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INDUSTRY REPORT

Global shifts in the Industrials sector are impacting supply chains, payment complexities, and products in transit. Payment terms and timing are crucial for maintaining liquidity and balancing working capital. For international business, managing foreign exchange transactions is essential. Citi Commercial Bank offers extensive experience and solutions enabling you to simplify payments, optimize trade flows, mitigate currency risks and more. We can help you to focus on the manufacturing and delivery of your products by taking care of your banking needs.

Learn about Huaijin Bao, Global Industry Head for Industrials, what she sees as the biggest trend in Industrials, and more in 90 seconds.

Get to Know Our Leaders: Huaijin Bao 

Commercial Banking for Industrial Companies

When considering the trends facing our Industrials clients, at Citi Commercial Bank (CCB) we review the various Industrials sub-sectors in which our clients operate. These sub-sectors include Capital Goods, Automotives, Paper & Packaging, Transportation & Logistics, Metals & Mining, Aerospace, Building & Construction, or Chemicals. Over time, CCB has seen a new industrials ecosystem emerge, one in which the lines have blurred across the various Industrials sub-sectors and expands/overlaps with other industries. Let’s consider an example: The Mobility Ecosystem. Industry data suggests approximately 30%- 40% of EV costs are batteries which involve both metal and chemical processes. Continuous innovation in battery technology has been critical to enabling the EV revolution. Increased energy density (longer vehicle range) and lower cell costs (consumer affordability) continue to drive the innovation landscape. To accommodate, EV charging companies are investing in EV charging infrastructure which offers new opportunities for manufacturers of charging equipment. With the rising success of lithium battery in vehicles, trends show expansion to aircrafts as well – eVTOLs (Electric Vertical Take-off and Landing vehicles). The perspective of the air taxi will change how people travel in the future. The other aspect of Mobility is technology, which has fundamentally changed the function of cars to be smart, connected, and shared. Citi Research estimates that by 2030, we can expect technology content to be 50% by value of a typical smart car. A smart car moves its passengers around without a human hand necessarily touching the steering wheel, and at the same time offers an in-journey array of entertainment choices. This will not only change the experience of individual consumers but also transform the Auto OEM (Auto Manufacturers) business model, as well as the overall transportation and logistics industry. The entire Mobility ecosystem requires industry players across the specialized sub-sectors to work together towards building a more advanced future. Because we serve clients across these sectors around the world, Citi Commercial Bank and our partners across Citi, have a unique view of this ecosystem. Our Industrials sector bankers understand the complexities of this ecosystem, as well as the opportunities and challenges clients in this sub-sector face. We can offer you advice and solutions so that you can make the most of the mobility ecosystem and, together, we can help build an exciting future.

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When considering the trends facing our Industrials clients, at Citi Commercial Bank (CCB) we review the various Industrials sub-sectors in which our clients operate. These sub-sectors include Capital Goods, Automotives, Paper &amp; Packaging, Transportation &amp; Logistics, Metals &amp; Mining, Aerospace, Building &amp; Construction, or Chemicals.&nbsp;Over time, CCB has seen a new industrials ecosystem emerge, one in which the lines have blurred across the various Industrials sub-sectors and expands/overlaps with other industries.&nbsp;Let&rsquo;s consider an example: The Mobility Ecosystem.
Industry data suggests approximately 30%- 40% of EV costs are batteries which involve both metal and chemical processes. Continuous innovation in battery technology has been critical to enabling the EV revolution. Increased energy density (longer vehicle range) and lower cell costs (consumer affordability) continue to drive the innovation landscape.&nbsp;
To accommodate, EV charging companies are investing in EV charging infrastructure which offers new opportunities for manufacturers of charging equipment.&nbsp;With the rising success of lithium battery in vehicles, trends show expansion to aircrafts as well &ndash; eVTOLs (Electric Vertical Take-off and Landing vehicles). The perspective of the air taxi will change how people travel in the future.&nbsp;
The other aspect of Mobility is technology, which has fundamentally changed the function of cars to be smart, connected, and shared. Citi Research estimates that by 2030, we can expect technology content to be 50% by value of a typical smart car. A&nbsp;smart car moves its passengers around without a human hand necessarily touching the steering wheel, and at the same time offers an in-journey array of entertainment choices. This will not only change the experience of individual consumers but also transform the Auto&nbsp;OEM&nbsp;(Auto Manufacturers) business model, as well as the overall transportation and logistics industry.
The entire Mobility ecosystem requires industry players across the specialized sub-sectors to work together towards building a more advanced future.&nbsp;
Because we serve clients across these sectors around the world, Citi Commercial Bank and our partners across Citi, have a unique view of this ecosystem. Our Industrials sector bankers understand the complexities of this ecosystem, as well as the opportunities and challenges clients in this sub-sector face. We can offer you advice and solutions so that you can make the most of the mobility ecosystem and, together, we can help build an exciting future.
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When considering the trends facing our Industrials clients, at Citi Commercial Bank (CCB) we review the various Industrials sub-sectors in which our clients operate. These sub-sectors include Capital Goods, Automotives, Paper & Packaging, Transportation & Logistics, Metals & Mining, Aerospace, Building & Construction, or Chemicals. Over time, CCB has seen a new industrials ecosystem emerge, one in which the lines have blurred across the various Industrials sub-sectors and expands/overlaps with other industries. Let’s consider an example: The Mobility Ecosystem.

Understanding the mobility ecosystem within industrials

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*This partner content was produced by the Financial Times on behalf of Citi Commercial Bank Building bridges and breaking barriers in international trade has never been more important. In many small and medium sized enterprises (SMEs) operating globally, beleaguered CFOs and CEOs are facing circumstances that constrain business to an unprecedented degree. The geopolitical tensions between the US and China, for example, have impacted supply chains across the world, while the ongoing effects of Brexit have seen red tape tie up UK businesses and their trading partners. Add in the aftershocks of Covid-19, ever-changing data privacy regulations, evolving trade agreements such as the US-Mexico-Canada Agreement (USCMA) replacing NAFTA, and the fact that the World Trade Organization noted that these barriers affect SMEs more than large organizations, and you have something approaching a perfect storm. Deep local knowledge is key to expansion success It’s a view shared by the United States International Trade Commission, which points out that SMEs may lack the resources and local knowledge needed to navigate these increased complexities. But while these challenges are significant, they’re not insurmountable – provided companies employ some expertise to help them on their expansion journey. Volex, a global leader in integrated manufacturing for performance-critical applications and a supplier of power products, is a case in point. A new management team in 2015 prompted a change in strategy with the company expanding quickly to become a more profitable and acquisitive operation, buying related businesses around the world and growing its product offering. Today, Volex is a more diverse and resilient business with a global footprint spanning 28 sites on three continents with over 11,500 employees across 24 countries serving the complex industrial technology, consumer electricals, electric vehicles, medical and off-highway markets. “We’ve doubled in size over the past five years and our plans are to double in size again,” says Volex Group CFO Jon Boaden. A $400mn investment in acquisitions since 2018 necessitated moving into markets where they previously had no presence. “We have vastly expanded our manufacturing, too,” Boaden says. “We’ve advanced manufacturing capabilities in Mexico, the US, China, Indonesia, Turkey, Vietnam, India and more.” Company acquisitions can bring banking challenges However, Boaden points out that this expansion comes with its own headaches. For example, acquiring owner-managed businesses means they may be relatively unsophisticated when it comes to foreign currency exposure. And moving into new territories means tackling different regulatory requirements, which can be particularly stringent in Volex’s sector. The firm’s partnership with Citi Commercial Bank has proved invaluable in addressing many of the expansion challenges. “Citi has proved really proactive and insightful when it comes to banking strategies,” he says. “We can leverage Citi’s platform across every country we operate in. We haven’t yet found a country where Citi can’t support us in dealing with the intricacies of overseas business.” This consistency in banking operations, with the same processes and controls being used worldwide, also reduces risk to Volex’s margins from currency conversion. Huaijin Bao, Global Head of Industrials at Citi Commercial Bank, is keen to point out that while Citi’s initial role was to help with financing acquisitions, working capital and ensuring a smooth-running banking process in new territories, this has opened up as the relationship has deepened. “We enjoy a wide-ranging advisory role with Volex,” says Huaijin. “Not just on banking matters such as local regulations or global cash management, but also with industry insights. Our Industrials team comprises eight or nine subsectors, many of which are downstream industries that Volex is involved in, such as EV, consumer electronics, industrial technology and med-tech. This multi-sector expertise means we can advise our clients not just on their industry, but also share insights with them around adjacent and interconnected sectors. This means we can provide clients with a much broader view of trends and developments across relevant verticals.” Boaden agrees, pointing out that Citi has provided him with a “tremendous amount of intelligence and a wealth of research” that has helped inform Volex’s growth strategy. “With Citi’s help, we’ve identified the right markets, the right customers and the right ways of working. The business is operating incredibly well at the moment. It’s all coming together.” All opinions expressed by the participants in this article are their own and do not necessarily represent the opinions of Citi Commercial Bank

*This partner content was produced by the Financial Times on behalf of Citi Commercial Bank
Building bridges and breaking barriers in international trade has never been more important. In many small and medium sized enterprises (SMEs) operating globally, beleaguered CFOs and CEOs are facing circumstances that constrain business to an unprecedented degree. The geopolitical tensions between the US and China, for example, have impacted supply chains across the world, while the ongoing effects of Brexit have seen red tape tie up UK businesses and their trading partners.&nbsp;
Add in the aftershocks of Covid-19, ever-changing data privacy regulations, evolving trade agreements such as the US-Mexico-Canada Agreement (USCMA) replacing NAFTA, and the fact that the&nbsp;World Trade Organization noted&nbsp;that these barriers affect SMEs more than large organizations, and you have something approaching a perfect storm.&nbsp;
<h2>Deep local knowledge is key to expansion success</h2>
It&rsquo;s a view&nbsp;shared&nbsp;by the&nbsp;United States International Trade Commission, which points out that SMEs may lack the resources and local knowledge needed to navigate these increased complexities. But while these challenges are significant, they&rsquo;re not insurmountable &ndash; provided companies employ some expertise to help them on their expansion journey.
Volex, a global leader in integrated manufacturing for performance-critical applications and a supplier of power products, is a case in point. A new management team in 2015 prompted a change in strategy with the company expanding quickly to become a more profitable and acquisitive operation, buying related businesses around the world and growing its product offering.&nbsp;
Today, Volex is a more diverse and resilient business with a global footprint spanning 28 sites on three continents with over 11,500 employees across 24 countries serving the&nbsp;complex industrial technology,&nbsp;consumer electricals,&nbsp;electric vehicles,&nbsp;medical&nbsp;and off-highway markets.
&ldquo;We&rsquo;ve doubled in size over the past five years and our plans are to double in size again,&rdquo; says Volex Group CFO Jon Boaden. A $400mn investment in acquisitions since 2018 necessitated moving into markets where they previously had no presence. &ldquo;We have vastly expanded our manufacturing, too,&rdquo; Boaden says. &ldquo;We&rsquo;ve advanced manufacturing capabilities in Mexico, the US, China, Indonesia, Turkey, Vietnam, India and more.&rdquo;
<h2>Company acquisitions can bring banking challenges</h2>
However, Boaden points out that this expansion comes with its own headaches. For example, acquiring owner-managed businesses means they may be relatively unsophisticated when it comes to foreign currency exposure. And moving into new territories means tackling different regulatory requirements, which can be particularly stringent in Volex&rsquo;s sector.
The firm&rsquo;s partnership with Citi Commercial Bank has proved invaluable in addressing many of the expansion challenges. &ldquo;Citi has proved really proactive and insightful when it comes to banking strategies,&rdquo; he says. &ldquo;We can leverage Citi&rsquo;s platform across every country we operate in. We haven&rsquo;t yet found a country where Citi can&rsquo;t support us in dealing with the intricacies of overseas business.&rdquo; This consistency in banking operations, with the same processes and controls being used worldwide, also reduces risk to Volex&rsquo;s margins from currency conversion.
Huaijin Bao, Global Head of Industrials at Citi Commercial Bank, is keen to point out that while Citi&rsquo;s initial role was to help with financing acquisitions, working capital and ensuring a smooth-running banking process in new territories, this has opened up as the relationship has deepened.
&ldquo;We enjoy a wide-ranging advisory role with Volex,&rdquo; says Huaijin. &ldquo;Not just on banking matters such as local regulations or global cash management, but also with industry insights. Our Industrials team comprises eight or nine subsectors, many of which are downstream industries that Volex is involved in, such as EV, consumer electronics, industrial technology and med-tech. This multi-sector expertise means we can advise our clients not just on their industry, but also share insights with them around adjacent and interconnected sectors. This means we can provide clients with a much broader view of trends and developments across relevant verticals.&rdquo;
Boaden agrees, pointing out that Citi has provided him with a &ldquo;tremendous amount of intelligence and a wealth of research&rdquo; that has helped inform Volex&rsquo;s growth strategy. &ldquo;With Citi&rsquo;s help, we&rsquo;ve identified the right markets, the right customers and the right ways of working. The business is operating incredibly well at the moment. It&rsquo;s all coming together.&rdquo;
All opinions expressed by the participants in this article are their own and do not necessarily represent the opinions of Citi Commercial Bank
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Global expansion can be hamstrung by thorny trade and financial requirements. Here’s how one company overcame bureaucratic challenges.

Clearing the hurdles: how to navigate complex regulations

Citi Commercial Bank Podcast Series 

A 19 minute podcast exploring the implications of the Mobility ecosystem for business and treasury, featuring&nbsp;Huaijin Bao, Industrials Sector Head, Citi Commercial Bank, and&nbsp;John Murray,&nbsp; Global Head of Mobility, Treasury and Trade Solutions, Citi. Together, they explore the big trends driving the mobility ecosystem, the industries most involved, and the impacts for business models and financial flows.

Episode 1: The Mobility Ecosystem - Trends and Impact 

READ HERE 

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The 2024 Citi Commercial&nbsp;Bank Sector Snapshot Report on Mobility,&nbsp;with data from PitchBook, looks beyond the&nbsp;headlines and takes a closer look at the mobility sector, with a&nbsp;focus on EV, autonomous vehicles, mobility tech and the micro&nbsp;mobility sector, and assesses market conditions, industry&nbsp;shifts, and key trends in investment.
This raises a number of interesting questions:
<ul>
<li>Will we see a rise in venture dealmaking after the peak in 2021?</li>
<li>Can mobility businesses turn technical promise into sustainable profit and attract investment?</li>
<li>And will pre-seed financing sizes, at their highest to date, continue to rise?</li>
</ul>
These are some of the areas covered in the report which&nbsp;delivers valuable insights and will unlock opportunities.
Read the full report <a href="https://www.citibank.com/icg/sa/flippingbook/2024/Sector-Snapshot-Key-Trends-in-Dealmaking-Mobility/" target="_blank" rel="noopener" data-link-source="tiny">here.</a>
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<div>Huajin Bao Global Head of Industrials Citi Commercial Bank</div>
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Key Trends in Dealmaking

The 2024 Citi Commercial&nbsp;Bank Sector Snapshot Report on Mobility,&nbsp;with data from PitchBook, looks beyond the&nbsp;headlines and takes a closer look at the mobility sector, with a&nbsp;focus on EV, autonomous vehicles, mobility tech and the micro&nbsp;mobility sector, and assesses market conditions, industry&nbsp;shifts, and key trends in investment.&nbsp;

Sector Snapshot: Mobility

Commercial Bank

Banking & International

We provide global banking solutions to mid-sized companies that are looking to grow rapidly and expand internationally. 

This podcast episode features perspectives from Citi Commercial Bank clients Jon Boaden, CFO at Volex plc, and Kyu-Ha Choi, Head of Treasury and Risk Management of Coroplast Group, and Citi colleagues Huaijin Bao, Global Industrials Head, Citi Commercial Bank, and Sylvia Huang, Director, FX Structuring and Solutions, Citi.&nbsp;The discussion focuses on the Currency Risk Management aspect of international expansion and how these finance leaders align their organizations to minimize impact of FX market volatility.

Citi Commercial Bank Podcast Series

The discussion focuses on the Currency Risk Management aspect of international expansion and how these finance leaders align their organizations to minimize impact of FX market volatility.

Episode 2: Business & Risk Management Impacts of International Expansion

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