LIKE weather maps that track wind patterns, charts of world trade traffic offer a snapshot of the future. Today we see bold directional arrows that indicate vast growth in South-South trade between developing economies. Such images suggest great potential to harness these favourable ‘trade winds,’ but they also raise challenges for emerging market business leaders to transact across unfamiliar corners of the globe.

While traditional North-South trade is strengthening, so-called ‘South-South’ trade now dominates the data. For example,the recovery of trade has been more advanced among developing nations than among higher-income countries, with imports to developing markets driving the rebound. China is now the largest trading partner of both Brazil and Chile, and growing bonds between Latin America and Asian partners are encompassing commodities, consumer goods and services trade.

South-South growth creates opportunity

Although these are welcome trends for business leaders seeking inter- or intra-regional trade, it means they must find secure methods to transact with new partners in unfamiliar places. This element of the unknown has spurred a renewed interest in Letters of Credit (LC) and working with a dependable financial institution that can provide traditional trade finance solutions.

And while a trader in these markets faces many issues – from payments and foreign exchange to working capital solutions – there are just a handful of trade banks that can resolve these challenges. Since the global financial crisis, many banking houses have withdrawn from emerging markets, and local and regional banks may be unable to satisfy clients’ trade needs, since they lack the network or credit appetite.

Who really knows South-South?

With so much opportunity at stake, it’s critical to test the true capabilities of a potential trade bank in your South-South markets. You need to consider whether trade finance remains a core business in their institution, particularly in the locations that matter to you.

Scotiabank has been dedicated to trade finance for over 175 years. With origins supporting trans-Atlantic commerce with the West Indies, Scotiabank was founded on international trade. Today, the bank is active in more than 50 countries and possesses an enviable network of local banks, branch networks and trade offices across the Americas and Asia.

A global bank that is refocusing on domestic markets, or a local bank that is stretched to accommodate its clients, is not the ideal partner to achieve your company’s potential. To gauge a bank’s commitment, seek evidence of new investment in their trade operations. Are they opening overseas offices, upgrading systems and demonstrating product innovation? At Scotiabank, I comfortably assure clients that we are growing across the South¬South corridors, from Brazil to Colombia, and China to Uruguay. We are investing in new platforms to enable seamless 24/7 processing, and we are expanding non-traditional trade instruments that anticipate arising client needs, like reverse factoring, a way of providing discounted receivables financing to suppliers.

Scotiabank customers appreciate dealing with Canada’s most international bank – headquartered in one of the world’s most stable financial systems – which remained well capitalized throughout the recent global financial crisis because of our prudent risk management culture. This strong foundation helps anchor our commitment to building operations in distant hemispheres.

Delivering real solutions across continents

While reputation is important and a roster of third-party awards and media recognition helps confirm a bank’s performance, trade finance is truly about problem solving in volatile conditions. At the end of the day, the knowledge of a bank’s local relationship managers and trade specialists and their ability to deliver a host of traditional trade finance instruments to suit South-South traders are the defining factors in successful trade.

For example, we helped a long-time customer, Maderas Integradas (Madinsa) of Chihuahua, Mexico, to strengthen its global supply chain, plus provided credit facilities to help them grow their import business. Based on a philosophy of offering the best products and service at the best prices, Madinsa has become a top supplier of wood products to Mexico’s furniture and construction industry. Madinsa imports top quality lumber products from suppliers in Indonesia, Malaysia and Chile, many of whom sought advanced payment for their shipments. As part of Scotiabank’s global network and expertise across these southern markets, we issued commercial LCs and standby LCs for Madinsa, helping them secure longer payment terms and supply chain financing strategies to improve cash flow for both Madinsa and its suppliers.

To develop such customized solutions, it’s essential to work with on-the-ground bankers with relevant insights, language and cultural knowledge and an in-depth understanding of traditional trade finance instruments. Your bank must possess a unique combination of the right geographic footprint, local presence and expertise that mirrors your needs.

While those colourful maps of emerging trade corridors suggest immense potential, they don’t depict the undercurrents of complexity and risk. It’s crucial to find a banking partner with the proven expertise, network and commitment to connect those arrows, and capitalize on today’s billowing South-South trade winds.

As Executive Vice-President & Head, Global Transaction Banking, Alberta G. Cefis oversees Scotiabank’s extensive trade finance, cash management, payments and correspondent banking services for multinational, corporate, commercial and small business customers. Under her leadership, Scotiabank has continually attained impressive industry recognition, such as the Global Finance Best Emerging Markets Bank in Latin America for Barbados, Costa Rica, Jamaica, Trinidad &Tobago and Turks & Caicos in 2011, and Best International Bank in Peru and Best Trade Bank in Central America and the Caribbean, in 2011 by Trade Finance.