China’s crackdown on tech firms is in the longer run benefiting consumers and the industry itself, says business analyst Shaun Rein about the governmental efforts to curtail free-wheeling companies.
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China’s Ant group went to great length in explaining its non-fungible tokens (NFT’s) are something completely different from the cryptocurrencies the government is targeting. Is it a smart way to avoid government measures? Fintech expert Winston Wenyan Ma highlights the dilemma created by Ant’s NFT, he tells Reuters.
Reuters:
“NFT is not interchangeable, nor divisible, making it different by nature from cryptocurrencies such as Bitcoin,” said a spokesperson at AntChain, the Ant unit that develops blockchain-based technology solutions.
He said that NFTs can be used to create a unique signature for digital assets.
Winston Ma, NYU Law School adjunct professor, also highlighted the confusion over the nature of NFTs.
“Are NFTs virtual currencies? Or, are NFTs certificates for virtual currencies? And more importantly, are NFTs securities? These are the questions that no major digital economy’s legislature has ever answered,” Ma said.
Winston Wenyan Ma is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
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Alibaba and Tencent were high-profile casualties as the central government stepped in to regulate free-wheeling tech firms with growing financial clout. To the relief of consumers and smaller competitors, exponential growth in the tech industry is over, tells Winston Ma, former managing director of the sovereign wealth firm China Investment Corporation (CIC) in New York to Reuters.
Reuters, quoting Winston Ma:
“The blockbuster IPO of Ant Group last November – and its suspension — was the tipping point that urged all relevant Chinese regulators to step up supervision of the major internet platforms. Now the comprehensive framework is being put in place, before the major platforms becoming “too big to regulate”.
“In short, the age of “exponential growth in the wilderness” for internet finance – and all cyber barons in various sectors — is over.”
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China’s government shocked the fintech industry by introducing firm financial measures, similar to the banking sector. Ant Financial even had to cancel its massive IPO. But what we have seen is only the start of more government action to regulate the internet, says fintech expert Sara Hsu in the Diplomat. Managing capital and data are key elements.
Sara Hsu:
The strongest voices calling for further fintech regulation demand greater data security and privacy protection within the sector. Government and non-government experts have asserted that large internet firms have become “information islands,” obtaining large amounts of information without increasing people’s access to information services. Such experts believe that shared information can improve social efficiency, particularly in extreme cases, such as the COVID-19 epidemic. Shared information can also provide public data to enhance government capabilities and improve public services.
At the same time, Chinese experts have also asserted the need for improving personal data privacy rights and safeguarding national data security. The idea is that data must be separated according to its necessary control and privacy risks. While China’s legislature has already passed a Civil Code to generally protect individual consumers’ data, there remains a great deal of concern about what type of data exits the country and how cross-border data flows can be properly managed. Some technology experts have even recommended that a national data bank be established and run by a special agency in order to properly collect, store, and transmit data.
Some government researchers have requested that other types of fintech regulation be put into place in order to better control loan funds and improve the credit investigation environment. Last month, the People’s Bank of China issued the “Measures for the Management of Credit Investigation Services (Draft for Comment),” which would prevent credit collection firms from collecting information from illegal channels or through deceptive means, collecting fees from individuals or firms, or otherwise violating the rights of the information subjects. Currently, there are credit investigation companies that have questionable credit collection, storage, and use practices. The current draft regulations follow two previous rules on credit reporting institutions and may be followed by additional rules.
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Ant Finance has been one of the more prominent victims of the current crackdown by the central government on the booming fintech industry. But small regional banks are another group getting into trouble, says financial analyst Sara Hsu in China-US Focus.
China-US Focus:
China’s small banks are under pressure as the fintech sector is experiencing increasing regulation. Regulations cracking down on deposit-taking in the sale of banks’ financial products through third-party platforms will soon result in a contraction of small banks’ loan bases. As larger banks shift from platform deposit-taking to other sources of funds, this regulation will likely compound an already-squeezed small banking sector.
China’s fintech sector is undergoing extensive scrutiny at present, from the sudden imposition of regulations on Ant Financial to the implementation of risk ratings on consumer finance companies. While small banks, which struggle to obtain deposits from their local customer base, had hoped to benefit from the fintech boom, they are facing increasing regulation. Banks overall have been found responsible for subverting financial regulations in order to grow their funding base.
On January 15, the China Banking and Insurance Regulatory Commission banned commercial banks from selling deposit products via third-party internet platforms. The regulatory body stated that China’s fintech sector has brought with it hidden risks regarding information disclosure and product management. Online third-party deposit sales have resulted in the potential for financial contagion.
Small banks in particular found that, by selling financial products through third-party platforms, they could break through geographical restrictions in order to obtain deposits from the entire country rather than from their own location. Products sold online included personal time deposits, with a focus on three and five-year maturities. Interest rates on these products were close to the upper limit of banks’ self-regulatory pricing mechanism, which is tied to the benchmark interest rate. Most products required an initial deposit of only 50 RMB and could be withdrawn at any time.
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The world never saw so much reaction of wealth as during 2020, says Rupert Hoogewerf, chief researcher of the Hurun China Rich List, despite the coronavirus crisis triggered off by COVID-19. Even seasoned rich-researcher Hoogewerf is amazed by the number of billionaires China created over the past months, he tells Devdiscourse, citing the newly released Hurun China Rich List 2020.
Devdiscourse:
Ant is expected to create more mega-rich through what is likely to be the world’s biggest IPO, as it plans to raise an estimated $35 billion through a dual listing in Shanghai and Hong Kong. The combined wealth of those on the Hurun China list – with an individual wealth cut-off of 2 billion yuan ($299.14 million) – totaled $4 trillion, more than the annual gross domestic product (GDP) of Germany, according to Rupert Hoogewerf, the Hurun Report’s chairman.
China is minting new billionaires at a record pace despite an economy bruised by the coronavirus pandemic, thanks to booming share prices and a spate of new stock listings, according to a list released on Tuesday. The Hurun China Rich List 2020 also highlights China’s accelerated shift away from traditional sectors like manufacturing and real estate, towards e-commerce, fintech and other new economy industries.
Jack Ma, founder of Alibaba, retained the top spot for the third year in a row, with his personal wealth jumping 45% to $58.8 billion partly due to the impending mega-listing of fintech giant Ant Group . Ant is expected to create more mega-rich through what is likely to be the world’s biggest IPO, as it plans to raise an estimated $35 billion through a dual listing in Shanghai and Hong Kong.
The combined wealth of those on the Hurun China list – with an individual wealth cut-off of 2 billion yuan ($299.14 million) – totaled $4 trillion, more than the annual gross domestic product (GDP) of Germany, according to Rupert Hoogewerf, the Hurun Report’s chairman. More wealth was created this year than in the previous five years combined, with China’s rich-listers adding $1.5 trillion, roughly half the size of Britain’s GDP.
Booming stock markets and a flurry of new listings have created five new dollar billionaires in China a week for the past year, Hoogewerf said in a statement. “The world has never seen this much wealth created in just one year. China’s entrepreneurs have done much better than expected. Despite Covid-19 they have risen to record levels.”
According to a separate estimate by PwC and UBS, only billionaires in the United States possessed greater combined wealth than those in mainland China. China has accelerated capital market reforms to aid a virus-hit economy, accelerate economic restructuring and fund a “tech war” with the United States.
Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
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| Shirley Ze Yu |
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| Rupert Hoogewerf |
The 10 top unicorns, businesses created in the 2000s, are worth US$542 billion, according to Hurun Research.
Hurun Research Institute has released the inaugural Hurun Global Unicorn List for 2019. All the top unicorns are not on a stock exchange and valuations are a snapshot on 30 June.
“We have found just under 500 unicorns in the world. The Hurun Global Unicorn List 2019 is designed to inspire entrepreneurship among wannabe entrepreneurs and encourage investors. These young companies, only seven years old on average, are the world’s most exciting start-ups, leading a new generation in disruptive technology,” said Hurun Report Chairman and Chief Researcher Rupert Hoogewerf, also known by his Chinese name Hú Rùn.
Hurun Research Institute found 494 unicorns in the world, based in 25 countries and 118 cities. They were created seven years ago on average, are worth US$3.4 billion on average and US$1.7 trillion in total.More at the CEO Magazine.
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| Rupert Hoogewerf in Shenzhen |
This is the first time in the history of the Hurun that blockchain technology has been embraced. As the starting point to enhance the value of the blockchain technology, blockchain projects have become the focus of this awards ceremony. Waltonchain, as the winner of the Hurun Blockchain Innovators 2018 award, was invited to attend the awards ceremony.
More than 1,000 industry leaders from all over Asia gathered at the conference. These included blockchain practitioners, experts, investors and big names such as Huawei, Ant Financial and Xiaomi. The focus was on new trends and how to construct a brand-new blockchain ecosystem with a new mindset — thinking outside of the box. Some hot topics were innovative applications, future development trends and risks of blockchain.
As the winner of the Hurun Blockchain Innovators 2018 award, Waltonchain was also invited to attend. Waltonchain CSO Welson Wong accepted the award on behalf of Waltonchain. It is a fact that, having its excellent technical strength, Waltonchain has already become a leader in the blockchain + IoT industry.
At present, the blockchain industry is rife with chaos and hype. Fortunately there are projects that are consistently recognized for their solid foundations and what they have actually accomplished in the real world. The Hurun Blockchain Companies List focuses on the essence of “chains” and helps serve the real economy and energize the blockchain ecosystem.
More at the Medium.com.As a leader in blockchain + IoT, Waltonchain aims to promote the healthy development of blockchain technology and strives to build a brand-new business ecosystem.
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| Rupert Hoogewerf |
The Hurun Research Institute released today the Hurun Greater China Unicorn Index 2017, where Ant Financial, Didi Chuxing, and Xiaomi top the chart. The report listed out 120 best unicorns in the Greater China region that are valued over $1 billion as of the end of November 2017.
“We select the companies valued over $1 billion based on the initial definition of a unicorn startup. However, for many investors nowadays, only those valued over $10 billion or over $15 billion are considered unicorns,” says Rupert Hoogewerf, chairman of Hurun Report, in a statement.
It’s worth noting that Beijing accommodates the most unicorn startups, holding up 45% of the companies on the list, followed by Shanghai, Hangzhou, and Shenzhen. Among the selected companies, 17 of them are from the internet finance industry with valuations totaling RMB 700 billion (roughly $106.5 billion).
On top of that, the list also sees a slew of startups from the internet service and e-commerce sectors, both of which account for 18% of all the listed companies. Startups from the entertainment, transportation, and health sector are active as well.
Also, among the top 10 unicorns, eight of them are valued over RMB 8 billion ($12 billion). Sequoia Capital, on the other hand, became the venture capital that invested in the most unicorns, followed by Tencent and MatrixPartners China.
On the list, Ant Financial, Didi Chuxing, and Xiaomi are named the top three unicorns with valuations respectively at RMB 400 billion ($60.84 billion), RMB 300 billion ($45.63 billion), and RMB 200 billion ($30.42 billion). The other unicorns include China Internet Plus, Toutiao, CATL, Lufax, DJI, Koubei, Cainiao, JD Finance, and Ele.me.More in Asiaventurepedia.
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| Shaun Rein |
Ant Financial and Tencent, which according to iResearch make up the lion's share of China's 22.7 trillion ($3.4 trillion) mobile payment market, have just completed a weeklong battle in which they dished out generous incentives to lure users to their payment systems.
Ant said in a statement that it will comply with the requirements of the central bank. Tencent said it will cooperate with regulators and other relevant parties to build a justified, fair and source-sharing platform for a nonbank payment network.
"Online payments generate a significant amount of data that payment firms can use to their benefit," said Shaun Rein, managing director of China Market Research Group.
More in the China Daily."The government should really step up to limit their power and ensure financial security."
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| Matthew Brennan |
The main concern is that Tencent may have ceded too large a lead in the race to Ant Financial, whose Sesame Credit has had 2.5 years to gain ground in the marketplace, particularly since Alibaba is the bigger player — with 53.7 percent of China’s mobile payments market to Tencent’s 39.5 percent.
But Tencent, whose payments services have until now been largely limited to small transactions in convenience stores and peer-to-peer lending, has spent much of the last 12 months upping the level of its game and has signed up many new retailers to its payments platform, including Starbucks.
Matthew Brennan, co-founder of tech consultancy China Channel, says the credit scoring play is the next natural move if Tencent wants to continue to bring the competition to Ant Financial and its leadership position.
“Tencent obviously wants to change that, and they need to build up infrastructure to compete with Alipay’s more mature offering,” he said. “Credit scoring is an essential part of that.”More in Pymnts.
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| Matthew Brennan |
Ant Financial and Tencent could both potentially surpass credit card companies like Visa and Mastercard in total global transactions per day in the coming year, as they offer merchants a cheaper and more accessible QR-based option that is more desirable than a more costly upgrade to payments terminals for cards.
That nearly ubiquitous presence among merchants online and off in China’s major retail sector has lead to an incredibly mobile-dominated marketplace full of some very loyal customers.
At present, according to analyst Matthew Brennan, Alipay and WeChat Pay collectively control some 67 percent of the Chinese payments market in major cities — compared to Union Pay’s 22 percent and cash’s 11 percent.
Apple Pay, which launched in China over a year ago? Less than 1 percent. And not for lack of trying or interest. Apple went into the market with an alliance with Union Pay — the nation’s only state-backed issuer of six billion cards that are accepted at major retail stores all over China. They also enlisted participation from 19 Chinese banks, including its four largest. They even managed to get three million customers to link their cards to an Apple Pay account within the first two days the service was available.
Full speed ahead? Not so much — it didn’t even make so much as a ripple in the marketplace. According to Brennan’s data, 67 percent of store clerks have no idea how the service even works — and built in, smartphone-based payments tools are an order of magnitude less popular among Chinese consumers than app-based systems that use the more understandable and accessible QR codes.More at Pymnts.
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| Ben Cavender |
According to a Reuters source, Ant is looking to raise up to $3 billion in debt to fund acquisitions in foreign markets.
“Ant’s ultimate goal is to become a global payments monster – the biggest, broadest option for consumers,” said Shanghai-based Ben Cavender, speaking to Reuters from China Market Research. “The challenge is facing strong local players around the world, so it’s cheaper to buy into these companies rather than burning money to steal market share from them.”
In its latest funding round, Ant is valued at $60 billion and is expected to announce an initial public offering this year. As things stand, Alipay is supported at nearly 100,000 retail stores across 70 overseas markets, outside China, in countries including France and Germany.More in Cryptocoinnews.
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| Jeffrey Towson |
The Ant Financial mascot is--an ant. The company hopes to expand in the U.S.
If Ant Financial’s offer is accepted, the deal must still gain the approval of the Committee for Foreign Investment in the United States, known as CFIUS. Some experts believe this would be the first test for a Chinese financial company seeking to do business in the U.S.
Jeffrey Towson is a professor of investments at Peking University’s Guanghua School of Management.
He told VOA that “getting approval from CFIUS might be more difficult this year. Plus, Chinese acquisitions are more on the media radar than before. And finally, there is also a competing bidder, Euronet, and they will probably push for a regulatory denial based on security concerns.”More at the Voice of America.
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| Ben Cavender |
Ant is currently looking to raise as much as $3 billion in debt to fund acquisitions and further foreign investments, a person with direct knowledge of the matter told Reuters earlier this month.
"Ant's ultimate goal is to become a global payments monster - the biggest, broadest option for consumers," said Ben Cavender, Shanghai-based principle for China Market Research.
"The challenge is facing strong local players around the world, so it's cheaper to buy into these companies rather than burning money to steal market share from them."
Kakao, best known for its online messaging platform Kakao Talk, has in total over 48 million users. Its Kakao Pay unit is a financial services platform which offers services such as bill payment and remittance.More at Reuters.
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| Rupert Hoogewerf |
Among the 72 billionaires from the Zhejiang region are Neil Shen, a venture capitalist and founder of Sequoia Capital China in Beijing; Ding Lei, founder of NetEase, also in Beijing; Frank Wang, founder and CEO of drone-maker DJI, based in Shenzhen; and Li Khufu, founder of Geely Auto Group, which owns Volvo and is based in Hangzhou.
"Zhejiang province people are head and shoulders above other entrepreneurs in China," Hurun Report chairman Rupert Hoogewerf told CNNMoney. "They're highly collaborative and versatile."
Even though people from Zhejiang make up about 5% of China's population, the region produces about 15% of the country's richest people, according to Hoogewerf. He also believes that Zhejiang will continue to produce more millionaires and billionaires, mainly because of (Jack) Ma.
"Ma has worked with so many partners in China," Hoogewerf said, noting the billionaire's wide-ranging investments. Over the past six years, Alibaba has spent about $30 billion to $40 billion on over 100 investments and acquisitions.
And Ant Financial, which was formerly called Alipay and spun off from Alibaba, will eventually have an IPO, likely making yet another billionaire in CEO Lucy Lei Peng, who Hurun estimates to be worth about $940 million.
"Alibaba and Ant Financial have already created more people on our rich list than any other company in China," said Hoogewerf. "They're a great example of what cooperation can yield."More in CNN Money.
