Going global efforts of new economy firms gain traction

Global expansion is becoming increasingly popular with Chinese new economy companies whose innovations are competitive and popular both inside and outside China, according to bankers at US-based Citigroup Inc or Citi.

The technology, media and telecom business has been the fastest growing business in Citi's China franchise in recent years. Its TMT business has grown by double digits every year since the bank set up a team specializing in the TMT sector at the end of 2016, said Jianxun Toh, head of technology, media and telecom of Citi China Corporate Banking.

Gerald Keefe, head of Citi Asia-Pacific Corporate Banking, said, "We see the innovations that the Chinese new economy players have created and probably perfected here in China as very attractive to the rest of the world, and that attraction is promoting their expansion."

Keefe further explained that the innovations which have made commerce more accessible to people, and which have promoted financial inclusion by enabling people who did not have access to banking to make and receive payments, are easily identifiable examples of innovations from the Chinese new economy that are spreading globally.

"Our role in this is to support these Chinese new economy champions as they expand globally by making our global network available to them, which provides rails for their systems to run on," he said.

Being physically present in almost 100 countries and regions, Citi provides financial services in more than 160 markets. The bank maintains 13 China Desks around the world, out of a total of 32 Asia Desks it has globally, to support its global clients as they go out and invest, and develop their business worldwide.

Within each country, Citi has banking teams that cover financial institutions, the public sector, subsidiaries of multinational corporations, and locally headquartered corporates. Within each of those teams, it has groups specializing in certain industries, namely TMT, energy, power and construction, consumer and healthcare, and diversified industrials.

"The desks where we send people out overseas are typically staffed by mainland residents whom we hire and train here (in China) and then give them an opportunity to go out into the Citi network and be global bankers," Keefe said.

"Our Chinese clients have a very high standard for turnaround time and a very high expectation of how hard their bankers are going to work. So we send bankers out to meet those expectations in local language because it makes the whole interaction of the Citi network with those clients more effective," he said.

Bob Zhang, Citi's China Desk head in Europe, said, "New economy companies make decisions quickly and require banks to respond much faster than they do to companies in traditional sectors… This has raised new challenges for us in terms of product innovation and customer responsiveness, forcing us to optimize our internal procedures and make decisions more quickly."

It is worth noting that in recent years, the types of Chinese TMT companies that are going global are evolving from hardware manufacturers and large technology companies to technology platforms in a horizontal market, as well as small－and medium-sized payment service providers. Citi provides TMT companies with wide-ranging financial services including on-the-ground support as they enter new markets, cash management, supply chain financing, and strategic advice on industry developments, Toh said.

The number of fintech companies, especially third-party payment processors, that enter the European market, keep rising because Europe has higher standards for personal privacy protection and information safety than any other continent. Many companies believe that once they successfully enter the European market, it will be easier for them to enter other markets. Emerging fintech companies are using Citi's platform to help merchant clients expand their business overseas, collect cross-border payments, and send the money back to their bank accounts in China as quickly as possible, and settle a payment in renminbi at the best exchange rate, Zhang said.