Shanghai government hands out policies and incentives to attract investments and talent in five-year fintech hub master plan
- In announcing various incentives to draw fintech companies and talents to the municipal, Shanghai has officially thrown down the gauntlet to Hangzhou, which also vies for role as global fintech centre by 2030
- Shanghai grooms fintech unicorns such as Lufax, Ping An OneConnect; Hangzhou are home to tech giants Alibaba and Ant Financial
In announcing the policies mooted since last year, the Shanghai municipal government has also formally thrown down the gauntlet to neighbouring Hangzhou city, the capital of Zhejiang province, which is home to some of China’s biggest tech companies including the cryptocurrency mining gear maker Canaan, China’s biggest e-payment company Ant Financial Services and Alibaba Group Holding, owner of South China Morning Post.
In Shanghai’s latest rules, roughly translated as “implementation plan on expediting Shanghai’s fintech centre development”, the municipal government has promised to cut the enterprise tax on hi-tech companies to 15 per cent, from the standard 25 per cent. The government is also looking to attract talent through favourable housing and medical benefits.
Hangzhou isn’t standing still. The local government formulated a plan in May 2019 to turn the city into an international fintech centre by 2030, aiming to extract more than 120 billion yuan (US$17.4 billion) in added value from the sector by 2022.
“The implementation plan proposes that Shanghai should spend five years to develop itself into a fintech research and technology [centre]; a centre of innovation application, amalgamation of fintech companies and talents; a place for fintech standard-setting, and a pilot district for regulatory innovation,” according to a report by Yicai the local government-linked media outlet. The official document is not yet available on the Shanghai municipal government website.
Continuous effort will also be made on further improving China’s well-entrenched internet payment technology and ecosystem, whereby nonbank payment operators, including Alipay and Tencent’s WeChat Pay, have processed some 181.3 trillion yuan (US$25.9 trillion) in online payment during the first three quarters of 2019.
But while Hangzhou groomed Alibaba and Ant Financial – the latter raised a record US$13.9 billion in 2018 from private equity investors – Shanghai took pride in being the home base to several leading fintech groups. These include China UnionPay, which is the country’s largest bank card network. Ping An’s OneConnect, one of the eight virtual banking licences issued by the Hong Kong Monetary Authority; and online lender and wealth management group Lufax, reportedly valued at US$39.4 billion last year.
The race to become China’s fintech hub comes amid additional resources being put into intellectual property by Chinese entrepreneurs, said Chuan Thor, general partner of private equity firm AlphaX Partners, speaking at a private equity conference organised by the Hong Kong Venture Capital and Private Equity Association.
“Ten years ago, Chinese entrepreneurs had less interest and were spending less capital on registering patents. But in the last few years, we found that the number of patents are increasing significantly in China,” Thor said.
