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How International Companies can Accelerate their Success in the Chinese Market with LianLian Global

Recent changes in the Chinese regulatory scene highlight the need for international companies to find the right partner to help them tap into the Chinese market. An established cross-border payments service provider can guide entrants to comply with the fast-changing pace of Chinese regulations and reduce potential risks associated with expanding into a new market. With the necessary licenses and know-how, the right partner can help companies take advantage of China’s e-commerce boom and accelerate their success.

David Messenger, CEO of cross-border payments company LianLian Global, explains how by making the right choices, international companies can accelerate their success in the Chinese market.

Companies active in China find themselves in a complex regulatory situation. As Chinese regulators rapidly develop and enforce regulations, it is a challenge to keep up with the pace. However, the e-commerce market continues to present an amazing opportunity that requires important decisions with far-reaching implications.

The e-commerce growth is driven by a combination of China’s fast-growing middle-class, the extraordinary supply chain of goods emanating from China, and the large volume of e-commerce sellers providing goods to consumers all over the world. As a result, the volume of cross-border e-commerce sales in China will reach approximately 6 trillion yuan (US$ 920 million) in 2021, according to market research firm iResearch. That number has doubled over the previous five years. 

This great opportunity also comes at a time where the Chinese government is reforming regulation right across the economy. Sectors such as private tutoring (significantly restricting after-school tutoring) and real estate (to ensure housing prices are stable and avoid excessive speculation) have also been targeted with more stringent rules. New regulations regarding anti-competitive behaviour, data privacy and data security have particularly hit high-profile tech giants such as Ant Group and ride-hailing app Didi. 

These regulations reflect a wider shift in Chinese regulatory reform to promote sustainable economic growth while championing consumers and workers. Speaking at a conference organised by the Bank for International Settlements, Yi Gang, China’s central bank governor, recently said that China would: “continue to co-operate with anti-monopoly authorities to curb monopolies and actively deal with new forms of anti-competition behaviour.”

Why it is important to find a good partner

This situation presents challenges to foreign companies that they can address with the right cross-border payments partner. An established company with local expertise can help entrants navigate the complexities of an ever-changing regulatory climate. There are a lot of checks to complete, and yet some payments companies do not even have a Chinese cross-border payments license or the necessary know-how.

All of which makes it absolutely essential to work with a partner that is reliable and understands how this fast-changing situation is likely to evolve. This is true of even the most tech-savvy companies. For example, Airbnb partnered with us when they realised that they needed a sophisticated partner to help them comply with quickly-changing, local Chinese regulations.  That is because a cross-border payments business that straddles the border is uniquely positioned to help its customers to move funds into and out of the country.

What makes a good partner

A good partner will be able to help businesses substantially reduce risk on the compliance side. For example, KYC checks present a major challenge for foreign investors and businesses trying to operate in China. This is because: 

  • There are stringent regulations required by the Chinese financial system that affect external transactions and money movement
  • There is a limited volume of accessible information on Chinese businesses
  • A dynamic, high-profile and emerging regulatory vision for data security and data privacy within China

A well-established fintech company that has a deep understanding of the local regulatory environment is the best way to overcome the barriers and ensure growth. It is particularly important to look out for the following attributes when choosing a partner:

  • A global company but with local (in this case Chinese) staff and knowledge
  • A partner that is fully compliant with complicated Chinese regulations
  • A partner that “owns all the rails” and can provide end-to-end control of the process to reduce risk and costs
  • A partner that is a well-established, trusted corporation with a proven reputation to maintain and protect
  • A partner that has a robust local KYC process and knows how to find the right customers or suppliers

Most importantly, the right fintech partner is one that understands where the Chinese market is today and where it is going. With the benefit of expertise offered by such a reliable partner, international companies can really capitalise on the opportunities presented by cross-border e-commerce with China.

The competitive nature of the industry has already led cutting-edge payments companies to expand what they offer beyond their core product, and so become even more useful to their customers. This support could come in the form of multicurrency accounts, logistics, marketing tools (to grow the customer base), or perhaps working capital finance. With this sort of extended support, international companies can continue to grow and successfully tap the Chinese market.

Author

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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