Unlike the US, which has a well-built traditional financial system, poor conditions in China’s finance sector have seen fintech develop more aggressively and attract investors from around the world, an industry insider told Yicai Global.
“No fintech company wants to miss out on China’s massive market,” said Zhang Ze’en, head of blockchain service provider Factom China.
As one of the best-known providers on the market, Factom has received attention from a number of Chinese investors. Outside of the US, it focuses on storage for Chinese marketing data.
“Recently, we’ve had many emails from foreigners looking for internships at Chinese fintech companies,” VeChain co-founder Lu Yang said, “because in this industry, there is only a fine gap between China and the rest of the world. It’s even leading some areas.”
Companies like Factom and VeChain, which investors are bullish about, are on the rise in China. Advanced technology and strong capital markets are making the country a global front-runner in the sector.
China has two unique factors, said Xu Jieping, senior partner at Plug and Play China. First, there is money in its industries. Second, its resources can be rapidly converged. The ‘Silicon Valley effect’ is declining, he added, saying the rising popularity of Baidu Inc. [NASDAQ:BIDU], Alibaba Group Holding Ltd. [NYSE:BABA] and Tencents Holding Ltd. [HKG:0700] overseas is seeing more and more American-Chinese entrepreneurs looking to come back to China.
Plug and Play, which is headquartered in Sunnyvale, California, is a subsidiary of Amidi Group Inc. that focuses on incubation and investment in science and technology. Since 2015, it has helped more than 200 startups in China. It helps overseas companies understand the latest developments in the nation’s fintech industry and find potential partners and investors, Xu said, adding that it is getting an increasing number of applicants.
Whereas US fintech firms are looking to transform traditional financial markets, many Chinese companies are starting from scratch to introduce new products and meet demands not fulfilled by traditional banks, he continued, saying improving the quality and efficiency of financial services is a unique path for the development of China’s fintech sector.
Chinese companies are also looking to break away from their reputation for imitation, with platforms like Alipay helping the industry spread overseas. The financial app by Alibaba has already expanded to offer payment tools, credit and debit cards.
“Any manner of spending can be carried out on just a phone,” said Ken Ching, managing director of PricewaterhouseCooper’s Venture Hub.
Fintech investment in the Asia Pacific region rose to USD11.2 billion last year, up from USD5.2 billion in 2015, according to data from Accenture. In 2016, USD10.2 billion of investments went to Greater China, with the top 10 fintech investments in the Asia Pacific region taking place in mainland China and Hong Kong and making up 82 percent of total investment.
Source: yicaiglobal.com
