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Business / Technology

Web-based finance firm eyes expats

By Yu Ran (China Daily) Updated: 2015-12-17 11:12

Huaxia Finance is China's first Internet financial services provider to receive foreign direct investment, in the form of $3 million from Cathay Capital Group, the US-based investor, in December, 2015.

For the latter, the investment in Huaxia, approved by the Shanghai municipal government, was its major step into China's Internet finance sector.

Now, Huaxia Finance has received a certificate that allows it to enlarge its client base by tapping into the expat investors in China, in addition to its current domestic investor pool. "The certificate brings more discipline than immediate benefits as we have to be totally transparent in our business operations, and ready for supervision and monitoring by the government," said Benny Li, chairman and CEO of Huaxia Finance, which is headquartered in Shanghai.

To be sure, other Internet finance companies in China do have foreign investors, but their investment was not labeled as FDI. Such Internet finance companies are organized through a variable interest entity (VIE) structure, which could encounter regulatory and taxation hindrances in a potential offshore IPO.

The FDI obtained by Huaxia Finance ensures its stability and sustainability, the company said. "But it also allows us to convince more clients in a long term perspective, as our company is allowed by the government to offer loans."

Launched in June, Huaxia Finance started operations in August. It has extended loans of 400 million yuan ($62 million) to 6,000 clients over 40 cities in China, including individual consumers, via its tie-ups with travel agencies, e-commerce sites, micro enterprises and small businesses.

"I am confident that more expats will become our clients and incorporate our financial products as an alternative investment in China," said Li.

The recent push to Internet finance in China, he said, marks the start of a revolutionary era in which all market participants can borrow and lend directly on the Internet with few information barriers.

The Internet finance segment is closely associated with the development of big data, which incorporates all sorts of information on a platform accessed by many people.

In Shanghai, in particular, Internet finance has become one of the major attractions in the financial sector, which could transform the city into a sci-tech innovation hub.

"We received tax incentives from the district government. The attendant official recognition helps us to work with potential clients and business partners," said Li.

Huaxia Finance is working on a plan to gradually offer more loans to a larger group of people. It is targeting 5 billion yuan in loans in 2016.

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