Mainland China’s Internet Giants Invest in Hong Kong Financial Sector
China has been quite vocal about its aims to be a leader in technology in the coming years. A vibrant tech startup culture coupled with strong support by the government has pushed a lot of local firms to come up with innovative technological solutions. Many state-owned, as well as private Chinese firms, look for areas of growth in the technological markets across the globe. They also increasingly invest beyond borders to leverage any technological knowledge and talent pools from other parts of the world.
The financial landscape in Mainland China is no different. Many businesses are increasingly investing in viable FinTech solutions encouraged by a rising middle class and a remarkably high FinTech adoption rate. One such quest takes Mainland China’s top internet-based businesses such as ZhongAn, Online P&C Insurance, and JD.com to Hong Kong, where they look to experiment with new FinTech solutions.
These internet-based firms have set up 4 joint ventures within Hong Kong and have already obtained virtual banking permits by The Hong Kong Monetary Authority, the central banking authority of the city-state. By the end of this year, the four companies will have kicked off their operations as they will provide virtual banking services to the market in Hong Kong without a physical brick and mortar set up there.
The Chinese business JD.com has entered into a partnership agreement with the BOC Hong Kong Holdings and established Livi VB. ZhongAn chose to partner with a real estate firm Sinolink Group and set up the joint venture, ZhongAn Virtual Finance. The Chinese travel agency Ctrip partnered with Standard Chartered and the telecommunications firm PCCW to establish SC Digital solutions. Other major Chinese firms such as the Alibaba Group, Xiaomi, and the Tencent holding are also anticipated to be entering the same market sometime later this year.
The online banking market in Hong Kong seems like a safer market to try out innovative financial solutions. The main target market for these online banks will be the medium and small scale businesses in the local market that have trouble acquiring finances through traditional channels. This market presents a segment that is not being served at present. Customer service and convenience are said to be two key factors in these particular banking markets.
Hong Kong has traditionally been a financial hub in the region and will see a stiff rise in the competition as the Mainland China’s firms enter the financial sector with their innovative, one-of-a-kind FinTech solutions.