Web-based fi­nance firm eyes ex­pats

China Daily (Canada) - - CHINA - By YU RAN in Shang­hai yu­ran@chi­nadaily.com.cn

Huaxia Fi­nance is China’s first In­ter­net fi­nan­cial ser­vices provider to re­ceive for­eign direct in­vest­ment, in the form of $3 mil­lion from Cathay Cap­i­tal Group, the US-based in­vestor, in De­cem­ber, 2015.

For the lat­ter, the in­vest­ment in Huaxia, ap­proved by the Shang­hai mu­nic­i­pal gov­ern­ment, was its ma­jor step into China’s In­ter­net fi­nance sec­tor.

Now, Huaxia Fi­nance has re­ceived a cer­tifi­cate that al­lows it to en­large its client base by tap­ping into the ex­pat in­vestors in China, in ad­di­tion to its cur­rent do­mes­tic in­vestor pool. “The cer­tifi­cate brings more dis­ci­pline than im­me­di­ate ben­e­fits as we have to be to­tally trans­par­ent in our busi­ness oper­a­tions, and ready for su­per­vi­sion and mon­i­tor­ing by the gov­ern­ment,” said Benny Li, chair­man and CEO of Huaxia Fi­nance, which is head­quar­tered in Shang­hai.

To be sure, other In­ter­net fi­nance com­pa­nies in China do have for­eign in­vestors, but their in­vest­ment was not la­beled as FDI. Such In­ter­net fi­nance com­pa­nies are or­ga­nized through a vari­able in­ter­est en­tity (VIE) struc­ture, which could en­counter reg­u­la­tory and tax­a­tion hin­drances in a po­ten­tial off­shore IPO.

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