial institutions. Venture capital involves investors who become shareholders or partners of a business by purchasing equity or providing financial support.

Trade financing mainly involves the payment risk and performance risk of transactions. Banks or financial institutions reduce transaction risks by providing financing, guarantees or letters of guarantee, but their returns are relatively low, and risky investments face higher risks. Investment is risky as it usually invests in start-ups or high-risk projects. However, venture capital can reap huge rewards if the business or project is successful.