2018/01/09

Wang Dongzhi of CM Financial: Finance Should Serve the Real Economy and Build Whole-Chain Financial Services

    China Minsheng Financial Holding Corporation Limited (CM Financial), a major financial platform owned by CMIG Asia Assets Management Co., Ltd. (CMIG Asia), is based in Hong Kong and aims to connect mainland China with the Hong Kong markets. It has made some positive attempts and gained several achievements in connecting finance with industries, attracting foreign investors and encouraging private enterprises of China to go international. These achievements can be attributed to the powerful background of CMIG’s shareholders, the accurate strategic positioning of CM Financial and its professional financial team.  

    When interviewed by Shouxi Dialogue, Mr. Wang Dongzhi, a top executive who only travels between his office and home and deems work as the greatest fun, shared the strategic vision and business ideas of CM Financial.

 

    Developing whole-chain finance to serve the real economy

    In the past two years, CM Financial has obtained four financial licenses in the HK market: No. 1, 4, 6 and 9. As Mr. Wang said, “As a matter of fact, by obtaining these four licenses, CM Financial is now able to serve the entire life cycle of enterprises. We are able to provide businesses with financial services for their start-up, growth, M&A, regrouping and expansion.”

    Shouxi Dialogue learned that the HK market adopts the regulation of financial licenses. Financial institutions can engage in the trading of stocks, financial derivatives, foreign exchange, gold, etc. Ranging from No. 1 to No. 9, HK financial licenses differ in how difficult they are to obtain.

    CM Financial now holds HK financial license No. 1, allowing securities trading for clients; financial license No. 4, permitting the provision of proposals on securities trading; financial license No. 6, permitting proposals on institutional financing; and financial license No. 9, permitting the provision of the asset and investment portfolio management of securities and futures contracts in the form of carte blanche.

    Financial license No. 9, which is considered the best, qualifies a company for Category 9 business as regulated in the Securities and Futures Ordinance issued by the Securities & Futures Commission of HK. Holding this license means obtaining a permit for the international capital market. Holders of this license can not only make overseas investments but also manage and use the funds of overseas investors. Independently holding this license is usually seen as proof of a company’s strength.

    In just two years after its founding, CM Financial obtained four financial licenses, showing the admirable executive force and strategic deployment of its team.

    In the eyes of Mr. Wang, the business permitted by licenses Nos. 1, 4, 6 and 9 held by CM Financial forms a closed business circuit when it serves the real economy and life cycles of companies, thereby promoting the healthy and sustainable development of CM Financial.  

    As Mr. Wang told us, “We hope to take advantage of the licenses of CM Financial to help more companies use the power of the capital market and secure rapid growth. Industries have to rely on support from finance, and it can only play a bigger role by depending on industries. We hope that finance can genuinely serve the real economy. Only in this way can finance grow stronger in the process of serving the real economy.”

 

    Building a bridge to support going out and bringing in

    CMIG Asia aims to become an organizer of cross-country resources serving the healthy development of private capital. As a subsidiary of CMIG Asia, CM Financial plays a major role in its strategic pattern and establishes a synergistic effect with the industrial pattern of CMIG. At present, CMIG has set up five sectors oriented towards the real economy: CMIG New Energy, CMIG Jiaye, CMIG Futurelife, CMIG Aviation and CMIG Healthcare.

    Without the support of the financial market, it would be impossible to secure the healthy development of these sectors. Headquartered in HK and serving as the bridgehead of CMIG’s financial services, CM Financial plays an important role in this respect.

    As a major part of CMIG’s global strategy, HK has always been the hub for CMIG to connect mainland China with the global market. The longer plan of CMIG is to use its advantages in the HK market to build a platform that provides professional and comprehensive professional services for more companies in China.

    Based in HK with mainland China as strong support, CM Financial is able to build a bridge of communications for companies in mainland China and HK, thereby bringing in capital to China and encouraging companies in China to go out.

    According to Mr. Wang, HK plays two roles for companies, especially the private companies of mainland China. First, it plays a powerful role in financing; and second, the financial market in HK takes the leading position.

    As Mr. Wang said, “Nowadays, HK is the world’s fourth largest and China’s largest financial center, featuring convenient financing, long term and low cost. To secure continuous economic growth in China, we need more companies supporting the real economy. At present, CM Financial is providing investment and financing services for an SOE about to list in HK. We are ready to provide more SOEs with financing services for M&A and regrouping in national strategic energies, mineral resources and other fields. At the same time, we will make corresponding industrial investments and layout by following the Belt & Road Initiative.”

    Shouxi Dialogue learned that CM Financial has provided financing services worth billions of HK dollars for China’s enterprises over the past two years. It has also carried out research and investing & financing practice in serving China’s Belt & Road Initiative and establishing its global industrial presence.

    Since its founding, CM Financial has provided professional services and assistance for the overseas projects of ACFIC member companies and the shareholder companies of       CMIG. Its services and investments are seen in the US, Europe, Singapore, Malaysia, Iran and other countries and regions.

    As Mr. Wang revealed to Shouxi Dialogue, “Last week our team found a very good online platform trading securities assets. In order to better coordinate our overseas and domestic business, we are also negotiating with a domestic Internet platform for trading assets. If we are successful in investing in these two companies, we can combine the overseas platform with the domestic one. On the one hand, we can make full use of the advanced technologies of other countries to access the securities trading markets of London, Singapore, Japan and Korea. On the other, we can gain access to the population advantage and trading advantage of China. Once the two markets are connected, we will produce a huge volume.”

 

    Development in Internet finance

    As the development of Internet finance has accelerated over the past few years, P2P, universal finance and other new-type financial models have emerged. While many new Internet finance companies have been established, traditional financial giants have established alliances with Internet finance, embracing new development.

    According to a CNNIC research report, as of June 2017, 511 million users in China were using mobile payment and 126 million users had purchased online wealth management products. Featuring a convenient and efficient service model, Internet finance helps more people gain access to greater welfare. The concept of Internet finance is being widely accepted.

    CM Financial is doing well in Internet finance. As Mr. Wang told us, “Since last year, we have conducted extensive research in the field of Internet finance. We are currently negotiating with two overseas Internet financial companies on investment.”

    Having worked in the field of traditional finance for many years, Mr. Wang had much to share when talking about Internet finance. According to him, innovative Internet finance is a major direction in deepening financial reform.

    Mr. Wang stated the three prominent characteristics of Internet finance. First, it is communicable. In the past, financial institutions were physical outlets and people had to go to financial outlets to receive services. Nowadays, the PC end and mobile end make things more convenient. In recent years, the extensive deployment of merchant settlement devices has helped to boost Internet finance.

    Second, Internet finance is serviceable. Suppliers and buyers can meet on the Internet. In this way, companies that provide services find it easier to access clients.

    Third, it can help companies to grow rapidly. Nowadays, people can make cross-border payments when purchasing goods. The cross-border shopping offered by Alibaba is a typical example. Mr. Wang believes that Alibaba would not have expanded so quickly without the Internet instruments that support settlement. The Internet has helped many physical companies to quickly expand their scale within a short period.

    Based on these three points, Mr. Wang believes that CM Financial, a company with a financial nature, must resort to Internet finance if it intends to gain unconventional growth speed.

    As Mr. Wang reiterated, “When engaging in Internet finance, CM Financial should focus on our core business and securities trading platform. We hope to establish an online platform to trade securities in HK and use this platform to access the major securities markets in the world, allowing more institutions and individual investors access to our professional asset portfolio plans on the Internet and our high-yield portfolio of wealth management products.”

    Mr. Wang expressed support and recognition for the financial supervision policies issued by China. According to him, the government should enhance supervision, which is good for responsible investment companies because it helps to regulate the market.

    As he pointed out, “By constantly improving the supervision policies, the government is able to phase out those companies and platforms with poor compliance. This can help to protect CM Financial by improving the security coefficient of our investment platform.”

 

    Enhancing HR building and improving the branding of CM Financial

Incorporated in Shanghai in 2014 with registered capital of RMB 30 billion, CMIG now has total assets of over RMB 300 billion, and building a team of qualified personnel contributed greatly to this achievement. It is the same for CM Financial, which focuses on professional and precise services.  

    It is known that the financial industry focuses on maximizing the HR margins and professionalism. CM Financial now takes the leading position in China in the industry in terms of team building. Since its inception, CM Financial has enrolled senior executives from TOM, Goldman Sachs, UBS and other famous financial institutions. In a short period, it established a financial investment team in line with CMIG’s strategic layout and work style. Today, CM Financial has four professional teams engaging in securities and asset management, investment and financing, investment banking, etc.

    As Mr. Wang said, “Last year our profits stood below RMB 100 million, but this year they have expanded to a few hundred million. With the same amount of funds, we have increased our profits tenfold. This is the power of professional teams.”

    He continued, “CM Financial will set a clearer strategic positioning and focus more on the investment pattern. In the past, we worked in investment banking + investments. Today, CM Financial, which started business just two years ago, is concentrating on major industries and business orientations.”

    Wang Dongzhi believes that by shrinking the investment lines and focusing more on the core business, CM Financial will greatly expand its brand influence.

     “We hope to become a specialist, but not a versatile company.”