In Hong Kong, have enterprises going global found a new "source of wealth"? | Pay-to-Win · Going Global
作者 | Author | Wang Hanyu
编辑 | Editor | Huang Yida
In the trend of going global, it seems that a new solution is emerging for the problems of difficult and expensive financing for small and medium-sized enterprises.
In August this year, AntChain and Longshine Group collaborated to issue a cross-border RWA (Real World Asset Tokenization), proving the feasibility of issuing and financing real-world assets in digital form on the blockchain.
At the Hong Kong FinTech Week held not long ago, the heated discussions among the participants on topics such as Web3 and RWA have highlighted the possibility that this new financing approach will be widely used by enterprises going global in the future.
Industry insiders believe that RWA is the cornerstone of the integration of Web3 and the real economy. Through the open attitude and innovative practices of the Hong Kong regulatory authorities towards RWA in recent years, it can be predicted that a number of mainland enterprises striving to go global are expected to be the first to open a new financing channel in Hong Kong.
01 Hong Kong: The First Stop for Enterprises to Go Global
Currently, Southeast Asia, South America, the Middle East, Africa and other regions are all popular choices for domestic enterprises to go global. As a transition and intermediate station for domestic enterprises to step out of the local market, Hong Kong has its unique practical conditions.
First of all, Hong Kong shares the same language and culture with the mainland, while also being in line with the international market, which helps mainland enterprises better understand and adapt to international business rules, thereby promoting the development of overseas businesses.
Secondly, Hong Kong's positioning as an international financial center and trade center makes it mature in terms of business regulations, international trade and other aspects, and has always been the preferred choice for domestic and foreign enterprises to set up and manage offshore trade and regional headquarters.
Although Singapore and Hong Kong have similar positioning, and Malaysia also has a similar language and cultural background to the Chinese mainland, in terms of geographical location and financial volume, Hong Kong is still more suitable for mainland enterprises to "pave the way".
In terms of location, Hong Kong is closer to the mainland and has a number of interconnection policies. For example, in April this year, the China Securities Regulatory Commission issued five capital market cooperation measures with Hong Kong, including expanding the eligible scope of the Shanghai-Shenzhen-Hong Kong Stock Connect ETFs, including REITs in the Shanghai-Shenzhen-Hong Kong Stock Connect, and supporting mainland enterprises to go public in Hong Kong.
Moreover, Hong Kong's talent policy towards the mainland is more flexible. For example, mainland residents who obtain Hong Kong resident status through the Hong Kong Quality Migrant Admission Scheme, the Top Talent Pass Scheme, etc., will not affect their social security contributions in the mainland, and those who meet the conditions can apply to settle back in the mainland. Data shows that in 2023, Hong Kong received about 200,000 settlement applications, more than 120,000 of which were approved, and about 70,000 people have arrived in Hong Kong.
In terms of financial volume, Hong Kong's geographical advantages are more intuitive compared to Singapore and Malaysia.
Take the stock market as an example. Wind data shows that as of the end of September this year, the total market value of the Singapore Exchange is about 665.95 billion US dollars; the total market value of the Kuala Lumpur Stock Exchange in Malaysia is about 2.04 trillion ringgit, equivalent to about 463.84 billion US dollars; in contrast, the total market value of the Hong Kong Stock Exchange in the same period is about 36.88 trillion Hong Kong dollars, equivalent to about 4742.01 billion US dollars.
The scale of the Hong Kong stock market benefits from its backing by the Chinese mainland. Wind data shows that there are currently 1,224 Chinese-funded stocks in the Hong Kong stock market, accounting for more than 46% of all listed companies in the Hong Kong stock market.
Although the number of mainland enterprises going to Hong Kong for IPOs has declined for some time before, the trend has improved after the release of a number of interconnection policies. The report of CVSource Research Institute shows that in the third quarter of this year, a total of 13 mainland enterprises went public in Hong Kong, raising a total of 32.7 billion yuan, an increase of 4.45 times year-on-year and 3.36 times quarter-on-quarter.
This shows that Hong Kong is still the preferred international investment and financing platform for mainland Chinese enterprises.
At the same time, in the "Chief Executive's 2024 Policy Address", Hong Kong Special Administrative Region Chief Executive Lee Ka Chiu once mentioned that as of July this year, the Hong Kong SAR Government has negotiated with more than 100 potential and representative key innovation and technology enterprises to settle or expand their businesses in Hong Kong, bringing a total investment of more than 52 billion Hong Kong dollars to Hong Kong and creating more than 15,200 job opportunities.
Mainland enterprises are flocking to Hong Kong. In this process, as a part of the foundation, financial technology enterprises are also playing the role of an "accelerator".
For example, at this Hong Kong FinTech Week, AntChain has announced that it will invest 1 billion yuan in the next three years to promote the joint innovation of digital technologies in the Guangdong-Hong Kong-Macao Greater Bay Area and help local customers and ecological partners accelerate digital transformation. In the exhibition area of the event, speeches by enterprises such as AntChain, Du Xiaoman, and Tencent, or exhibition booths of financial technology businesses are also commonly seen.
This may indicate that in the trend of going global, financial technology enterprises are forming an impetus, using their technical capabilities honed in the mainland market to promote the digital transformation of enterprises and improve the efficiency of going global.
In addition, at this FinTech Week, more than half of the thematic activities involve Web3 and RWA. This phenomenon also indicates that RWA is expected to become a new channel for cross-border financing of enterprises.
02 Web 3: A New Turning Point for Cross-Border Financing
During the FinTech Week, one of the major corporate developments was AntChain's first public announcement of the "Two Chains and One Bridge" platform. Behind this development is the new pain points revealed by most enterprises in the process of going global in the face of new situations such as the explosion of big data.
Looking back at the journey of to B enterprises going global, it can be roughly divided into three stages.
In the early 2000s, communication technology companies such as Huawei and ZTE leveraged their influence in the ICT field to export communication equipment to overseas markets and participate in the construction of telecommunication infrastructure in multiple countries, laying the foundation for the local digital development.
Subsequently, traditional enterprises began their digital transformation, committed to improving IT efficiency through technical means such as cloud computing. Since 2015, cloud computing vendors such as Alibaba Cloud and Tencent Cloud have begun to follow the footsteps of these enterprises in their globalization process and seize the opportunity to open up their overseas markets.
Nowadays, with the explosion of big data, the synergy between the upstream and downstream of the industrial chain is becoming increasingly close, and improving the efficiency of digital collaboration has become a key demand; when data becomes the core asset, establishing an efficient, transparent and secure transaction process has become a new proposition.
It is also at this stage that new Web 3 technologies such as blockchain are just ushering in a development dividend.
Take the overseas financing of going-global enterprises as an example. Traditional financing methods mostly rely on the credit of the enterprise itself, and very few enterprises can obtain financial support from local banks and other institutions. With the help of blockchain, RWA can split real-world assets into multiple "on-chain" digital assets, facilitating investors to evaluate asset credit and enabling enterprises to achieve off-site financing. With the interoperability of the global blockchain network, it brings more liquidity to real-world assets.
For example, the cross-border RWA jointly issued by AntChain and Longshine Group is to use the real-world asset "charging pile" operated by Longshine in the mainland as the RWA anchor asset, and completed a financing of about 100 million yuan in Hong Kong through the "Two Chains and One Bridge" platform.
The "Two Chains and One Bridge" specifically refer to the "Asset Chain", the "Transaction Chain" and the "AntChain Trusted Cross-Chain Bridge".
36Kr learned from Zhang Chenguang, the head of AntChain's Web3 business product, that the application of the "Asset Chain" in the mainland enables the physical assets of enterprises to be digitized and standardized, thereby transforming them into tradable financial products. The "Transaction Chain" focuses on tokenizing funds, especially funds from traditional financial institutions, and realizing the efficient circulation and transaction of funds through blockchain technology.
With real-world assets "on the chain", blockchain technology provides a guarantee for the security, transparency, and immutability of assets, as well as improving liquidity. At the same time, as a financial innovation, this may also open up new ideas for enterprises, especially for improving financing efficiency and reducing financing costs overseas.
03 Localization: Challenges of Financial Innovation
When financial technology enterprises that propose such innovations are helping going-global enterprises solve problems such as financing through technologies such as blockchain, they also have their own challenges.
For example, for the currently popular RWA, according to AntChain, the 100 million yuan financing it completed in collaboration with Longshine Group is the first RWA based on new energy real-world assets in China. This means that the relevant exploration is still in the early stage, and with further development, new problems may emerge.
The industry's primary concern is the issue of compliance.
Although Hong Kong has a positive attitude towards virtual asset transactions and has introduced relevant rules to guide them, such as the Hong Kong Securities and Futures Commission officially implementing the new regulatory requirements for virtual asset trading platforms in June last year, and the Hong Kong Monetary Authority launching a sandbox program called "Ensemble" in August this year, aiming to use experimental tokenized currencies to promote interbank settlement.
However, looking at the global market, the regulatory rules for RWA in most regions are still unclear, and whether it is compliant is also not clear, which adds uncertainty to whether domestic enterprises can replicate this financing method in overseas markets in the future. On the other hand, the early exploration of domestic enterprises in this direction may also become their advantage in participating in the formulation of relevant industry standards.
In addition, beyond the perspective of RWA, when domestic enterprises are moving towards Hong Kong, and even from Hong Kong to a more dispersed international market, many infrastructure facilities required for local adaptation are still under construction. Especially for technology enterprises developing financial-grade applications, the situation they face is more complex.
When asked about the difficulties in entering a broader international market, Sun Lei, Vice President of AntChain and General Manager of the Business Development Department in China, particularly mentioned three points. The first is how to achieve local adaptation in basic matters, such as making the official website display and technical explanations more in line with the language habits and thinking patterns of the local society; the second is how to make a local display of the product form, such as adjusting the presentation of the product according to the characteristics of the local market and adjusting the product computing power in response to changes in the local market.
And more difficult than the previous two is how to re-establish a partner system in the local area. Entering a new market, partners such as software developers, distributors, and consulting agencies need to be sorted out from the beginning. For this reason, domestic enterprises also need to explore and formulate a win-win company policy to promote long-term cooperation with partners.
"Only when these (partner systems) are truly established can our market be fully opened. Only when these three challenges are well addressed can we replicate in one region after another." Sun Lei said.
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