The Rise of Chinese Finance

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The Rise of Chinese Finance The Game of Dian Fu 颠覆 by Prof David LEE Kuo Chuen Sim Kee Boon Institute for Financial Economics Book Launch “Digital Currency” 17 Aug 2015, Ngee Ann Auditorium Guest of Honour: Mr Liew Heng San

The Rise of Chinese Finance The Game of Dian Fu 颠覆

Yu’E Bao

ZhaoCai Bao

Mayi Dake

David Lee: The Game of Dian Fu

YuLe Bao

http://www.riccimac.org/doc/JesuitsJourneys.pdf

Let us start with HanYu PinYin ▪ Romanization of Chinese: Between 1583-1588, Jesuit scholar in mathematics and astronomy Matteo Ricci, fellow Jesuit Michele Ruggieri, and Brother Sebastiano Fernandez compiled the first bilingual “Portuguese-Chinese” Dictionary in Zhaoqing~肇庆. ▪ The official phonetic system for transcribing the Mandarin pronunciations of Chinese characters into the Latin alphabet in China and Singapore.

▪ The Hanyu Pinyin system was developed in the 1950s based on earlier forms of romanization. It was published by the Chinese government in 1958 and revised several times. ▪ The International Organization for Standardization (ISO) adopted pinyin as an international standard in 1982. ▪ Singapore also adopted Hanyu Pinyin in the 80’s. ▪ The system was adopted as the official standard in Taiwan in 2009, where it is used for romanization alone rather than for educational and computer input purposes.

The Chinese word TianZhu ~天主 for God first appeared in Ruggieri’s Chinese translation of the Ten Commandments and later Catechism with Ricci on the left. A page from the manuscript Portuguese-Chinese dictionary葡汉辞典 created by Ruggieri, Ricci, and a Chinese lay Jesuit brother (between 1583-88)

Ancient writing

What is Dian Fu

David Lee: The Game of Dian Fu

http://www.vividict.com/ Falling with the head down

To turn it upside down

颠覆

颠覆 David Lee: The Game of Dian Fu

Dian Fu Disrupt; overturn; subvert; overthrow

Crocodile in the Yantze River: The Alibaba Story http://www.crocodileintheyangtze.com/buynow.html 50mins:52mins

From Start-up to the World’s Largest IPO Ever That Raised USD25b. David Lee: The Game of Dian Fu

Dian Fu No 1 Xin San Ban~新三板

New Third Board or

NEEQ

颠覆

The Rise of China GDP: Only Half Way There!

China accounted for 33% of world GDP and there is still more room to go with 5% pa more growth than other developed countries!

Source: Angus Maddison, University of Groningen, OECD, data post 1980 based on IMF data (GDP adjusted for purchasing power parity). Other countries account for ~35% of global GDP

The Rise of the China Stock Market: It has grown 10x to RMB 37.4t from 2002! China Stock Value 2012-2015 3000

70

2613 companies in 2014 with a market cap of RMB37.24t or USD5.8t! 60

2500

50

2000 43.58 40

37.26

1500 30

30

28.57

1000 20.33

19.41

22.18

23.91 20

16.76 500

10 4.6

0 1992

2.65 1.85 1.65 0.91 0.35 0.33 0.32 1993 1994 1995 1996 1997 1998 1999 2000

4.2

5.45

3.7

5.11

6.25 0

2001

2002

2003

Number of Listed Companies

2004

2005

2006

2007

2008

Market Cap (RMB Trillion)

Source: The Real Value of China’s Stock Market by Fangzhou Lu, SSE and SZSE

2009

2010

2011

2012

2013

2014

2015E

Market Capitalisation of the World's Top Stock Exchanges (As at end Jun 2015) Market Cap($billions) 0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

NYSE

19,237.43

Nasdaq OMX

7,243.28

SSE

5,694.38

JPX

4,944.15

LSE

4,363.85

SZSE

3,751.45

NYSE Euronext(EU)

FWB

Sources: WFE and Bloomberg

BSE

In 2015, it has increased more than 65% to USD9.6t excluding HK!

3,907.21

SEHK

TMX

20,000

3,414.83 2,046.03 1,752.56 1,599.68

But till a long way to catch up with NYSE and NASDAQ!

What is NEEQ or Sin San Ban ~新三版 Sin San Ban ~新三版 National Equities Exchange and Quotations!

Main Board Large blue chip enterprises (1200+) SME Board (400+)

Medium size companies with steady growth

Second Board (700+)

NEEQ (2811, estimate to be 4000+, by the end of the year)

Technology companies with rapid growth Innovative startup firms

SSE、SZSE

SZSE SZSE OTC

Other SMEs Regional Equity Market David Lee: The Game of Dian Fu

OTC

The Dianfu颠覆 of the China Stock Market - NEEQ NEEQ has become a nation-wide stock exchange (NEEQ: National Equities Exchange and Quotations) Main board

Profitability Requirements for firms

Second Board Positive earning for the past 2 years and total earning no less Positive earnings for the past 3 than 15 million RMB; or 50 million years and total earnings no less RMB's earning in the most recent than 30 million RMB year and sales grow at no less than 30% per year

NEEQ

Continuous earning

Cash Flows

Accumulated cash flow exceeds 50 million RMB; or accumulated sales exceed 300 million RMB

NA

NA

Net Assets

Intangible asset of the most recent year can not be exceed 10% of the net assets

Net asset of the most recent year exceeds 20 million RMB

NA

Total Capital Stock

Total capital stock exceeds 50 million RMB

Total capital stock exceeds 30 million RMB

NA

NEEQ Stocks Are for Accredited Investors with >RMB5mil Trading rules

Main board Auction trading, block trading and after-hour fixed price trading

Second Board Trade Auction trading, block trading and afterMode hour fixed price trading The Exchange imposes the daily price The Exchange imposes the daily price limit on limit on trading of stocks and mutual Price trading of stocks and mutual funds, with a funds, with a daily price up/down limit of up/down daily price up/down limit of 10% for stocks 10% for stocks and mutual funds and a limit and mutual funds and a daily price up/down daily price up/down limit of 5% for stocks limit of 5% for stocks under special treatment under special treatment

Investors

Purchases of stocks, mutual funds or Purchases of stocks, mutual funds or Purchase warrants in auction trading shall be in a round warrants in auction trading shall be in a limit lot of 100 shares (units) or the multiple round lot of 100 shares (units) or the thereof multiple thereof limits on institutional account

NA

NA

NEEQ Auction trading,

No price up/down limit

Purchases of stocks, mutual funds or warrants in auction trading shall be in a round lot of 1000 shares (units) or the multiple thereof

Total capital exceeds 5 million RMB

Individuals with no less than 2 years limits on of industrial experiences( trading, personal NA NA finance, accounting and etc.); or account individual traders with assets no Source: http://mp.weixin.qq.com/s?__biz=MzA4NTgyOTgzNA==&mid=208155994&idx=1&sn=af9a97f233d68adc1190bce135936ab3&scene=5#rd less than 5 million RMB

Exponential Growth Over the Last Two Years Numbers of Listed firms on NEEQ, 2006 - 2015 3,000

2,811

2,500

2,000 1,572 1,500

1,000

500

0

356 6

17

32

52

69

96

2006

2007

2008

2009

2010

2011

200

2012

2013

2014

2015Jul

Source: http://mp.weixin.qq.com/s?__biz=MjM5NjUxNDgzMw==&mid=205267509&idx=2&sn=d6efe71bc0a0c0b33ea8eb258355ded3&scene=5#rd

The Crash But Still in Positive Territory YTD Market Value of NEEQ, 2015,1 – 2015,7 The crash in Chinese stock market has spillover effects to the rest of the world.

SSE (32.2% )

NEEQ (58.3%)

SME Board (69.1%)

Second Board (94.2%) David Lee: The Game of Dian Fu

There is A Rush to Privatise Chinese Companies Listed on NASQAQ For “A” Share Listing More than a hundred NASDAQ companies are in the process of delisting for listing in A share market!

Source: http://mp.weixin.qq.com/s?__biz=MjM5OTkzODQ0Mg==&mid=207435837&idx=5&sn=bfeddf34dc5149d1984c9f8daa0dd0aa&scene=5#rd David Lee: The Game of Dian Fu

These are Mostly TMT Companies

Source: http://mp.weixin.qq.com/s?__biz=MjM5OTkzODQ0Mg==&mid=207435837&idx=5&sn=bfeddf34dc5149d1984c9f8daa0dd0aa&scene=5#rd David Lee: The Game of Dian Fu

Privatisation + Listing = Unwinding VIE Structure

David Lee: The Game of Dian Fu

Dian Fu No 2 VIE

颠覆

Variable Interest Entity (VIE) Structure:

SPV = Special Purpose Vehicle

WFOE = Wholly Foreign Owned Enterprise David Lee: The Game of Dian Fu

A Clever Financial Engineering For Baidu, Alibaba, Tencent and Sina (BATs) Company

Listed Location

Listed Date

Sina

America

2000/4/13

Tencent

Hong Kong

2004/6/16

Baidu

America

2005/8/5

Alibaba

America

2014/9/19

VIE was how the BATs flew out of China! • The VIE structure is also commonly referred to as the Sina-model structure, since it was first used by Sina in 2000 David Lee: The Game of Dian Fu

BATs Can Now Return to China As They Are ▪ Circumvent regulation of China Securities Regulatory Commission for company listing and shorten the IPO process in foreign countries.

▪ VIE structure plays an important role in allowing foreign shareholders participation in some Chinese industries in China, e.g., Internet industry. ▪ The most recent announcement is that VIE structure can be listed in China! David Lee: The Game of Dian Fu

Dian Fu No 3 Zou Chu Qu~走出去 Chu Hai~出海

Out to the Sea In Preparation of Investment Abroad

颠覆

In the Beginning From Our Eyes Zou Chu Qu~走出去 ▪ Cosco ▪ First company to embark on a backdoor listing with foreign assets (ships) in Singapore in 1993

▪ China Everbright ▪ Second company

▪ China Travel International Investment Hong Kong Ltd ▪ Listed in HK in 1992 with 10-15 back door listings

▪ Tsingtao Brewery H shares ▪ HKSE July 1993 first batch of 9 approved companies ▪ Late 1994, another 22 companies were approved David Lee: The Game of Dian Fu

Listed Companies Are Investing Offshore: Chu Hai~出海 ▪ Third week of Aug 2015 alone, 10 listed companies announced M&As of companies based outside China ▪ 2015Q2 overseas M&A activities increased by 60% to USD32.55b, 128 deals, mainly in TMT, Real estate and Finance ▪ 顺荣三七(002555.SZ): Acquired 81.25% of Japanese games company SNK for USD63.5mil ▪ 苏宁环球(000718.SZ): Acquired 20.17% of Korea’s REDROVER for RMB242m ▪ 紫金矿业(601899.SH: Acquired 100% of Australia’s Phoenix Gold Limited for RMB200m ▪ 德奥通航(002260.SZ), 富邦股份(300387.SZ), 江河创建、巴安水务、 歌尔声学、赣锋锂业 http://mp.weixin.qq.com/s?__biz=MzA5OTI0NDgyMg%3D%3D&mid=216468795&idx=2&sn=d7981023e9ee53ca269f02be9f226d60&scene=2&from =timeline&isappinstalled=0#rd David Lee: The Game of Dian Fu

Dian Fu No 4

Rise of the China VC/PE (Private Equity)

颠覆

Rise of the China PE Capital Stock of PE Investable Amount in China, 2008-2015H1 160,000 140,000

147,206 161.50%

160.00%

137,264 127,892

120,000

112,340

140.00%

117,868

120.00%

101,080

100,000 84,242

180.00%

100.00%

83,840

80,000

80.00% 60.00%

60,000

40.00%

40,000

20.60%

20,000

11.10%

-0.50%

20.00% 4.90%

8.50%

7.30%

7.20%

-

0.00% -20.00%

2008

2009

2010

2011

2012

Investable Amount (US$ M) Source: Qingke Data

David Lee: The Game of Dian Fu

2013

2014

Increase Rate ofRate Increase

2015H1

Investable Amount has crossed USD147bil half year 2015 with 7.2% growth!

Rise of the China PE – Internet Tops the List! TOPTOP 5 HOTTEST INDUSTRIES 5 HOTTESTINVESTED INVESTED INDUSTRIES OF OF PE, PE, 2015H1 2015H1 Biotechnology, 1,489 , 9% Others, 4,934, 30%

IT, 1,828 , 11%

Radio, television and digital media, 2,362 , 14%

Internet, 2,921 , 18% David Lee: The Game of Dian Fu

Finance, 2873.35, 18%

RANKING OF THE PE INVESTED INDUSTRIES, 2015H1

NEEQ Is the Catalyst for VC/PE ▪ Currently, there are more than 2811 enterprises listed in the NEEQ, which includes not only high-tech enterprises, but also investment agencies such as Jiu Ding Investment ( 九 鼎 投 资 ) and Silicon Valley Paradise (硅谷天堂). ▪ NEEQ is set up to support the government objectives of capital market development and reform, to support innovation, to upgrade the industry and to encourage corporate restructuring.

▪ New NEEQ funds were set up. NEEQ is a new source of funding for star-ups, an alternate source for new investment, and an exit route for PE/VE. David Lee: The Game of Dian Fu

NEEQ Fund Information, 20122015H1 16000

14862 640

14000

700

600

12000

500

10000

400 8000 300 6000 200

4000

2642

2000 0

446 9

378 13

2012

2013

NEEQ Fund Size

100

73

0 2014

2015H1

NEEQ Fund numbers

Top 10 PE Firms in China Ranking

English name

1

CDH investment fund management company

2

Hillhouse Capital Management

3

Tiger Global Management

4

Tencent Collaboration Fund

5

Shanghai Yunfeng investment management co., LTD

6

Fosun International

7

Citic industrial investment fund management co., LTD

8

Kunwu Jiuding investment management co., LTD

9

Boyu Capital Advisory

10

DST David Lee: The Game of Dian Fu

Source: http://pe.pedaily.cn/201412/20141204374638.shtml

Top 10 VC Firms in China Ranking

English name

1

IDG Capital

2

Sequoia Capital China

3

Shenzhen Innovation Investment Group co., LTD

4

Jiangsu Venture Capital Co.,LTD

5

Delta Capital Markets Ltd.

6

Dachen Venture Investment Co., LTD

7

SAIF Partners

8

Qiming Venture Partners (Shanghai)

9

Cowin Capital

10

GSR Ventures David Lee: The Game of Dian Fu

Source: http://pe.pedaily.cn/201412/20141204374638.shtml

Dian Fu: PE/VC for SOEs’ Restructuring - Guo Qi~国企 From self governing, separation ownership from shareholding, shareholding restructuring experiment, restructuring of shareholding and strategy, to deepening the restructuring of SOEs In a mid July Report, S&P estimated USD14.2t Chinese Corporate Debt at end 2013. On 17th July, Economist estimated that the number is possibly 25% less. Deducting Local Government Financial Vehicles (LGFVs), the number is closer to USD11.4t. Source: http://mp.weixin.qq.com/s?__biz=MzI1MTAxNDE0Ng%3D%3D&mid=211919834&idx=1&sn=87b8dfd794da30c48a6f24e58eb53448&scene=2&from=timeline&isa ppinstalled=0#rd

M&A of SOEs M&A amounted to USD35b

There were 481 cases in 2014

SCB estimates that China’s overall debt has increased from 150% of GDP in 2008 to 245% of GDP at USD22.8t. Source: http://mp.weixin.qq.com/s?__biz=MzI1MTAxNDE0Ng%3D%3D&mid=211919834&idx=1&sn=87b8dfd794da30c48a6f24e58eb53448&scene=2&from=timeline&isa ppinstalled=0#rd

SOEs’ Output is 2/5 of GDP and 1/5 Employment VC/PE Investment amounted to USD8.9b

62 cases in 2014 Local Governments are allowed to issue market-directed debt instruments on top of state-directed debt swap to lower borrowing cost. There are more promotions of Public-PrivatePartnerships (PPPs). Source: http://mp.weixin.qq.com/s?__biz=MzI1MTAxNDE0Ng%3D%3D&mid=211919834&idx=1&sn=87b8dfd794da30c48a6f24e58eb53448&scene=2&from=timeline&isa ppinstalled=0#rd

Dian Fu No 5 Rise of the China P2P

颠覆

P2P is the Fastest Growth Sector in Finance ▪ US :P2P market is dominated by 2 large players, Lending club and Prosper, which accounts for 96% of the total market. ▪ The revenue sources of Lending Club are transaction fees(1-6%), servicing fees(1% of the repayment) and management fees( 0.7%1.25% of the assets under management)

▪ China: the growth of the P2P platforms has present an exponential pattern since PaiPaiDai~拍拍贷 was introduced in 2007. ▪ 2028 P2P platforms: 683.5 billion RMB loans with 208.7 billion RMB outstanding during the first half of 2015. ▪ The average annualized interest rate is 14.8% and average lending period is 6.74 months. ▪ Over the past 5 years, more and more platforms face solvency issues, the number of such companies is 419 in the first half of 2015, 7.5 times as that of the same period of 2014. David Lee: The Game of Dian Fu

Comparison of P2P in China, UK and US Size of P2P in China, US and UK $60,000.00 $54,417.19 $50,000.00 $40,000.00

$38,621.88 $31,446.88

$30,000.00

$20,000.00 $14,493.75 $10,000.00 $0.00

$304.69 2010

$1,510.94

2011

$4,193.75

2012 China(US$M)

(US$ M)

2010

2011

2012

China

$304.69

$1,510.94

$4,193.75

2013 US

2013

2014

2016E

UK

2014

$14,493.75 $31,446.88

US

$ 2,400.00 $ 6,600.00

UK

$ 441.20 $ 1,151.44

David Lee: The Game of Dian Fu

2015E

2015E

2016E

$38,621.88

$54,417.19

China P2P market is still 5 times larger than the US at over USD32b!

Source: http://www.guancha.cn/economy/2015_01_25_307435.shtml Research Cases of P2P Lending, 2014, (P2P小额信贷典型模式案例研究报告), Page 5

China Consumer Credit Has Room to Grow!

Non-Mortgage Consumer Credit as Percentage of GDP 30%

25%

24%

This may have increased but still a long way to go!

20%

15%

15%

U.S.

9%

10%

5% 2% 0% Category 1

Source: CreditEase 2014 report David Lee: The Game of Dian Fu

21%

Malaysia

Taiwan

HongKong

China

US

China Saving Rates are still very high and P2P has a long way to go! BUT…..

Lower Returns and Longer Duration! RMB683.5b transaction volume! Returns of P2P platforms have dropped to 14.8%

The P2P development during 2010-2015 800

2,500

22.0%

21.3%

683.5

700

2,028 2,000

20.0%

6.5

17.9%

1,500

6.12

5.98

6

16.0%

400 300

800

252.8

105.8

14.0%

208.7

5

100

0

0

10

2010

3.1 1.2

200 21.25.6

2011

2012

50

Transactions(Billion RMB)

500

103.6

4.73

12.0%

Returns are lower

4.5

26.8 0 2013

Loans outstanding(Billion RMB)

David Lee: The Game of Dian Fu

5.5

14.8%

1,000

200

0

6.74

19.1%

18.0%

1,575

500

7.5

7

6.9

18.9%

600

Duration is longer

2014

2015H1

Number of the Platform

10.0% 2010

2011

2012

Return

2013

2014

Lending Period(Months)

2015

4 2016

Approaching 1 mil Lenders: Problematic Platforms on the Rise Some problematic platforms are for equity margin financing with many investors involved! The Development of P2P platforms

The Development of P2P platforms 1,800

400

More than 700 platforms have “Serious” Problems!

1,600

350

1,400

338.5

2014Q4

933.8

300

1,200 250

247.9

2014Q3

761.2

1,000 200 800 150 600

114.8

2014Q2

450.4

100

400

50

200

87.9

2014Q1

0

364.6

0 2014Q1

2014Q2

Number of recent problematic platforms Number of the platforms

David Lee: The Game of Dian Fu

2014Q3

2014Q4

Number of total problematic platforms

0

100

200

300

400

Number of the Borrowers(,000)

500

600

700

Number of the investors(,000)

Source: http://shuju.wangdaizhijia.com/industry-type-2-6-2015.html

800

900

1000

Large Increase in the Investment into P2P Companies Number of Investment=57 Amount of Investment =RMB5.7b

David Lee: The Game of Dian Fu

Huge Investment from PE – Burning Money烧钱TOP 10 Platforms:

Investors:

Money Raised and Used (29/07/15) 0.00

100.00

200.00

300.00

400.00

500.00

WeiDaiWang

RMB334mil burnt or used by WeiDaiWang for the week

YouLiWang RenRenDai

TouNaWang TuanDaiWang LuJinSuo

USD485mil raised by LuJinSuo

PaiPaiDai LiCaiFan

YinDouWang XinYongBao Money Raised($Million) David Lee: The Game of Dian Fu

Money use used per week (RMB Million) Money per week(RMB Million)

Source: http://www.pedata.cn/p2p_do/

600.00

Huge Investment from PE – Burning Money烧钱TOP 10 (US$ M)

Trading Volume

Raised Amount (29/07/15)

62

46

31

15

0 David Lee: The Game of Dian Fu

Source: http://www.pedata.cn/p2p_do/

Created Massive Employment Opportunities!

The Number of Workers in CreditEase 30000 28000 25000

20000

20000

15000

 Current number of the largest 5 year-old P2P HengChang 恒昌 employees: 47,000

15000 12000

10000

5000 2300

0

300 2009

2010

David Lee: The Game of Dian Fu

2011

2012 Number

2013

2015

Source: http://www.askci.com/news/2015/08/0 3/101936qzad.shtml

Explosive Growth in the Last 5 years 野草丛生,野蛮生长 Let a thousand flowers bloom! 2011.06

2009.03

2006

2006

2006

2007

2007.06

2011.06

2011.09

20082009

David Lee: The Game of Dian Fu

2013.02

2012.07

2012.12

2013.09

2013.08

2013.12

2013.10

2010-2015

2011.07

2012.05

2013.03

2013.12

2014.07

Ranking of P2P Organizations

Ranking according to Trading Volume 30000

16.00% 14.83%

26351.47 25000

12.95%

12.85%

11.95% 20000

10.45%

10.65%

9.97% 8.22%

15000 10862.48

10000

14.00% 12.00%

11.95%

11.43%

10.00%

9.67%

8.19%

8.72% 8.00%

8.35%

8.14%

6.00%

9849.98 8144.34 5676.46

5669.16

5648.73

5000

4880.05 4292.29

4.00%

4252

4170.55

3662.98 3442.64

3096.8

2738

0

2.00% 0.00%

红岭创投

鑫合汇

PPmoney

David Lee: The Game of Dian Fu

有利网

微贷网

金信网

人人贷

Trading Volum

金融工场

Column1

你我贷

链家理财 向上金服

Average Interest Rate2

团贷网

积木盒子

宜人贷

开鑫贷

Example: XinHeHui (鑫合汇) Trading Volume of XinHeHui, 2015.1-2015.7 (US$ M)

Trading Volume

126 101

76 50 25 0 David Lee: The Game of Dian Fu

Source: http://shuju.wangdaizhijia.com/archives-505.html

Many FinTech start-ups in China

Supply chain finance & P2P

Since last year, the payments infrastructure and landscape were relatively established, resulting in many platforms for example, O2O platforms, e-commerce platforms, cars, real estates and large scale logistic supply chain systems etc. to embrace the use of P2P financing. Moreover, the risk management capabilities and financing facilities provided by logistic supply chain and e-commerce businesses successfully merges with the P2P business landscape to further strengthen this supply chain finance. Apart from Alibaba and Jingdong platforms and the resulting goods sold there, property, automobiles, commodities and industrial goods have generally and recently favoured P2P financing due to the presence of the naturally large market outreach and secure financing capabilities of P2P financing.

Source: 2015 China Internet Finance Report

David Lee: The Game of Dian Fu

3 P2P Categories: Original, State/Bank, Internet  P2P start-up platforms/original P2P platforms Passed 2000 in China.  Bank or state-owned P2P Platforms P2P financing fills the gaps of bank financing (Limited bank outreach due to geographical conditions and no financial services for SMEs) Once policies on P2P financing are refined, it is likely that the P2P banking industry would rapidly take off. Although traditional banks have the advantage of lower associated risk as well as the quality of the assets that they hold, they lack experience in the internet business.

Source: http://mp.weixin.qq.com/s?__biz=MjM5NDMwOTY2OQ==&mid=207371584&idx=3&sn=721d951c4932 dc1ad83e633daf99f3ee&scene=5#rd

 Internet P2P Financing Companies Internet companies entering the P2P industries in two ways: Building the P2P platform by themselves and acquiring an original P2P platform business.

P2P Supervisors: Finally Guidance was issued in Mid July!

CIRC 中国保监会

The People’s Bank of China taking charge of Internet payment business

David Lee: The Game of Dian Fu

China Banking Regulatory Commission taking charge of P2P lending, Internet Trust and Internet consumer finance business

China Securities Regulatory Commission taking charge of equity crowd funding business

China Insurance Regulatory Commission taking charge of Internet insurance business

Source: http://www.wib.wang/zixun/20150419/2376.html

The Future of P2P ▪ Industry Disruption ▪ Declining Interest rates ▪ Higher barriers to entry ▪ Vertical Subdivisions

▪ Cross border cooperation ▪ Supply Chain P2B

David Lee: The Game of Dian Fu

Other information

Dian Fu No 6 DiChan Bao~地产宝 Real Estate Treasure

REITS is knocking the door of China

颠覆

C-REITs ▪ HK:越秀(Dec 2005), 春泉(May 2014)

▪ Spore: Capital Land 凯德、Ascendas 腾飞、Mapletree丰树、 Forterra 富达来 ▪ Dec 2008 Finance Regulation 32 ▪ Mar 2013 Regulation on Real Asset Securitisation证监会发布 《证券公司资产证券化管理规定》 ▪ Jan 2014 Approval of CITIC QiHang Real Estate Management Company关于核准中信证券股份有限公司设立中信启航专项 资产管理计划的批复 ▪ REITs? – no tax advantage, around 5-6% yield David Lee: The Game of Dian Fu

Magical 1.5 Hour! ▪ China: ▪ TianJin Real Estate Bond 天津“债权版”(Aug 2012) ▪ 中信启航 CITIC QiHang (Jan 2014, RMB52.1b, 70% AAA min 5mil investment class A 5.5-7%, 30% unrated min 30mil class B 12-42%, max 200 investors) ▪ 鹏华前海万科公募 PengHua (June 2015,RMB3b, IPO, Hybrid) ▪ 万达商业地产众筹产品稳赚1号 Wanda (June 2015, RMB5b, Crowdfunding, pre-REITs)

CITIC QiHang

Wanda’s Crowdfunding of RMB5b Within 3 days! The Retail Portion Was Completed in 1.5 Hours. David Lee: The Game of Dian Fu

Dian Fu No 7 Chuang Ye Jia Su Qi~ 创业加速器

Accelerator: Rise of the China FinTech Start ups

颠覆

Internet and cellphone are changing the consumers’ habit

David Lee: The Game of Dian Fu

Source: Companies are eBay, Amazon, Alibaba, JD.com, and Rakuten. Per publicly available company data, Morgan Stanley Research.

Unlike Silicon Valley, Corporates like BAT are driving FinTech Innovation via a holistic approach

Social Media David Lee: The Game of Dian Fu

Location based Services

E-Commerce

Media

Source: http://www.mrjjxw.com/shtml/mrjjxw/20140627/52817.shtml

Others

Ants Financial (Alipay), QQ and Baidu Wallet  阿里巴巴通过蚂蚁金服布局互联网金融,基本覆盖了金融“存、贷、汇”三大板块,是阿里 巴巴“平台+金融+数据”的架构和规划中的重中之重。  腾讯的互联网金融发端于财付通,后续推出的微信支付、手机QQ支付、腾讯征信和理财通 等,未来不排除腾讯整合集团的互联网金融业务。  在BAT三巨头中,百度在互联网金融领域略显落后。百度虽然相继推出“百发”“百赚”和 百度钱包,但是相比阿里和腾讯,百度在互联网金融上的拓展始终不尽如意。

David Lee: The Game of Dian Fu

Source: 2015中国互联网金融报告

Alibaba’s Strategy – Acquisition & Investment Time

Firm Name

Name

Amount (US$ M)

Time

Firm Name

Name

Amount (US$ M)

2005-08

中国雅虎

Yahoo China

NA

2006-10

KouBei

600

2008-05

口碑网 phpwind

phpwind

NA

2009-09

万网

WanWang

540

2010-03

星辰急便 Vendio

Stars Express

4.6

2013-04 2013-05 2013-03 2013-07 2013-08 2013-09

新浪微博 高德 友盟网 穷游网 UC优视 酷盘

Sina Corp AutoNavi Umeng Qyer UC Kanbox

568 234 80 NA NA NA

Vendio

NA

EMG

35

天弘基金

Tianhong Asset Management Co

4

2010-08

易图通 Auctiva

2013-10

Auctiva

NA

2010-10

搜狗

Sogou

15

2010-11

OneTouch

NA

2011-05

一达通 CNZZ

2013-10 2013-12 2014-01 2014-02

CNZZ

NA

2011-07

美团

MeiTuan

50

2012-11

丁丁网

ddmap

NA

2014-03

ShopRunner 日日顺物流 中信21世纪 TutorGroup 文化中国传播集 团 TangoMe Inc.

2013-03

虾米网

XiaMi

NA

2014-03

银泰商业集团

2010-06

2010-08

David Lee: The Game of Dian Fu

2014-03

ShopRunner RRS CITIC 21CN TutorGroup ChinaVision Media Group TangoMe Inc. Intime Retail Group

NA 233 207 NA 804 215 692

Alibaba’s Strategy – Acquisition & Investment Time

Firm Name

Name

Amount (US$ M)

2014-03

魅族

Meizu

1050

2014-04

恒生电子

Hundsun Technologies Inc.

515

2014-04

华数传媒

Wasu Media Holding

1050

2014-04

优酷土豆

Youku

1080

2014-05

阿斯兰

ASLAN

NA

2014-05

新加坡邮政

Singapore Post Ltd.

223

2014-06

恒大

Evergrande

187

2014-09

石基信息

Shiji Information Technology Co

439

2014

快的

Kuaidi

NA

2014

陌陌

Momo

NA

2014

茵曼

Inman

NA

2015-03

光线传媒

Enlight Media Group

375

2015-06

上海文化广播影视公司

SMG

187

2015-07

魅力惠

Mei.com

100

2015-08

苏宁云商

Suning Appliance Co

4.4

Many FinTech start - ups in China Incubators/Accelerators

ZhongGuanCun~中关村 David Lee: The Game of Dian Fu

创业孵化加速器

ShenZhen~深圳

HangZhou Dream Town 杭州梦想小镇

Many FinTech start - ups in China Incubators/Accelerators ZhongGuanCun~中关村

Source: 2015中国互联网金融报告 David Lee: The Game of Dian Fu

Incubators – over 1600 as at June 2015 Numbers 700 600 500 400 300 200 100 0 2009 2010 2011 2012 2013 2014 Resource: 投资中国研究院《孵化器2014年度报告》

• Total number of incubators reach over 1600 in 2015.06 • The number of national-level incubators is over 600

Incubators

Resource:清科研究中心, 2015/6

There are 12 national-level incubators located in Shenzhen David Lee: The Game of Dian Fu

Dian Fu No 8

Zhong Chou~众筹

Crowdfunding

颠覆

Crowdfunding: Debt, Equity, Reward and Donation Based

1

Debt-based

2

Equity-based

3

Reward-based

In this type of crowdfunding, the company raising money does not sell shares, but instead

Members of the crowd become part-owners of the company that is raising funds. The crowd

Individuals forming the crowd give money to a business in exchange for a “reward,”

borrows money from the crowd. The individual lending the money receives the company’s legally binding commitment to repay the loan at certain time intervals and at a certain interest rate.

realizes a return of its investment and, assuming the company performs well, receives a share of the profits in the form of a dividend or distribution.

typically the product or service that the particular company produces or provides.

4

Donation-based

The crowd give money or some other resources because they want to support the cause.

Another Catalyst for Start-ups! Crowdfunding Debt

Equity Reward Donation David Lee: The Game of Dian Fu

AngelCrunch is the Archangel for Equity! Equity-based crowd-funding In 2014, AngelCrunch 天使汇 dominated the equity crowdfunding market with 2,607 deals amounting to RMB 769mil.

AngelCrunch

YuanShiHui

Number of Deals Total Amount RMB10k

Number of Investors David Lee: The Game of Dian Fu

Source: 2015中国互联网金融报告

DaJiaTou

TienShiKe

Total

Crowdfunding: Equity is Still the Favourite 2%

Hybrid-based crowdfunding (42) Reward-based crowdfunding (67)

Donation-based crowdfunding (4)

20% 46%

32%

Equity-based crowdfunding (98)

Source: 网贷之家《2015年中国众筹行业半年报》http://www.wangdaizhijia.com/news/baogao/21251-all.html

• Total amount of crowdfunding platforms reach 211 until 2015.06 David Lee: The Game of Dian Fu

Crowdfunding——Beijing Still Leads by Number and Few Closures Number of Platforms

250

58

Beijing

200

49

Guangdong

150 Total Platform Amount Existing Platforms

100

Jiangsu

0

Sichuan 2012

2013

2014

Jun-15

15

Zhejiang

50 2011

35

Shanghai

10

9

35 Source: 网贷之家《2015年中国众筹行业半年报》http://www.wangdaizhijia.com/news/baogao/21251-all.html Other Areas

• Number of closed crowdfunding platforms is 24 as at 2015.06 • Crowdfunding platforms are located in all 19 provinces and cities. • They are mostly located in the economically more developed coastal areas. David Lee: The Game of Dian Fu

Crowdfunding——Total Amount of Money Raised by Geographical Areas 1646

Beijing

1303

Guangdong

617

Zhejiang

589

Shanghai

511

Other Area 0

200

400

600

800

1000

1200

1400

1600

• Raised over 4.6 billion RMB during the first half year of 2015. Source: 网贷之家《2015年中国众筹行业半年报》http://www.wangdaizhijia.com/news/baogao/21251-all.html

1800

Crowdfunding——Beijing Leads Both by Numbers and Capital Raised

Area

No of Platforms

Amount Raised

Beijing

27%

35%

Guangdong

23%

28%

Shanghai

17%

13%

Zhejiang

7%

13%

Others

26%

11%

• Raise over 4.6 billion RMB during the first half year of 2015. David Lee: The Game of Dian Fu

Crowdfunding – The Giants Are Joining the Game Company/Group

Name

Type

Date

Alibaba

Taobao Crowdfunding (淘宝众筹)

Reward-based crowd-funding Donate-based crowd-funding

2013

Ant Dake (蚂蚁达客)

Equity-based crowd-funding

2015.6

Jingdong Crowdfunding (京东众筹)

Reward-based crowd-funding Donate-based crowd-funding Lending-based crowd-funding

2014

Dongjia (东家)

Equity-based crowd-funding

2015.3

Ping An Insurance (Group)

Qianhai Crowdfunding (前海众筹)

Equity-based crowd-funding

2015.4

Suning

Suning Crowdfunding (苏宁众筹)

Donate-based crowd-funding Reward-based crowd-funding

2015.4

Jingdong

• Raise over 4.6 billionBaidu RMBCrowdfunding during the first halfN/A year of 2015. Baidu David Lee: The Game of Dian Fu (百度众筹)

Forthcoming

Crowdfunding Data——Until 2015.5.31 Source: 鸣金网 http://www.28zhongchou.com/zixun/zhishi/778.html Platform

Project(successful)

RMB Mil

Investors

Total project amount

Jingdong

271

206

801641

1000

Taobao

228

117

1048379

1131

Qingju

128

16

45570

160

Suning

20

7

29373

80

Angelcrunch

310

3000

2386

36954

Renrentou

162

328

8698

165

Yuanshihui

11

15

344

352

Tianshijie

13

40

5296

30

Dajiatou

55

68

700

69

• Raise over 4.6 billion RMB during the first half year of 2015.

Jacky Chan

Dragon Blade 天将雄师 https://www.youtube.com/watch?v=TVvpzS8LD78

David Lee: The Game of Dian Fu

Example——Debt-based Crowdfunding Yu Le Bao ~娱乐宝

Dragon Blade 天将雄师

David Lee: The Game of Dian Fu

Example——Equity-based Crowdfunding

• The Crowdfunding filmduring in China 2014. Raisefirst over 4.6 billion RMB theinfirst half year of 2015. • It has reached 120 million RMB at the box office within 24 days.

Example——Equity-based Crowdfunding The highest grossing animated film in China to date.

David Lee: The Game of Dian Fu



Prior to 4th August , “Monkey King: Hero is Back” has reached 800 million RMB at the box office within 24 days.



89 investors invested a total of 7.8 million and expected to get 30 million RMB of principal and interest, i.e., 400% return.

China’s Box Office to Cross USD5bil in 2015 at 15.5% Growth Sources: http://www.the-movie-times.com/thrsdir/Yearly.cgi; http://www.pwccn.com/home/eng/pr_090615.html

Box Office (Billion US Dollar) China 10.59

10.56

North America 10.92

10.83

10.17

10.36

6.65 4.77

1

2009

1.64

2010

2.12

2011

2.75

2012

3.51

2013

3.28

2014

2015-July

• According to PwC’s Global Entertainment and Media Outlook 2015-2019, China’s box office spending is projected to pass US$5bn in 2015 and to rise at a compounded annual growth rate (CAGR) of 15.5%. It • Raise over RMBinduring is expected to 4.6 reachbillion US$8.86bn 2019. the first half year of 2015. David Lee: The Game of Dian Fu

Example

David Lee: The Game of Dian Fu

Source :http://www.the-movie-times.com/thrsdir/Yearly.cgi

Crowdfunding & Bitcoin ▪ Bikeji(币科技) is attracting more shareholders through getting bitcoin in 2014 ▪ Yinyu(银鱼) raised 5600BTC in the end of 2013, this company’s estimated value is far more than $10 million at that time.

• Raise over 4.6 billion RMB during the first half year of 2015. David Lee: The Game of Dian Fu

Many FinTech start - ups in China Reward-based crowd-funding Led by JinDong and TaoBao with 301 and 544 deals, and RMB147mi and RMB63m. David Lee: The Game of Dian Fu

Source: 2015中国互联网金融报告

Supply Chain Financing is a USD2t Market

Supply chain finance & P2P – Big Market $7,000 B

$1,095 B

$2,635 B

In total, there will be $10,730 Billion of Supply chain finance (non-finance firms). 假设其中有20%具备融资需求, 那么供应链融资潜在的业务规模 就高达$2,146B.

Source: 2015中国互联网金融报告 David Lee: The Game of Dian Fu

JD and Other e-Commerce are the Lead Players

Supply chain finance & P2P – Jingbaobei (京宝贝)

2013年12月,京东的供应链金融产品“京宝贝”上线。上线当月其融资金额超过$50B,2014年1月份放贷额突破 $1,587B。与银行合作一段时间之后,京东根据客户的需求,设计出了进军金融最核心的产品:供应链金融产品 “京保贝”和“京小贷”。“京宝贝”上线之后,京东开始使用自有资金放贷。 −其供应链金融可以在一个月内完成超过$1,587B规模的放贷,主要原因在于把握住了客户的需求。相对于传统供 应链金融,“京保贝”优势明显:门槛低、效率高、客户体验好。

Current Investments are into FinTech

Main investment cases in FinTech firms, 2014

Social Media – No Company Can Beat Facebook!

QQ, QZONE, WECHAT are way behind!

David Lee: The Game of Dian Fu

Resource: http://wearesocial.sg/blog/2015/03/digital-social-mobile-in-apac-in-2015/

Social media Monthly Active User(Million) 2012 798

808

815

2013

2014

Mar-15

832

603

625

654

668 500

300

549

355

97

QQ

Resource: Annual financial reports David Lee: The Game of Dian Fu

Qzone

Wechat

129

176

Sina Weibo

198

The Game of Dian Fu is in Digital Wallet

Digital Wallet

User Amount

Resource

WeChat & QQ Wallet

Over 100 million

The forth quarter 2014 result

Alipay Wallet

270 million

The first quarter 2015 result

David Lee: The Game of Dian Fu

Dian Fu No 9

RenMinBi~人民币

People’s Currency

颠覆

Internationalization of RMB in Africa 2014

• 2012.8 2000.10 •

中国银行约翰内斯堡分行 成为南非第一家正式对外 营业的中资银行,率先完 成非洲第一笔人民币跨境 结算业务。



尼日利亚央行宣布将人民币储备份 额由2%提升至7%

尼日利亚和坦桑尼亚 首次将人民币列为储 备货币 2015.7.8

2013 •

3月,南非央行与中国人民银行签 署协议,确定投资中国银行间债券 市场额度为15亿美元

Vice President of Zimbabwe proposed to China to have the Yuan as a legal tender during July 2015 visit to China!

• 津巴布韦副总统在北京 访问时提出使用中国货 币人民币作为津巴布韦 法定货币。 •

中国银行约翰内斯堡分行担任 南非人民币清算行,成为中国 人民银行在非洲指定的第一家 人民币清算行。



尼日利亚央行宣布将人民币储 备份额由7%提升至10%。

Internationalization of RMB in Africa Trade Volume between China and Africa (Billion RMB) 221.8 198.4 200

Mandarin will be second language in South Africa and not without resistance!

166.3

126.9 106.2

92

73.3

10.6

10.8

12.4

18.5

29.5

39.7

55.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 David Lee: The Game of Dian Fu

Internationalization of RMB in Africa ▪ From 2000 to 2012,Sino-African trade accounted for the proportion of China 's total foreign trade , increased to 5.13% from 2.23% . ▪ From the perspective of Africa, Sino-African trade accounted for Africa’s total foreign trade rose from 3.82% to 16.13% during the same period.

Source:《中国与非洲的经贸合作(2013)》白皮书 David Lee: The Game of Dian Fu

Internationalization of RMB in ASEAN ASEAN or Dong Meng ~东盟 Will be the real catch for China!

Trade Volume Comparison (Billion RMB)

China-ASEAN

362.6

China-Africa

400.9

443.6

480.4

292.9

126.9

2010

166.3

2011

198.4

2012

200

2013

221.8

2014

Source: http://www.china-aseanbusiness.org.cn/newsmore.asp?lanmu=11 David Lee: The Game of Dian Fu

Internationalization of RMB in the world

David Lee: The Game of Dian Fu

Clearing Banks for RMB in the world RMB Clearing Bank Location

Date

Clearing bank

1. HONG KONG

2003.12

BOC

2. MACAU

2004.09

BOC

3. VIENTIANE

2012.06

ICBC

4. TAIPEI

2012.12

BOC

5. SINGAPORE

2013.02

ICBC

6. PHNOM PENH

2014.03

ICBC

7. LONDON

2014.06

CCB

8. FRANKFURT

2014.06

BOC

9. SEOUL

2014.07

BOCM (BANK OF COMMUNICATIONS)

10. PARIS

2014.09

BOC

11. LUXEMBOURG

2014.09

ICBC

12. QATAR

2014.11

ICBC

13. TORONTO

2014.11

ICBC

14. SYDNEY

2014.11

BOC

15. KUALA LUMPUR

2015.01

BOC

16. BANGKOK

2015.01

ICBC

17. CHILE

2015.05

CCB

18. JOHANNEBURG

2015.07

BOC

RMB Qualified Institutional Investors RQFII Country/Area Quota (Until the end of 2015) Unit: 100mil Total: RMB270Bn Starting in 2002, the Chinese government began allowing QFII to access the A-share market in an attempt to entice more investment into its markets. Using offshore currency accounts, licensed QFII can directly invest in A-share equities on both the Shanghai and Shenzhen exchanges, as well as bonds, index futures, warrants, open/closed-end funds and ETFs. RQFII participants can invest in the same range of investment products as QFIIs and are subject to many of the same restrictions. However, a RQFII uses renminbi to purchase securities, while a QFII uses their foreign home currency. David Lee: The Game of Dian Fu

Source: http://www.cenet.org.cn/index.php?m=wap&c=index&a=show&catid=1510&typeid=0&id=67466&page=3

Dian Fu in Singapore • • • •

RMB 17.2b bond issued in Singapore RMB 27t transaction for 2015H1 RMB 67t transaction 2013 Singapore is the largest clearing center outside Hong Kong

David Lee: The Game of Dian Fu

One Belt, One Road ▪ Yi Dai Yi Lu ~ 一带一路

▪ Video

David Lee: The Game of Dian Fu

One Road, One Belt •

对外贸易方面,2015年第1季度中国 与“一带一路”沿线国家双边贸易额 2360亿美元,占全国进出口总额 26%。其中,中国对沿线国家出口增 长10%,占出口总额28%,大幅领先 于4.9%的整体出口增速;



利用外资方面,“一带一路”沿线国 家对华投资增长迅速。1季度“一带 一路”沿线国家在华设立外商投资企 业457家,同比增长18.4%。蒙古、 俄罗斯及中亚国家对华实际投资金额 整体增长超过一倍;中东欧、西亚北 非地区国家对华实际投资金额增长超 过四倍。其中,对广东省投资项目50 个,同比增长6.4%;对福建省投资项 目22个,同比增长100 %。



对外投资方面,1季度中国对“一带 一路”沿线国家实现非金融类直接投 资 25.6 亿美元,占同期对外直接投 资总额的 9.9%。位居前三位的国家 地区分别为新加坡、印尼和老挝。 David Lee: The Game of Dian Fu

One Road, One Belt: Is the US in or Out?

▪ “中国版马歇尔计划”“TPP1和TPP2的反制方案”

▪ 据估算,“一带一路”将涵盖包含亚洲在内的26个国家和地区,合计44亿 人口,将产生21万亿美元的经济规模。 ▪ 目前中国在“一带一路”沿线国家共有70多个在建的经济产业合作区项 目,年产值超过200亿美元,为当地创造20万个就业机会 ▪ The Press viewed it as an Anti Trans-Pacific Partnership (TPP) Chinese’s Marshall Plan ▪ Spread over 26 Asian countries, 4.4b population, USD2.1t Output

▪ 70 projects with annual output of over USD20b and 200k new jobs. ▪ ADB estimates: USD8t worth of infrastructure projects David Lee: The Game of Dian Fu

USD 40B Silk Road Infrastructure Fund ▪ The US$40bn Silk Road Infrastructure Fund is to provide funding to carry out infrastructure, resources, industrial cooperation, financial cooperation and other projects related to YDYL. ▪ The company that manages the fund, The Silk Road Fund Co. Ltd, is backed by China’s foreign exchange reserves, China Investment Corp, Export-Import Bank of China, and China Development Bank. The fund started operation in February 2015 with US$10bn in capital, which was 65% contributed by China’s SAFE, which manages China’s Foreign Reserve. The fund is chaired by Jin Qi, the assistant governor of PBOC.

▪ Jin Qi, the chief executive of the Silk Road Fund, said in March 2015 that the fund will invest in projects with reasonable mid- and long-term returns, and it is not an aid agency that does not consider returns. She added that the Silk Road Fund will not be the sole financer of projects; rather it will seek to cooperate with other financial institutions when investing in projects in the future David Lee: The Game of Dian Fu

New Development Bank

• China , Brazil , South Africa , Russia , India‘s infrastructure gap is huge so that need a common financial cooperation at the national financial force incompetent . BRICS Development Bank not only for the five BRICS countries , but for all developing countries. As a BRIC member countries may be given priority lending authority. • Voting right: China39.95%, Brazil/Russia/India:18.10%, South Afirca5.75%。 David Lee: The Game of Dian Fu

New Development Bank

Composition and power

Name

Nationality

President

Kundapur Vaman Kamath Indian

Chairman of the Board of Governors

Anton Siluanov

Russian

Chairman of the Board of Directors

卡内罗

Brazilian

• According to announcement of BRICS publish in July 15th 2015, headquarters located in Shanghai, China. • Chairman of the bank will be rotating among the five countries , a five-year term David Lee: The Game of Dian Fu

Comparison AIIB

BRICS

ADB

WB

IMF

Leading country

China

N/A

Japan

America

America&Euro

Headquarters

Beijing, China

Shanghai, China

Metro Manila, Philippine

Washington D.C., United States

Washington D.C., United States

Formation

2014

2015

1966

1944

1945

Capital

$100 Bn

$100 Bn

$175 Bn

$223 Bn

$238 Bn

Purpose

A proposed international financial institution that will focus on supporting infrastructure construction in the Asia-Pacific region.

To mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries.

A regional development bank to facilitate economic development in Asia.

An international financial institution that provides loans to developing countries for capital programs.

An international organization working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth around the world.

Member number

57

5 (Brazil, Russia, India, China, South

67

188

188

Bitcoin Exchange Ranking

Name

Total volume [BTC]

Market share

OKCoin

63,206

40.07%

Huobi

29,489

18.68%

BTC China

12,646

8.02%

LakeBTC

11,638

7.38 %

ANX

4,910

3.11%

Source: http://bitcoinity.org/markets/list?currency=ALL

David Lee: The Game of Dian Fu

Bitcoin Mining Pool in China Miner Ranking F2Pool 19%

Other Pools except China 43%

Antpool 17%

BTCChina Pool 13%

BW.COM 8%

• China owns 57% in total. David Lee: The Game of Dian Fu

Source: https://blockchain.info/pools

Dian Fu No 10 YinHangDianShang~ 银行电商

The Final show down between Internet Banking and Internet Finance!

颠覆

Size of ICBC ▪ The biggest bank in the world measured in asset size (USD3.3tri) and capital (USD62.5bil) as at June 2015 Ranking by assets scale $3,500,000 $3,000,000

USD (mil)

$2,500,000 $2,000,000 Assets

$1,500,000

$1,000,000 $500,000 $0 David Lee: The Game of Dian Fu

Industrial and China Construction Agricultural Bank Commercial Bank Bank of China of China

BNP Paribas SA

Bank of China

Barclays Bank PLC

JPMorgan

Deutsche Bank

Source: http://www.accuity.com/useful-links/bank-rankings/Diji

Ranking by capital amount $70,000

$60,000

USD (mil)

$50,000

$40,000

Capital amount

$30,000

$20,000

$10,000

$0 Industrial and China Construction Agricultural Bank of Commercial Bank of Bank China China

David Lee: The Game of Dian Fu

BNP Paribas SA

Bank of China

Barclays Bank PLC

JPMorgan

Deutsche Bank

Source: http://www.accuity.com/useful-links/bank-rankings/Diji

ICBC around the world • 6 continents, more than 42 countries around the world

• 17,122 domestic branches, 400 overseas branches, 2,007 agencies • 456 million individual customers, 5.09 million corporate clients • Global RMB clearing network covering 76 countries and regions • 100m cards in China, Asia largest and 3rd in the world among the banks

• Acquired 60% stake in Standard Bank PLC on Feb 1 2015 for USD690m • Since 2007, ICBC has spent about USD7 billion on more than 10 acquisitions from South Africa to the U.S.

ICBC Strategy ▪ Mr. JIANG Jianqing, Chairman of ICBC, stated, “China is the world’s largest consumer of commodities. Many Chinese corporates have become active participants in commodities trading and global capital markets. ▪ This, along with the liberalization of China’s interest rates and exchange rates, the internationalization of China’s capital markets, the development of offshore RMB business, and the launching of the “One Belt and One Road” (the Silk Road Economic Belt and the 21st Century Maritime Silk Road) initiative, as well as the acceleration of Chinese enterprises’ overseas investment, has stimulated huge demand for global markets business. ▪ The acquisition of Standard Bank Plc is of strategic importance as ICBC proactively responds to this demand.

融e购 ~“Rong e Gou” Rong Yi sounds like Rong e!

容易



Rong Yi

Gou

融e



Rong e

Gou

EASY

To Buy

David Lee: The Game of Dian Fu

PURCHASE WITH EASE

Singlish!

e-ICBC

https://www.youtube.com/watch?v=mfv_zg9S7xU

▪ Three Platforms: • e-Commence:融e购 ~“Rong e Gou”(Jan 2014)

三大平台、三大产品

• Instant Message Platform:融e联 ~“Rong e Lian”(Jan 2014)

• Direct Online Platform:融e行 ~“Rong e Hang”(March 2015)

▪ Three Product Lines: • Transaction: • “ICBC e-payment” - 工银e支付 (Oct 2010) • “ICBC e-charging” - 工银e缴费 (March 2013)

汇(支付), 贷(投资), 存(融资)

• Investment: • ”ICBC e-investment” - 工银e投资 (Aug 2014) • Funding: • 逸贷 ~“Yi Dai”:a credit product for personal client (Sep 2013) • 网贷通 ~“Wang Dai Tong”: a B2B credit product for small and micro businesses. (End 2009) David Lee: The Game of Dian Fu

Three Platforms

Name

Date of introduction

No. of Customers

Amount of Transactions

Remark/nature of business

e-commence

Rong e Gou

Jan. 2014

more than 20 m

RMB 0.2044 t (increase 26.8 times in one year)

Rong e Lian

Dec. 2014

1.3 m

N/A

Instant Message platform

Rong e Hang

Mar. 2015

N/A

RMB23 b

Direct Online Platform

Source: http://m.21jingji.com/article/20150807/684a78853a4bd513569aa7e79f9a74f3.html David Lee: The Game of Dian Fu

Three Product Lines Product lines

Name

ICBC e-payment

Date of founded

Oct.2010

No. of customers

Remark/nature of business

60m

For micropayment transaction Mobile APP for charging transaction

Transaction

Investment

ICBC e-charging

Mar.2013

N/A

ICBC e-investment

Aug. 2014

0.15m

Yi Dai

Sep. 2013

Funding

Wang Dai Tong

Sep. 2013

11k

For personal investment

A credit product for personal client

A B2B credit product for small and micro businesses, More than 70t small including 短频急,公司逸 and micro companies 贷,个人自助质抵押贷款

Sources: http://m.21jingji.com/article/20150807/684a78853a4bd513569aa7e79f9a74f3.html;http://finance.cqnews.net/html/2015-05/18/content_34248488.htm

融e购 ~“Rong e Gou” http://mall.icbc.com.cn/

Network Effect B2C,B2B,B2G • Started Operation on 12 Jan 2014 • RMB 204b Gross Merchandise Value (GMV) for 2015H1 (26.8x more) • Within 14 months: 16 million register users with RMB 100b GMV; • Average time for online to surpass RMB10 billion is 7 years • 204 days for 融e购 ~“Rong e Gou”

• Average time for online to surpass 10 million users is 3 years • 10 months for 融e购 ~“Rong e Gou”

Disadvantage • Higher Prices(没有价格竞争优势,但是可以保障质 量) • Higher Barrier of Entry for Merchants (入驻商户标准 高,不像在淘宝上可以很容易就开店) • Higher Logistic Cost(物流成本高,入驻商家需要自行 解决物流问题)

David Lee: The Game of Dian Fu

“ICBC e-payment”

-工银e支付 Now •

RMB55 billion 2014 transaction amount (8x more than 2013)



2015H1 RMB80b (5.4x more)



60 million registered users



Capacity to deal with 11.2 million transactions per second

Source: http://bank.gucheng.com/2015/3093167.shtml

David Lee: The Game of Dian Fu

逸贷 ~“Yi Dai” ▪ Outstanding Individual Loans: RMB 190 billion (2015H1) ▪ Gross Loans: RMB 230 billion ▪ As large as the entire P2P market Source: http://www.icbc.com.cn/icbc/%E5%B7%A5%E8%A1%8C%E9%A3%8E%E8%B2%8C/%E5%B7%A5%E8%A1%8C%E5%BF% AB%E8%AE%AF/%E4%B8%AD%E5%9B%BD%E5%B7%A5%E5%95%86%E9%93%B6%E8%A1%8C%E5%85%AC%E5%B8% 832014%E5%B9%B4%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5.htm David Lee: The Game of Dian Fu

网贷通 ~“Wang Dai Tong” ▪ 1. 短频急 ▪ largest lending e-finance product ▪ Outstanding Micro Loans: RMB200b

▪ Total Loans: RMB1.73tri ▪ Micro-enterprise Base: 69k ▪ Start Date: June 20

▪ 2. 公司逸贷 ▪ Total Corp Loans: RMB8.73b ▪ 3. 个人自助质押贷款

▪ Outstanding Loans: RMB24.7b (4.6x) ▪ Total Loans: RMB38.2b

T+0 Settlement ▪ e灵通

▪ T+0 settlement ▪ Commodity trading with crude oil transaction vol of RMB56b (30.5x)

David Lee: The Game of Dian Fu

融e购 ~“Rong e Gou”

助推中国实现从“全球 工厂”向“全球商店”转变



no commission or annual fees



Info, logistic and payment e-commerce platform



accept third party bank cards



70% merchants are manufacturers and 1/3 were not customers



20m registered accounts



O2O (Online to Offline & Offline to Online)



15k free WIFI spots, 154 smart banks, 35 branch platforms and 431 points of connection



Expanded to 42 countries and regions



End to end to Spanish - China free trade zone in Hangzhou



Mobile platform was introduced on July 20 2015



From factory of the world to store of the world!

一个平台入驻,所有银行支付

融e购 ~“Rong e Gou” Vs JD 京东 ~“ Jing Dong ” Total register users

Transaction volume ¥205,000

120,000

¥204,500 100,000 80,000

¥203,500

Thousand

mil (RMB)

¥204,000

¥203,000

60,000

¥202,500

40,000

¥202,000

20,000

¥201,500 ¥201,000 Transaction

Rong E Gou ¥204,400

JD ¥202,300

0 Register users

Rong E Gou 18,000

JD 105,200

Period: Jan 2015 – Jun 2015 Source: http://finance.people.com.cn/bank/n/2015/0327/c20233126757938.html David Lee: The Game of Dian Fu

The Ranking of Rong e Gou is Number 3 in 2014 Transaction volume in 2014 2,500,000

Mil (RMB)

2,000,000 1,500,000 1,000,000

500,000 0 Transaction volume

David Lee: The Game of Dian Fu

Rong e Gou 70,000

JD 260,200

Alibaba 2,300,000

Sources: Rong e gou: http://finance.people.com.cn/money/n/2015/0112/c21890026369498.html JD: http://tech.gmw.cn/jd/2015-03/04/content_14993388.htm\ Alibaba: http://news.xinhuanet.com/fortune/2015-01/29/c_1114184822.htm

Rong e Gou Has Overtaken JD in 2015H1 Transaction volume in 2015 Q1-Q2

Total register users

¥1,400,000

400

¥1,200,000

350 300

¥1,000,000

250

Mil (RMB)

¥800,000

Mil

200

¥600,000

150

¥400,000

100

¥200,000 ¥Tranaction amount

50 Rong E Gou ¥204,400

JD ¥202,300

Period: Jan 2015 – Jun 2015 (6 months)

David Lee: The Game of Dian Fu

Alibaba ¥1,273,100

0 Register users

Rong E Gou 18

JD 105

Alibaba 367

Sources: Alibaba交易额: http://tech.sina.com.cn/i/2015-05-07/doc-icpkqeaz3326433.shtml (为阿里 巴巴2015第一季度的数据,京东和融E购数据是上半年的) 阿里巴巴Q2:http://www.yocajr.com/news/detail/3056 京东交易额:为两季财报公布交易额的加总:878亿+1145亿 融E购交易额:http://news.xinhuanet.com/fortune/2015-08/06/c_128100835.htm 京东活跃用户: http://news.xinhuanet.com/tech/2015-05/08/c_127780088.htm 融E购活跃用户: http://www.ggjrw.com/zixun/xinjinrong/2015-06-16/4297.html 2014nian Alibaba活跃用户:http://tech.sina.com.cn/i/2015-05-07/doc-icpkqeaz3326433.shtml

互联网+

线上选房、线上支付、线上金融

▪ 1. Internet + Real Estate model (May 2014)

互联网+房地产

▪ A total of 14 developers (保利、富力、碧桂园、雅居乐、合生地产) and e-ICBC initiated the Internet + Real Estate model (售房+装修+物业) for Sales, Renovate, Purchase of Furniture & Fixture

▪ 300 projects in 60 cities, 1800 units, gross amount RMB5.1b ▪ 2. Internet + Construction + Finance model

互联网+建筑+金融

▪ Turnover: RMB600b ▪ 3. Next move is mortgage financing

▪ 4. Flow of information, logistic and capital ▪ 5. Consumption + Finance + Internet David Lee: The Game of Dian Fu

三流合一

消费+金融+互联网 互联网金融营销中心、个人信用消费金融中心,筹建网络 融资中心

Big Data ▪ Big data from POS system

大银行巧用“大数据”服务“小商户”

▪ No guarantee or mortgage required ▪ No repetitive application ▪ Work within approved limit

▪ Hire purchase

David Lee: The Game of Dian Fu

融资难、融资贵

随刷随贷,即时使用

Use Experience ▪ Use experience:

1. one PW one QR Code 2. ICBC+VISA+HCE Cloud Payment Services (May 5 2015) ▪ Mobile NFC/HCE (Host-card emulation Cloud Service + Token), verification are done backend. Max Transaction Value = RMB5000

David Lee: The Game of Dian Fu

融e联 ~“Rong e Lian”Vs “We Chat” - 微信

Very similar! David Lee: The Game of Dian Fu

1.3mil users versus 500m active users

Quick loans JD 白条

工行逸贷

招行闪电贷 Ant Financial 花呗(Hua Bei)

建行快贷 David Lee: The Game of Dian Fu

逸贷 (Yi Dai) VS 白条(Bai Tiao),花呗(Hua Bei) ▪ Rapid Lending: • 白条(JD),花呗(Ant financial) • Banks: ▪ China Construction Bank: “快贷” includes“快e贷”、“融e贷”与“质押贷”三种产品

▪ China Mingsheng Bank - ”民生E贷” ▪ China Merchants Bank -“闪电贷” ▪ Guangdong development Bank -“个人网络带宽”

▪ China Citic Bank -“POS贷” ▪ Shangshan Pudong Development Bank -“网贷通” David Lee: The Game of Dian Fu

Quick Loans

Sources: 白条,花呗,快e贷:http://tech.sina.com.cn/i/2014-12-31/03399923242.shtml 闪电贷:http://www.tiantou.com/daikuan/bk/n_23437.html E秒贷:http://finance.sina.com.cn/roll/20150729/233122825710.shtml?cre=financepagepc&mod=f&loc=4&r=a&rfunc=-1 POS 贷:http://finance.chinanews.com/fortune/2014/01-21/5762700.shtml 网贷通: http://www.icbc.com.cn/ICBC/%E5%85%AC%E5%8F%B8%E4%B8%9A%E5%8A%A1/%E4%BC%81%E4%B8%9A%E6%9C%8D%E5%8A%A1/%E7%BD%91%E7%BB%9C %E8%9E%8D%E8%B5%84/%E7%BD%91%E8%B4%B7%E9%80%9A/ 新E贷:http://www.knet.cn/topic/kx/20131127/

China China Ant financial Construction Mingsheng Bank Bank

Name

JD

Product

白条

花呗

快e贷

新e贷

Loan modes

-

-

-

-

credit ceiling (RMB) Interest – free period Loan interest (annual) Founded

50k (500k 90% of your for private credit limit client)

15k

50k

30 days

41 days

12 months

6%

18%

7.20%

9.60%

Feb-14

Dec-14

Dec-14

Jan-15

Shanghan China Guangdong China Citic Pudong Merchants development Bank Development Bank Bank Bank E秒贷 POS贷 闪电贷 网贷通 mortgage and meet other application requirement

500k

300k

500k

3mil

3 years

90 days

1 year

13%

8.30%

18%

Depends

Jan-15

Dec-14

Jan-14

Jan-14

12 months 1-24 months

融e行、工银e投资VS各类“宝” ▪ Direct bank – ICBC is the first one and more than 20 banks have direct selling banking services in China.

David Lee: The Game of Dian Fu

Wealth Management Products Comparison

Name

Alipay

Ping An Bank

Product

Yu'E Bao

橙E宝

Industrial Shanghai and Pudong Mingsheng Commercial Development Bank Bank of Bank China

掌柜钱包

节节高2号

普发宝

如意宝

增金宝

5.192%

4.610%

5.000%

Jul2014

Feb 2014

Mar 2015

Annual Interest

3.850%

4.08%

3.562%

30%above Central Bank interest rate

Founded

May 2013

Nov 2014

Mar 2014

May 2014

David Lee: The Game of Dian Fu

China Zheshang Bank

Industrial Bank

Sources: 橙E宝:http://www.orangebank.com.cn/ 掌柜钱包:http://www.yypt.com/home/about/index!walletIntro.action 浦发宝: http://www.spdb.com.cn/docpage/c446/201407/0717_446_06.aspx?COLLCC=1974014816& 如意宝:http://www.mindai.com/news/2541184.html 增金宝:http://news.xinhuanet.com/fortune/2015-05/19/c_127817396.htm 节节高:http://epaper.oeeee.com/epaper/H/html/2015-07/24/content_3448677.htm?div=0

Three Development Models A. Independent:

1. 农行 – 掌上银行 – 2014 2. 民生银行- Direct selling banking system 3. 包商银行- 小马bank 4. 工行E-ICBC 5. 交通银行- 好生意-O2O

David Lee: The Game of Dian Fu

B. Cooperation: 1. 北京银行联合荷兰国际集团(ING) 2. 北京银行联合腾讯(Tencent) – more than 10 billion investment 3. 中国银行联合百度(Baidu)兴业银行联合蚂蚁金服(Ant-Financial services) 4. 华夏银行联合微众银行- “接力贷” C. Diversification: 平安银行联合微众银行,和邦股份,深圳 光启- Logistic finance, small and micro business, Diversified financials

Independent – On Your Own Partner

Product

Nature of Business

Founded time

N/A

掌上银行

Mobile App: E-payment, Ebusiness, E-social

Mar-14

N/A

如意宝,定活宝,民生金 etc.

Direct banking

Feb-14

Baoshang Bank

N/A

XiaoMa Bank: 千里马;马 宝宝

Online Wealth management product(bond and Money market fund)

Jun-14

ICBC

N/A

e-ICBC

Internet Finance Platform

Mar-15

Bank of Communications

N/A

好生意

Small and Micro Finance "O2O"

May-15

Banks Agricultural Bank of China China Minsheng Banking

David Lee: The Game of Dian Fu

Cooperation: Letting the BATs and Others In Banks

Partner

Product

Nature of Business

Founded time

Beijing Bank

ING Group

N/A

Internet + Direct Banking (the first one)

Sep-13

Beijing Bank

Tencent

京医通

Internet + Medical, Third party payment and retail selling

Apr-15

Bank of China

Baidu

Industrial and commercial bank

Ant-Financial services

Huaxia Bank

Webank

O2O, Data + risk management, N/A clients+ costs, consumer credit services strategy corporation in payment, N/A financial services, financial inclusion strategy corporation in resource "Jielidai" - 接力 sharing, credit card, wealth management, interbank business 贷 etc.

Sources: 北京银行和ING:http://finance.sina.com.cn/money/bank/ywycp/20130918/141716800000.shtml 中银和百度:http://www.bankofchina.com/aboutboc/ab8/201506/t20150615_5170218.html

David Lee: The Game of Dian Fu

Jun-16

Jun-15

Feb-15

Bank of Beijing * ING Bank 将直销银行概念引入中国,北京银行的直销银行采用的是“互联网平台+直销门店”的 方式。直销银行在服务渠道上提供线上和线下融合、互通的渠道服务.

Bank of Beijing * Tencent 北京银行将向腾讯提供意向性授信100亿,双方将围绕京医通项目、第三方支付、集 团现金管理、零售金融等领域开展业务合作。

Bank of China * Baidu

Cooperation

百度旗下的百度小贷牵手中国银行,将在“线上+线下”、“数据+风控”、“获客+资金 成本”多维度展开。同时,还将面向个人消费信贷领域。

Industrial Bank * Ant Financial Service 前期已在支付结算、客户/商户服务、资产平台等方面建立了较为深入的合作关系。双 方将在现有业务合作的基础上,将合作范围与深度进一步拓展至渠道互通、业务互 补、产品共建、客户共享等具有增值效应的领域,优化和共营投融资平台及服务,开 发新型获客途径

Hua Xia Bank * WeBank 双方将在资源共享、小微贷款、信用卡、理财、同业业务、生态圈业务等多个领域开 展深入的合作。华夏银行已给予了微众银行20亿元的同业授信额度,并且双方合作 的产品小微企业信贷产品“接力贷”已上线。 David Lee: The Game of Dian Fu

Diversification: Searching for the Unicorn and Disrupting Oneself!

Sources: 综合化的金融需求。http://finance.ifeng.com/a/20150508/13693211_0.shtml 橙E网:http://finance.sina.com.cn/stock/t/20150127/015421402787.shtml 橙E创业易:http://finance.ce.cn/rolling/201505/15/t20150515_5378452.shtml 商派:http://finance.sina.com.cn/money/bank/20150528/010422283334.shtml

Banks

Partner Webank Shopex

Ping An Bank

David Lee: The Game of Dian Fu

Product "big data credit" platform

Nature of Business

Founded time

strategy corporation

May-15

Internet funding based on Big data

May-15

Internet + agriculture service A new Mobile payment technology– tap to pay, don’t need card

He Bang corporation

N/A

Jun-15

GuangQi corporation

光子支付

N/A

橙e创业易

support star-up companies

Jun-15

N/A

橙子银行:“定活 通”,“平安盈”等

Direct banking

Aug-14

N/A

橙E网

E-commence

Jun-14

Jun-15

Cooperation – The Whole Industry Has Been Dian Fu! Webank 在深圳签署《全面业务合作协议》

PING AN BANK 和邦股份 和邦股份宣布与平安银行成都 分行就互联网+现代农业电子 商务项目结成全面、紧密、深入 的战略合作伙伴关系。

David Lee: The Game of Dian Fu

商派 签署互联网金融合作协议, 双方将建立面向小微企业的 互联网金融服务平台,第一 步将展开基于大数据的互联 网金融融资服务。

光启 联合深圳光启推出新型移动 支付方式“光子支付”。

Banks E-Commerce ▪ 工行的“融E购”(Rong e Gou)

农行的“e商管家”(e Shang Guan Jia)

建行的善融商城(Shan Rong Shang Cheng) 交行的“交博汇”(Jiao Bo Hui)

E-commence Of Banks Accumulated transaction volume

Founded time

Name

Product

Register customers

China construction Bank

善融商城 (Shan Rong Shang Cheng)

10b

RMB 90b

Jun 2012

Agriculture bank of China

E商管家 (E Shang Guan Jia)

More than 11t merchants

RMB 1.3t in 2014

Apr 2013

ICBC

融e购 (Rong e Gou)

18b

RMB 100b

Jan 2014

David Lee: The Game of Dian Fu

Source: http://tech.gmw.cn/newspaper/2015-07/23/content_108080096_2.htm E商管家:http://www.ccstock.cn/jrjg/bank/2015-07-28/A1438016082203.html

Banks Are Evolving!

2014年3月30日,农行重点推出 其最新版本的“掌上银行”, “掌上银行”提供移动银行、移 动支付、移动商务、移动社交等 应用。继掌上银行之后,农行多 个B2B平台和产品也陆续推出。

David Lee: The Game of Dian Fu

Internet Banking Or Internet Finance 2014年2月民生银行率先推出 的直销银行,提供如意宝、 定活宝、民生金等门槛低、 体验好的纯线上金融服务。 除探索直销银行新型银行经 营模式外,民生银行也持续 发力移动 金融,新推自助注 册客户小额支付、小微客户 在线贷款和续授信、信用卡 在线申请和实时购汇等手机 银行特色功能。

David Lee: The Game of Dian Fu

Chinese Banks Are Innovative!

2014年6月19日,包商银行独立 研发的被业内誉为中国银行业第 一家智能理财平台“小马bank” 正式上线。该平台上线初期主推 的重点产品包括两类产品债券 (千里马)和货币基金(马宝 宝)。产品债券是指把包商银行 传统的小贷业务的贷款转化成为 债券在线上出售,小马bank是 包商银行内部100%的全资控股 子公司。 David Lee: The Game of Dian Fu

The Clear Leader! 2015年3月23日上午,中国工 商银行在京正式发布互联网金 融平品牌“e-ICBC”及其“三大 平台+三大产品线”,成为国内 第一家发布互联网金融品牌的 商业银行。此次工行发布的互 联网金融品牌包括“三大平 台”和“三大产品线”,其 中,三大平台分别为“融e购” 电商平台、“融e联”即时通讯 平台、“融e行”直销银行平 台;三大产品线则分别为支 付、融资、投资理财,以及 “支付+融资”、“线上+线 下”和“渠道+实时”等多场 景应用。 David Lee: The Game of Dian Fu

Banks Are Driving Cloud and Technology Innovation

2015年5月底,交通银行正式对外 发布其小微金融O2O创新产品——“好 生意”。据悉,该产品基于互联网 云+端技术,整合软硬件平台,为小 微商户提供了线上线下(O2O)一 体化收单、商品管理、财务管理、 理财融资等综合解决方案。

David Lee: The Game of Dian Fu

The Banks Will Now Be In the Chart! Market share of China E-commence 1.10% 1.50% 1.30% 1.70% 1.40% 2.80% 3.10%

Source: file:///Users/smu/Desktop/%E3%80% 8A2014%E5%B9%B4%E5%BA%A6%E4 %B8%AD%E5%9B%BD%E7%94%B5%E 5%AD%90%E5%95%86%E5%8A%A1% E5%B8%82%E5%9C%BA%E6%95%B0 %E6%8D%AE%E7%9B%91%E6%B5%8 B%E6%8A%A5%E5%91%8A%E3%80% 8B.pdf

David Lee: The Game of Dian Fu

0.60%

20.20% 59.30%

Tmall 天猫 JD 京东 Suning 苏宁 Vipshop 唯品会 Gome Eshop国美商城 Amazon China 亚马逊中国 1Hao dian 1号店 Dangdang 当当网 Yixun 易迅 JuMei 聚美优品

A New Era Where Internet Finance and Internet Banking Complement Each Other and More ▪ Internet Banking ▪ 金融互联网 ▪ JinRong HuLianWang ▪ Finance before Internet ▪ Internet Finance ▪ 互联网金融 ▪ HuLianWang JinRong ▪ Internet Comes first, then Finance ▪ Internet of Things and More ▪ There will be no distinction ▪ End to End ▪ O2O ▪ LBS ▪ You no longer organise your corporates, society, rules and regulation as before David Lee: The Game of Dian Fu

The Growth of Mobile Payment 120000

18 16

100000

12 10

60000 8 40000

Volume

Value

80000

14

Source: http://www.pbc.gov.cn/publish/zhifujiesuansi/4263/index. html

6 4

20000 2 0 2010

2011

0 2013

2012

Mobile Payment in Value( billion RMB)

Mobile Payment in Volume (Billion)

Year

Mobile Payment in Volume (Billion)

Growth Rate

Mobile Payment in Value( billion RMB)

Growth Rate

2010

1.18

77.08%

5700

102.01%

2011

2.47

109.32%

9900

73.68%

2012

5.35

116.46%

23100

132.39%

2013

16.74

212.86%

96400

317.56%

David Lee: The Game of Dian Fu

Mobile Phone Penetration Rate in China

The US Mobile Penetration Rate is only 81.5%!

Source: http://data.stats.gov.cn/search.htm?s=%E7%A7%BB%E5%8A%A8%E7%94%B5%E8%AF %9D%E6%99%AE%E5%8F%8A%E7%8E%87 David Lee: The Game of Dian Fu

Penetration rate of internet users in China from 2005 to 2014

There is more upside than the current 47.8%! US is 60% and Europe 70%!

David Lee: The Game of Dian Fu

Number of internet users in March 2015 (in millions)

David Lee: The Game of Dian Fu

China is leading the world in Mobile Banking!

David Lee: The Game of Dian Fu

Transaction volume for China mobile banking is still growing at 18.6%! The Connectivity Inclusion Programme is World Class! Source: http://www.chinabgao.com/freereport/66449.html David Lee: The Game of Dian Fu

Alipay 9.0 – The Technology is World Class

David Lee: The Game of Dian Fu

Alipay 9.0 • 3 months ago, Alipay launched Non-Gesture Password Model • Near 30 million people accept this new model. Source: 支付宝《给新支付宝用户的一份安全报告》 David Lee: The Game of Dian Fu

Alipay 9.0—— Security Analysis

David Lee: The Game of Dian Fu

Alibaba ▪ Within 9 Months: Attracted 25% of all bank deposits onto its Yu’E Bao platform as a cash deposit with good interest payments

▪ Winning the competition against eBay that had over 70% of ecommerce market in China ▪ Expanded services into Fund supermart (Zhao Cai Bao), Insurance (Zhong An), Credit Rating (Zhima), Lending (Ali Credit), Movie (YuLe Bao and moving making), medical hospitality services, tax refund, moving booking, travel services, and almost every financial services that we can think of within months of each new product. ▪ Expanding into logistic and logistic financing with OBOR. ▪ All services provided within a few seconds using an app with insurance coverage for theft and loss. David Lee: The Game of Dian Fu

颠覆

Dian Fu

What is the End Game of Dian Fu David Lee: The Game of Dian Fu

▪ Round One: Internet Finance

▪ Round Two: Internet Services ▪ Round Three: OBOR, AIIB, Connectivity Inclusion and More ▪ Reorganisation is key to joining the game! ▪ Immediate: Technology + Mandarin

颠覆

Dian Fu It is Just the Beginning!

David Lee: The Game of Dian Fu

Are We Ready for 颠覆? ▪ Do we have the technology as advance as China? ▪ Do we have as many Strategists, Talents, etc. as in China? ▪ Do our traditional institutions have the experience to withstand and ride on the Dian Fu?

▪ Do we have the experience to work with rural areas as the Chinese financial inclusion model for ASEAN? ▪ Do we have any strategy to work along the OBOR strategy to take advantage of AIIB, Bi-lateral Swap, RQFII, and other financial facilities? ▪ Is the smart nation smart enough? David Lee: The Game of Dian Fu

David Lee: The Game of Dian Fu

Chinese Article that presented arguments for using “Blockchain Technology” for Singapore to expand into ASEAN and to use the Financial Inclusion model of China and Kenya for Singapore’s neighbours. -David Lee and Yan Li 15th May 2015, Lian Zaobao

David Lee: The Game of Dian Fu

David Lee and Yan Li, 3rd Aug 2015, Lianhe Zaobao

War Strategy

China should stop using the word

Policy Strategy

战略 Zhan Lue

战略

策略 Ce Lue

David Lee: The Game of Dian Fu

In a joint commentary, SMU Sim Kee Boon Institute for Financial Economics Director Professor David Lee and SMU Lee Kong Chian School of Business Senior Lecturer in Strategic Management Yan Li commented on China’s ‘One Belt, One Road’ initiative which aims to rejuvenate two ancient trade routes and further open up markets within and beyond the region. They said it is not possible for China and some ASEAN countries to dispel all reservations and cooperate merely on the basis of economic gains. Trusted by both sides, Singapore can act as a platform for China to enter the ASEAN market. Furthermore, Singapore could adopt the strategy supported by “Smart Nation” policy to set up infrastructure to boost internet finance and inclusive investment, which will not only improve the quality of life in underdeveloped regions in ASEAN countries, but further sustain Singapore’s leadership. They also commended the Monetary Authority of Singapore for setting up the new FinTech and Innovation Group to enhance efficiency and competitiveness of Singapore’s financial sector, and guide the transformation of Singapore’s leading traditional financial institutes. http://skbi.smu.edu.sg/news/2015/08/03/one-belt-one-road-and-one-connected-financial-network David Lee: The Game of Dian Fu

Time for More Chinese Helicopters! CAIC Z-10 Chinese Helicopters! CAIC 直-10 for 直升机-10 Z-10 is known as Fierce Thunderbolt (霹雳火)from the Chinese classic novel Water Margin (水浒传).

Z-10 and ZW-10

Sounds like

Chinese Educated Chinese Educated Singaporeans are known as Chinese Helicopters!

=

Case Study: Bi-lingual Start-up

bit.ly/yami_ios

bit.ly/yami_android

Appreciation to Members of the SKBI Dian Fu Research Team

Zhang Han

David Lee: The Game of Dian Fu

Chang Su

Chi YingYing

Lin JingXian

Public Talk delivered by

Professor David LEE Kuo Chuen 李国权 Executive/Academic Director of Sim Kee Boon Institute For Financial Economics Singapore Management University Founder, Ferrell Asset Management Pte Ltd Email: [email protected] Website: http://skbi.smu.edu.sg/ This is a Public Talk given at a Book Launch on 17th Aug 2015 with Guest of Honour Mr Liew Heng San

http://store.elsevier.com/coArticle.jsp?pageid=26100002

http://store.elsevier.com/Handbook-of-Asian-Finance/isbn-9780128009826/

http://store.elsevier.com/Handbook-of-Asian-Finance/isbn9780128009864/