A Demand Guarantee refers to a written commitment to a beneficiary, issued by CEXIM on request of an applicant (our customer) to ensure that the guaranteed party will fulfill the obligations of the underlying transaction contract entered in with the beneficiary, undertaking to pay under the guarantee when the beneficiary submits documents that meet the requirements.

Demand guarantees have a variety of uses covering trade in goods or services, project contracting, borrowing from financial institutions, financial lease and other performance of contractual obligations of underlying transactions.

According to the locations of the parties involved, demand guarantees can be divided into:

A Domestic Demand Guarantee refers to a demand guarantee of which both the creditor and debtor of the underlying transaction are registered overseas.

A Cross-border Demand Guarantee refers to a demand guarantee of which either the creditor or the debtor of the underlying transaction is registered outside the Chinese territory.

According to the content of undertakings, demand guarantees can be divided into:

A Financial Demand Guarantee refers to a guarantee issued for underlying transactions involving financial obligations, including loan guarantee and financial lease guarantee.

A Non-financial Demand Guarantee refers to a guarantee issued for underlying transactions involving obligations other than financial obligations, including tender guarantee, performance guarantee, advance payment guarantee, warranty (maintenance) guarantee, retention guarantee, customs guarantee, payment guarantee and labor service cooperation reserve fund guarantee.

Benefits for Applicants (our customers)

Bank credit is in place of commercial credit, reflecting the high credit standing of the company and enhancing the chance to sign the contract;

The applicant’s legitimate rights and interests can be protected by following uniform banking rules and standard procedures and conducting professional review of terms and clauses;

The applicant does not have to pay a full cash collateral if a credit line is granted, thus accelerating the applicant's cash flow;

The issuance procedure is simple and the guarantee format is flexible, thus satisfying different needs.

Categories of Guarantee

Tender Guarantee

At the request of the applicant (our customer), CEXIM can issue a demand guarantee with a related party such as the bid inviting party as the beneficiary, undertaking that the bidder will not withdraw or amend its bid.　

Performance Guarantee

At the request of the applicant (our customer), CEXIM can issue a demand guarantee with a related party such as the buyer (project owner) as the beneficiary, undertaking that the seller (contractor) fulfill the obligations under the underlying transaction, including production delivery, service delivery and completion of construction works.

Advance Payment Guarantee

At the request of the applicant (our customer), CEXIM can issue a demand guarantee with a related party such as the buyer (project owner) as the beneficiary, undertaking to refund the advance payment if the seller (contractor) fails to use the advance payment in accordance with the underlying transaction agreement to fulfill the obligations such as production delivery, service delivery and completion of construction works.

Warranty (Maintenance) Guarantee

At the request of the applicant (our customer), CEXIM can issue a demand guarantee with a related party such as the buyer (project owner) as the beneficiary, undertaking that the seller (contractor) will fulfill the obligations including replacement and maintenance regarding to objection to quality inspection of goods or services and project defects in accordance with the underlying transaction agreement after the delivery of goods or services and completion of projects.

Retention guarantee

At the request of the applicant (our customer), CEXIM can issue a demand guarantee with a related party such as the buyer (project owner) as the beneficiary, undertaking to refund the retainage if the seller (contractor) fails to fulfill the obligations provided for in the underlying transaction agreement including replacement and maintenance due to objection to quality inspection of goods or services and project defects.

Customs Guarantee

At the request of the applicant (our customer), CEXIM can issue a demand guarantee with the customs authority or its authorized institution as the beneficiary, undertaking that the obligator will fulfill the obligations of paying the duty and other expenses in accordance with law.

Payment Guarantee

At the request of the applicant (our customer), CEXIM can issue a demand guarantee with a related party such as the seller (contractor) as the beneficiary, undertaking that the buyer (project owner) will fulfill the obligations of payment for trade or project.

Labor Service Cooperation Reserve Fund Guarantee

At the request of the applicant (our customer), CEXIM can issue a demand guarantee with a related government department or its authorized institution as the beneficiary, undertaking that the seller (contractor) will fulfill the obligations provided for in the underlying transaction agreement in accordance with law，including paying the salaries or wages to contract workers and compensating for their loss.

Loan Guarantee

At the request of the applicant (our customer), CEXIM can issue a demand guarantee with a creditor as the beneficiary, undertaking that the borrower will fulfill the repayment obligations.

Financial Lease Guarantee

At the request of the applicant (our customer), CEXIM can issue a demand guarantee with a lessor as the beneficiary, undertaking that the lessee will fulfill the rent payment obligations.

Other Services for Demand Guarantee

Advice of Demand Guarantee

CEXIM, as the advising bank, can verify the authenticity of a guarantee and advise the original version to the beneficiary on time.

Demanding for Customers

CEXIM can make a claim by mail or telegraph and related enquiry, collection and settlement on behalf of the customers.

Letter of Intent to Issue Demand Guarantees

To satisfy the demand of bidding and business negotiation, CEXIM can provide a letter of intent to issue demand guarantees for enterprises.

Tips

Guarantees should be re-issued by other banks (as is shown in the flowchart) under some circumstances (e.g. some local laws may require that guarantees must be issued by a local bank). Re-issued guarantees should comply with the re-issuing bank’s usages and local regulations, and the applicant should be liable to pay the re-issuing fees;

The guarantee fees shall be charged based on the factors such as the category, risk level and validity of the guarantee, depending on different situations;

Upon mutual consent of the applicant and the beneficiary, an amendment request can be submitted.