The Dream Factory of China

　　Offering cross-border loans and launching renminbi loans in Hong Kong - these are just some of the services that Qianhai can offer both as a pilot free trade zone, and as a model portal to implement China’s open-door policies. In being Qianhai’s only integrated financial investment platform, Qianhai Financial Holdings Limited (abbreviated as “Qianhai Financial Holdings”) is the trailblazer in many of Qianhai’s financial innovation attempts.

　　What role does Qianhai Financial Holdings play in Qianhai’s financial innovation? How does it lead the change? Li Qiang, General Manager of Qianhai Financial Holdings, told all in a recent interview.

　　On the day when Guangdong province was officiated as one of China’s pilot free trade zone on April 21, Qianhai Financial Holdings issued 1 billion worth of renminbi bonds in Hong Kong. Said Li: “The significance of Qianhai Financial Holdings issuing bonds in Hong Kong isn’t only about the financing or economic effects it brings about, but also helps build up operation experience for Qianhai enterprises in the issuing of renminbi bonds in Hong Kong. This will help greatly in fine-tuning policies.”

　　Li said that to translate the beneficial policies that the country has bestowed upon Qianhai into real work on the ground is of utmost importance to Qianhai Financial Holdings. “Only after the first bonds issue did we realise how challenging it was. Credit investigation, finding underwriters and issuers, finding institutional investors, distributing related information… these were also very complex procedures, and the approval by ministries, the Development and Reform Commission and the People’s Bank of China were required. Thereafter, there is still a series of sessions to nail down the commercial terms as well as meetings with lawyers and accountants… If we didn’t go through it ourselves, we would have thought that the issuing of bonds was simple. But in terms of the means, the manner, the rationale, the operation, issuing bonds in China differs greatly from issuing bonds overseas. With our experience in this issuance, we will know where the difficulties are and share our experiences with other enterprises, and will be able to lead them in the future in cross-border bonds issuance.”

　　Qianhai Financial Holdings, a wholly subsidiary of the Qianhai Authority, was set up on August 17, 2010 and positioned as a strategic leader of integrated financial investment platforms. Five years since its inception, Qianhai Financial Holdings made its first foray into the issuing of renminbi bonds in Hong Kong, setting itself as an example for other Qianhai enterprises.

　　Qianhai Financial Holdings is also a leader in cross-border renminbi loans. Li said that Qianhai Financial Holdings has already successfully explored three different approaches of offering cross-border loans. The first, and the most commonly seen, is  collaboration with onshore banks which provide onshore guarantees or security for offshore loans, an approach known colloquially as neibao waidai.

　　The second approach is direct loans. Qianhai Financial Holdings has obtained a direct loan from Hang Seng Bank. But this approach rests solely on the offshore bank’s understanding and trust in the requesting enterprise, and questions of creditworthiness and taxation would arise in the process of obtaining the loan. Many of the details in this process need  to be further addressed to.

　　The third approach is loan syndication. Last December, as Qianhai’s renminbi cross-border policies reached the second anniversary of its implementation, Qianhai Financial Holdings, together with six financial institutions from Shenzhen and Hong Kong created the first cross-border renminbi loan syndicate.

　　In bringing to reality the “Qianhai Concept” and officially introducing and pricing of cross-border renminbi loan syndicates in Hong Kong’s banking industry, the syndicate’s creation marked a momentous occasion in the progress of cross-border renminbi loans. Thus, not only can Qianhai enterprises obtain loans from Hong Kong banks through the neibao waidai or direct loans, they can also obtain funds through loan syndication.

　　Li said that even though Qianhai Financial Holdings’ first loan syndication is only 500 million yuan, it has brokered new ground in providing cross-border loans and thus a new model for business operations in the larger cross-border renminbi loan environment. It is also a shining example of Qianhai Financial Holdings’ financial innovativeness.

　　“Through offering cross-border loan syndication, we have taken note of many points of interest and accumulated a vast array of experiences, thus enabling Qianhai Financial Holdings in standardising procedures for the operation of cross-border loan syndication with other banks. Aside from norm-setting, we can also play the role of investment advisor, helping other partners obtain loans and funding.”

　　Li said that aside from policy feedback and financial innovation, Qianhai Financial Holdings is imbued with another important sense of purpose, whichis to lead the industry. “The industry can seek its way forward through co-funding or operational collaboration. Qianhai Financial Holdings will do all it can and explore all avenues to find a way to standardise the procedures for the industry.”

　　Aside from taking up a steering role in a co-subsidiary with ZTE Corporation, Qianhai Financial Holdings also takes up leading roles in other collaborations with other companies. In addition, Qianhai Financial Holdings has also set up a direct subsidiary Qianhai New Finance. Through the strategic investment, shareholding or financial holding, Qianhai New Finance steers the development of Qianhai’s non-licenced financial institutions, innovative financial companies and trading centres.

　　In order to facilitate the implementation of Qianhai’s policies re  PE FOFs and other private investment funds, Qianhai Financial Holdings established Qianhai Capital Management Limited in order to develop its investment fund clusters and to function as a platform for onshore and offshore investors.