HongKongEcho 90 - Finance: A new pulse for Hong Kong's heartbeat

Autumn/ 2018

90

FINANCE A NEW PULSE FOR HONG KONG’S HEARTBEAT

W

elcome back for this autumn edition of HongKongEcho as we start another working year. I’m sure you all enjoyed the break – and France’s World Cup victory – whether you were in Hong Kong or abroad.

It’s my absolute pleasure to be writing to you for the first time as Executive Director of the French Chamber. I’m proud to take over this role and lead this organisation which truly represents the dynamism, implication and diversity of the French business community in Hong Kong.

EDITOR’S LETTER

I’d like to take this opportunity to thank my predecessor Delphine Colson for her great work over the past two years and her six years of service to the Chamber. I’m excited to embark on this new journey and I look forward to working closely with our President Rebecca Silli and the whole of the Chamber’s Executive Committee.

I see the Chamber’s role as a platform to connect France and Asia by bringing French business to Hong Kong, as well as to foster closer ties between the local and French business communities.

As the Head of Members Services at the Chamber for the past year, I’ve seen the depth of engagement of our 1,000 members and I can assure you we will continue to build this strong business community to help you network, gain insight and grow.

I also look forward to welcoming many more new companies to our fantastic city through our wide range of business services.

There’s certainly a busy year ahead as we tackle many of the key issues concerning Hong Kong and for this back-to-work edition of HongKongEcho we look to a subject that has long been a part of the city’s identity – finance.

Hong Kong’s finance sector is one of the many areas where French presence is significant, but it’s also a sector which is undergoing significant change in the face of increased disruption.

From virtual banks to crypto assets, to green finance and everything in between, finance is finding a new pulse in Hong Kong. For the city’s future success, it’s an evolution which might just be crucial.

Sophie Leconte Executive Director French Chamber

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Contents

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Editor’s Letter Contents La Chronique

Cover Story: Finance

10 12 16 20 24 28 31 34

Banking on success Timeline of Hong Kong’s finance industry Green light for green finance FinTech, frankly Crypto comes of age A share of the spoils Branches for the unbanked The mainland movement

French Chamber Highlights

42 47 52 54

Looking Back Members' Highlights New Faces French Chamber Foundation

P.44 Published by

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@French Chamber in Hong Kong

facebook.com/fccihk

LaChronique

‘IS IT A REVOLT? NO SIR, IT’S A Hong Kong has been left behind by mainland China’s rapid FinTech explosion. But it’s not too late to catch up, says David Baverez, author of Paris-Pekin Express. He tells us why the financial revolution must come from within before it’s too late.

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hile we all thought that the 2008 Global Financial Crisis would lead to a complete revamp of the financial industry, incumbents have been at first sight very clever at teaming up with regulators to introduce the most bureaucratic regulatory framework.

They thought they would thereby raise barriers for new entrants, maintaining their traditional cartel, even if their resulting dismal return on equity would

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now struggle to cover their cost of capital. After all, traditional bankers had all been educated according to the wellestablished principle that we were all more likely to change wife or husband, rather than banks. So, the key was to maintain the old order.

Fortunately, for us, what these blinded bankers did not see coming is the dramatic technological revolution we

are going through, with the rise of data and smartphones. Instead, they have been drawing comfort from the lack of any really sizeable successful ‘FinTech’ both in the US and Europe. They have overlooked mainland China, where the most advanced part of the FinTech action is now taking place, best illustrated by the recently announced IPO of Ant Financial Services with a targeted US$150 billion market capitalisation.

Mainland leads the way The new ‘3D’ revolutionary experience in financial services is indeed first happening in the mainland: Deconstruction of the value chain; Dematerialisation of the offering; Disintermediation of the distribution.

The Deconstruction led to the rise of highly targeted business models attacking the most overpriced and inefficient niches of the financial industry, like transfer payments, small and medium enterprise lending, or asset management. The dematerialisation was best exemplified by mobile payments, where two new entrants – Alipay and TencentPay very swiftly cornered 90% of a market now 10 times bigger than that of the United States. The Disintermediation gave rise to peerto-peer distributors replacing the ‘pire en pire’ (worse and worse) brick and mortar horror experience of traditional banking and insurance.

Unfortunately, it’s fair to say that Hong Kong so far has largely

missed the boat. A globally significant Hong Kong-based FinTech is still yet to emerge, while Singapore’s PR engine is keen on regularly stressing its superior progress versus its traditional rival in financial services.

So, what should Hong Kong do?

One possible stance would draw comfort from the city’s well-established undisputed strengths: the only ruleof-law environment within a four-

"Hong Kong is therefore in a unique position through the development of the Great Bay Area to build a ‘Special Financial Zone’ over the next decade" hour flight circle, encompassing close to a US$20 trillion annual GDP; and the necessary gateway for the mainland to get the convertibility of the Yuan at some stage in the future.

A more productive approach would be to learn lessons from the drivers of the success of the mainland at reinventing its financial services industry:

like a proactive regulatory framework for new entrants, a careful selection of new champions backed by exceptional entrepreneurs in targeted industry segments; and a cultural change encouraging young talents to join these new startups rather than the traditional industry incumbents.

At the same time, Hong Kong should think about the role model it could be for the mainland, helping it address the remaining numerous weaknesses of its financial system: the US$1.5 trillion estimated losses from Non-Performing Loans by the IMF remind us of how much the mainland remains in dire need of decent credit risk mechanisms.

Meanwhile the very slow start of the China-backed Asian Infrastructure Investment Bank – having granted only a mere US$4 billion in loans since its inception – is a great illustration of how the mainland remains incapable of meeting international financing standards, like in sustainability or ‘green finance’ requirements.

Hong Kong is therefore in a unique position through the development of the Great Bay Area in Guangdong to exploit the ‘Hong-Kong-Shenzhen Connect’ to build a ‘Special Financial Zone’ over the next decade that could serve as a template for the whole country.

If not, no doubt, it will be Shenzhen’s FinTech start-uppers who will be every bit keen to launch their own revolution and carve out their own ‘ShenzhenHong-Kong Connect’.

David Baverez is the author of Paris-Pékin Express (Editions Francois Bourin 2017).

The views expressed are purely personal.

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FINANCE A NEW PULSE FOR HONG KONG’S HEARTBEAT BANKING ON SUCCESS (P. 10) TIMELINE (P. 12) GREEN LIGHT FOR GREEN FINANCE (P. 16) FINTECH, FRANKLY (P. 20) CRYPTO COMES OF AGE (P. 24) A SHARE OF THE SPOILS (P. 28) BRANCHES FOR THE UNBANKED (P. 31) THE MAINLAND MOVEMENT (P. 34)

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FINANCE | Banking on success

BANKING ON SUCCESS Hong Kong’s finance sector has suffered accusations of being overly traditional, slow and out of touch. But its evolution shows signs of a fresher future for finance.

A

skyline says a lot about a city.

Hong Kong’s tells you one thing quite clearly: finance is the name of the game here. The iconic towers of HSBC, Bank of China or even IFC itself are us much part of the city’s cultural fabric as they are emblems of a city rooted in banks and their billions.

It’s no surprise, then, that 70 of the world’s largest 100 banks operate in the city, helping to put it on the map as one of the top four global financial centres with financial services accounting for 6% of the workforce and almost 18% of the city’s GDP.

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The numbers are nice, yes. But it wasn’t so long ago that we were hearing banking was ‘dead’ – a dangerous prospect for a city so deeply intertwined with the banking sector.

Banks are just the beginning The talk has changed though, says Charles d’Haussy from InvestHK. FinTech is a disrupter, certainly, but the talk is now “how the banks will collaborate with FinTech players to keep their leading market positions”. He tells us why FinTech is more than a buzzword with a host of concrete measures kicking in this September on (page 20).

One of those measures is the much-touted arrival of virtual banking licences. No physical branches needed, and no need to be backed by a traditional bank. It’s the kind of evolution which will “bring financial management and responsibility to people who would never have had access to such a thing before,” according to Alex Kong.

His Hong Kong-based startup TNG Wallet is part of the new wave of startups that offer services which look and feel like those of a bank, but without the strings attached.

He tells us how he transformed the city’s several thousand 7-Elevens into branches for the ‘unbanked’ (page 31).

While the steps have been made to move away from traditional banks, the move away from traditional currency is also gaining ground. Still, it won’t happen overnight admits Pascal Gauthier from French cryptocurrency security startup Ledger.

The private sector is likewise mobilising with the likes of the Hong Kong Green Finance Association launched on 21 September among other notable steps taken by banks that recognise the city’s opportunity to add a new feather in its cap for financial leadership.

New economy tech giants are the new target, largely because one of the old targets – mainland banks – have already either listed or are often choosing China’s own market to list. Don’t be fooled, though, mainland banks are more present in Hong Kong than ever.

What’s certain though is that cryptocurrency is no longer simply the stuff of tech fanatics and utopian idealists.

“There’s been a huge shift in sentiment regarding cryptocurrency, and it’s happened only in the past six months,” he says. And it’s the banks who want in. Pascal explains why Asia is the next frontier for crypto assets’ surge into the mainstream (page 24).

Indeed, Hong Kong has never been short of plaudits for its role a regional leader – no more so than for its stock

We dug through the figures to see what a 170% increase in the number of mainland banks operating in the city

market. As an IPO destination, the city

over the past decade means for Hong Kong’s banking sector (page 34).

Beyond the virtual The changing face of finance is of course not limited to all things digital. Green finance is much more concerned with the physical world.

Social responsibility, sustainable development, positive impact to the environment. It sounds great. But how does it translate into real projects?

Mr Paul Chan, Financial Secretary of the HKSAR Government, explains the schemes put in place to make Hong Kong a regional leader for green financing within the notable context of China’s Belt & Road initiative (page 16).

has few rivals even if China’s increasingly relevant market looms large.

Nonetheless it needed a revamp, insists Louis Lau from KPMG. He explains why Alibaba rejecting a listing in Hong Kong was the shot in the arm the city needed to push for recent reforms targeting the new wave of tech giants (page 28).

Undoubtedly all these developments will continue to raise questions about the city’s vital financial services industry.

After all, it’s a sector Hong Kong can’t afford to slip behind on. What’s positive is that there’s no shortage of initiatives to do what has constantly defined the city’s success – reinvention.

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FINANCE | Timeline

TIMELINE OF HONG KONG’S FINANCE INDUSTRY 1859

Standard Chartered Bank sets up in Hong Kong

1865

HSBC established Hong Kong’s first locally owned and managed bank.

Now employing 229,000 people worldwide, it’s become an icon of the city’s banking prowess.

1866 Global financial crisis

1891 Hong Kong Securities market (now known as Hong Kong Exchange) created

Chris Patten, Hong Kong’s final Governor. After 156 years, British rule ends.

The territory has gone from fishing village to financial hub.

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Today represents one of the world’s largest stock markets with 2,118 listed companies and a total market cap of HK$34 trillion.

1917 Bank of China established in Hong Kong Now one of the most recognisable of the Chinese banks. There are now 26 Chinese banks set up in Hong Kong, marking a 170% increase in the past ten years.

1918 Bank of East Asia established in Hong Kong

1958 Deutsche Bank established in Hong Kong

1894 CrÊdit Agricole CIB registered in Hong Kong The first of today’s French banks to establish its presence in Hong Kong.

Today there are a number of French banks among the roughly 178 international banks with a presence in the city.

1958 BNP Paribas established in Hong Kong Now with 2,500 employees here, BNP Paribas is the largest French bank in Hong Kong in terms of staff.

Hong Kong: The Asian Tiger.

From textile trading and manufacturing prowess to international finance hub; a city never afraid to reinvent itself.

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FINANCE | Timeline

1997

Hong Kong is handed over from British rule to the Chinese

1997

Asian Financial Crisis The crisis reaches Hong Kong in October when stocks plunge in the city by 30% that month.

1970 The decade where Hong Kong is firmly an ‘Asian Tiger’ Hong Kong’s economy booms as the world’s gateway to China, and the city affirms its place as the region’s financial services hub.

1977

Société Générale established in Hong Kong

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1994

Natixis sets up in Hong Kong

1997

Octopus card launches At the time it was revolutionary. A way around traditional credit cards that was accessible to all.

Now, the card is being challenged by other players in the drive for easier payment systems in the city.

2003-2014 SARS outbreak in Hong Kong / Global financial crisis / Occupy Central A difficult and highly eventful decade for Asia’s World City.

The Hong Sang Index hits a low of 8,331 points on 25 April 2003 amid the SARS crisis.

2018

2017

Hong Kong’s economy named world’s most competitive for second year running

HKMA announces first-ever virtual banks to be authorised A landmark step in Hong Kong’s shift towards a more nimble and modern banking sector.

1999

DBS Bank (Hong Kong) established in Hong Kong

Finance goes green: A new imperative?

Paul Chan, current Financial Secretary proposes a HK$100 billion green bond issuance programme in his 2018-19 Budget.

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FINANCE | Green light for green finance

GREEN LIGHT FOR GREEN FINANCE Financial institutions working for the good of society. Some may be sceptical. But Financial Secretary of the HKSAR Government, Mr Paul Chan, is confident that green finance is the real deal.

H

ongKongEcho: When we set out to cover the evolution of Hong Kong’s finance sector, there was one topic that stood out as essential – green finance. But what exactly is it?

Paul Chan: Green finance is a new but rapidly expanding area of financial activities that seeks to make use of capital markets and/or financial intermediaries to bring a positive impact on the environment through emphasis on social responsibility and sustainable development. The concept of green finance, as well as the underlying principles and mechanisms for assessment and evaluation, is at the

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nascent stage of development, and keeps on evolving as it attracts more public attention and increased investment from around the world.

HKE: The government has been quite vocal in recent years about its development – what exactly are your ambitions PC: We aim to develop and firmly establish Hong Kong as a leading hub for green finance in the region, with a focus on the mainland and economies along the Belt and Road. By leveraging our strengths and advantages as an international financial centre, we seek

to create values through sophisticated professional

services

and

our

unparalleled expertise and reputation in the provision of financial services.

The Government will facilitate and provide the necessary infrastructure and catalyst for jump-starting market

developments. We will at the same time build up our international profile on green finance with proactive promotion targeting audiences overseas.

We’ve already seen steady growth. In the first half of 2018, at least 15 green bonds were issued in Hong Kong, with an aggregate size reaching US$8 billion by notable issuers including multilateral agencies and private sector entities around the world.

On that point, progress is being made on a number of fronts including the Green Finance Certification Scheme, the Green Bond Grant Scheme, the Government Green Bond Programme, the Pilot Bond Grand Scheme as well as the Enhanced Qualifying Debt Instrument Scheme.

HKE: What’s the reason behind the timing of such a focus? Why now?

PC: Following the Paris Agreement in 2016, the unprecedented multilateral treaty to combat climate change, governments around the world are taking steps to embark on the arduous but necessary journey of moving towards economic development that is greener and puts increased emphasis on sustainability. On the back of market players’ growing demand for higher environmental, social and governance standards, as well as increasing public awareness of sustainable development, green finance has become a hot topic among the investment community in recent years where global green bond issuance in 2012 increased by 60 times to around US$160 billion in 2017.

Riding on the increasing global and domestic demand, China has emerged as a leader and key player in green finance.

Under the G20 presidency in 2016, China took the initiative of launching the G20 Green Finance Study Group (currently

known as the G20 Sustainable Finance Study Group), and called for scaling up of green finance. Development of green industries was likewise featured in the National 13th Five-Year Plan.

The mainland itself has witnessed notable development in the green bond market since then, with issuance reaching some US$23 billion consecutively in both 2016 and 2017, ranked as the first and second largest green bond issuer in the world in the two respective years.

As an international financial centre and the global RMB business hub leveraging on our status as the prime gateway between the mainland and the rest of the world, Hong Kong can play an important role as a premier financing platform for international and mainland enterprises in channelling global capital to projects and investments that bring environmental benefits.

HKE: Surely this role is one that has particular significance within the context of the Greater Bay Area and the Belt & Road project?

PC: Yes, these initiatives will add further momentum to cross-border and crossboundary infrastructure and investment projects, including those with a green focus.

As stipulated in the Framework Agreement signed between the HKSAR Government and the mainland authorities last year, building a green and low-carbon Bay Area is one of our key cooperation areas. In fact, Guangdong is now one of the five green finance pilot zones as launched by the mainland authorities.

As for the Belt & Road, infrastructure development and investment is crucial.

According to estimates from the Asian Development Bank, infrastructure

The view from the private sector Three historic financial actors in Hong Kong are leading the way for green finance in the city and beyond.

Crédit Agricole CIB was one of the four first banks to define green finance in 2014. Last year, it was awarded the title of leading underwriter in the green bond market

by Environmental Finance for its role as a lead manager in 81 green bond deals that year.

Likewise, BNP Paribas has taken a leading position in the region and worldwide which was recognised by Euromoney with an award for ‘World’s Best Bank for Sustainable Finance’ in 2018.

Amongst the Chinese banks, Bank of China’s overseas presence is unrivalled. In 2018 it was awarded ‘Best Green Chinese Bank in Overseas Markets’ by AsiaMoney.

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FINANCE | Green light for green finance

Planting the seeds

Green Finance Certification Scheme (GFCS) Pilot Bond Grant Scheme

Launched: May 2018 A scheme for enterprises to issue bonds, including green bonds, in Hong Kong. The amount of grant for each eligible bond issuance is equivalent to half of the issue expenses, capped at HK$2.5 million.

Enhanced Qualifying Debt Instrument Scheme

Announced in 2018/19 Budget With a view to spurring market demand, an enhancement to provide tax concession for bond investment in Hong Kong.

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Established: January 2018 Established to provide thirdparty conformity assessments for issuers on their green financial instruments.

Launched: June 2018

Green Bond Grant Scheme (GBGS)

A scheme to subsidise eligible green bond issuers in obtaining certification under the GFCS (up to a maximum of HK$800,000 per bond issuance) and to attract more corporate green bond issuance in Hong Kong.

Announced in 2018/19 Budget

Government Green Bond Programme

A programme with a borrowing ceiling of HK$100 billion to encourage issuers to finance their green activities through Hong Kong’s capital markets and develop a broad green investor base through the issuance of high quality green bonds.

investment of as much as US$1.7 trillion per year will be needed until 2030 in Asia alone. That will be even higher for the entire Belt & Road region. A concerted effort will be required to ensure the sustainability and environmental friendliness of these investment projects.

To this end, under arrangements signed in December 2017, we have agreed to develop a green bond market on the basis of Hong Kong’s platform by supporting qualified Chinese enterprises to raise funds through issuing bonds in Hong Kong for green projects relating to the Belt & Road initiative; and to promote the setting up of an internationally-recognised green bond certification institution.

including the annual Asian Financial Forum organised in Hong Kong.

In June this year, the Hong Kong Monetary Authority, in collaboration with the International Capital Market Association and the People’s Bank of

finance scene such as the United Nations Sustainable Stock Exchange Initiative to promote market development.

With Hong Kong being a member centre of the G7-supported International Network of Financial Centres for S u s t a i n a b i l i t y, t h e Government will continue to support local professional bodies and their collaboration with overseas counterparts to jointly promote green finance.

“We aim to develop and firmly establish Hong Kong as a leading hub for green finance in the region.”

HKE: Those are the concrete projects, but how are you looking to promote Hong Kong’s positioning on this topic to the world?

PC: We’re always keen to publicise Hong Kong’s competitive capital markets and highlight our edge in developing green financial products at regional and international for u ms

China respectively, held two events on green bonds that brought together a total of 1,300 industry professionals and policymakers.

All of this will not only deepen the understanding of green finance among the investment community and the general public in Hong Kong, but will also help enhance Hong Kong’s participation and profile in green finance globally.

The Securities and Futures Commission and the Hong Kong Exchanges and Clearing Limited have also been actively taking part in the global green

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FINANCE | FinTech, frankly

FINTECH, FRANKLY

The F-word. It’s promised a lot. Paradigm shifts, re-imagined financial systems, blockchains upon blockchains. But Hong Kong’s FinTech ecosystem is more than a pipedream, says Charles d’Haussy, Head of FinTech at InvestHK.

H

ongKongEcho: FinTech seems to pop up in every conversation about finance in Hong Kong, but what are we actually talking about beyond the buzzwords?

Charles d’Haussy: When we talk about FinTech in Hong Kong, we mostly talk about the B2B ecosystem as opposed to the B2C kind of ecosystem that is so predominant in mainland China.

The reason Hong Kong’s ecosystem has developed that way is largely because we’re talking about a city that is the number three global financial hub in the world with 159 banks, 157 insurance companies, several hundred stockbrokers and – to top it off – the world’s most

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competitive economy. Combine this with one of the world’s freest market economies and you’re left with the right environment for FinTech to flourish. It’s important that the government is there to facilitate, not to interfere with the private sector as you may see in other jurisdictions.

In terms of pure numbers, Hong Kong has seen a high level of investment by venture capitalists in FinTech worldwide leading the Asia pack (excluding the mainland market) at US$545 million according to a 2017 study by Accenture.

Beyond that, you can divide FinTech in Hong Kong into six main subsections:

cybersecurity, blockchain for enterprises, InsurTech, WealthTech, RegTech and CrediTech.

Cybersecurity is a real priority because FinTech is finance and finance is all about trust. Whenever cybersecurity is compromised, you damage the trust.

So it’s important we keep Hong Kong’s financial industry safe.

HKE: What’s the typical role of traditional financial institutions in this evolution? Are they threatened or welcoming it with open arms?

CH: The narrative has changed a lot. Two years ago what we were hearing was that FinTech would lead the world and banks

“The discussion has shifted to how the banks will collaborate with FinTech players to keep their leading market positions.”

Ten FinTech startups to know in Hong Kong • 8 Securities

Online and mobile investing service

• CompareAsiaGroup

Financial comparison platform

• Currenxie FX and cross-border payment solutions • Lion Rock Fintech Fund distribution platform • Mioying Financial Technology Artificial intelligence software for banks • Quantifeed Digital wealth management solutions • Simple Token Public blockchain platform for businesses • TNG Wallet E-wallet and payments • WeLab Online lending platforms • Wesurance Mobile app for insurance services

would die out. Now, not just in Hong Kong but worldwide, the discussion has shifted to how the banks will collaborate with FinTech players to keep their leading market positions.

Proof of this is that in Hong Kong we have five FinTech accelerators, which are for growth stage companies who want to accelerate in the market. That’s more than most financial capitals worldwide. Who’s funding them? It’s the banks, investment funds and venture capitalists. That shows it’s not just lip service, the banks are really getting involved positively.

What’s also interesting in that space is the rise of services or payment apps which

aren’t technically banks but which give the user experience of a bank. This is why the mobile phone wallet licence was introduced in 2016, for example.

HKE: The Hong Kong Monetary Authority’s (HKMA) recent virtual banking licence regulations should also provide users with more options for their financial needs. What have you made of the announcement?

CH: I think it’s the right step forward and the market is welcoming it very well. All eyes will be on the new banks which, under this licence, while needing a physical presence in Hong Kong, won’t need physical branches to operate.

Their biggest challenge will be customer

acquisition and retention. It will be interesting to see what kind of customers they will attract and why. But we shouldn’t forget about the existing banks who will most likely get involved also.

HKE: There has been some commentary that these licences are over-restrictive and that the price of entry is too high. Are those comments accurate?

CH: I think we shouldn’t forget that when you’re a bank you represent a systemic risk for the economy. So for different types of banking licences it’s important to manage risk according to the use.

For example the mobile phone wallets have specific storage limits and that’s a HongKongEcho | 21

FINANCE | FinTech, frankly

way of controlling risk to Hong Kong’s economy which, after all, relies strongly on financial services.

FinTech week, this platform will be connected with the equivalent trade finance blockchain in Singapore.

But ultimately the goal of the regulators is to push innovation while also protecting the users. They’re not looking to open the market up for anyone and everyone.

Finally, the Faster Payment System (FPS) is set to be introduced in September also and will be a real game-changer. Anyone in Hong Kong will be able to move money instantly and free of charge between all banks as well as all mobile phone wallets in Hong Kong.

That being said, my feeling is that you will see a similar pattern to the way the mobile phone wallets were introduced.

On that occasion we saw licences given out to technology companies, telecom companies, mobility companies and banks. I think we’ll see a similar situation with the virtual banks. It will be very much open to new players.

HKE: Are there other government initiatives coming up that we should keep an eye out for?

CH: September will be exceptionally busy. First with the issuing of virtual banking licences. Secondly we’ll soon see a common QR code regulation introduced which will ensure that codes used by all payment apps will be uniform, making it easier for shops and users alike to pay efficiently and with ease.

Another major initiative is the blockchain trade finance platform across Hong Kong banks. The HKMA, working with seven major banks, are completely revamping the trade finance workflow within banks. Today it’s very costly and time consuming for banks to help SMEs with their trading and activity. The result is those SMEs suffer. By taking this paper-intensive process online onto the blockchain, it means any requisite documents will move between banks effortlessly as a way of validating an SME’s trade.

Next year, as part of an agreement we signed during last year’s Hong Kong 22 | HongKongEcho

HKE: You mentioned that announcement as part of last year’s FinTech week – this year’s edition is just on the horizon, what’s the purpose of the event?

CH: The Hong Kong FinTech week presented by InvestHK is now in its third year and we’ve been doubling our numbers every year. This year we have 8,000 sqm at the Hong Kong Convention Centre to welcome 8,000 attendees with 100+ companies exhibiting and four stages for talks. The idea is to host a largescale business networking event. Our aim is to bring overseas companies to Hong Kong to meet with potential customers while simultaneously stimulating the FinTech ecosystem here.

This will also be the first time that we’ll host a cross-border FinTech week. The event will finish in Shenzhen as part of our desire to align with the government’s strategic objective of nourishing the connections within the Greater Bay Area.

FinTech startups visiting Hong Kong for

the week will be able to really experience the opportunity the city offers you to easily access the enormous market just across the border..

HKE: Greater Bay Area is one thing but perhaps the even bigger point of interest for Hong Kong is the Belt and Road initiative. What’s FinTech’s role in positioning the city within this initiative?

CH: The Bay Area is a fantastic mediumterm case study for Hong Kong to make the most of the initiative and prepare the city for the business opportunities of the Belt and Road.

If you look at the roughly 100 countries along the Belt and Road, most of them have very nascent financial services infrastructure. Hong Kong will be a great place to raise funds and to have a legal base whether you’re a Chinese or international firm. The key fundamentals are already there: stable regulations, low tax rates, a trusted financial centre, rule of law and English-language prowess.

The Belt and Road Initiative is the world’s largest project involving digital infrastructure. It opens unique opportunities that Hong Kong is ready for. FinTech will simply be the enabler for Hong Kong to continue doing what it does best.

ABOUT INVESTHK As the Foreign Direct Investment agency of the Hong Kong Special Administrative Region Government, InvestHK is at the forefront of promoting the city to the world.

Boosting Hong Kong’s FinTech profile is a key aspect of this mission. With a dedicated team in Hong Kong working closely with correspondents in London and San Francisco, InvestHK’s FinTech department is a 24hour, six-day-a-week operation.

By attracting top global innovators, enterprises, investors and entrepreneurs in the FinTech space, it aims to make Hong Kong the platform for these businesses to scale and expand to mainland China and the rest of Asia.

FINANCE | Crypto comes of age

CRYPTOCURRENCY: AN EXPLAINER So, what actually is a cryptocurrency?

In short: a digital asset which doesn’t exist in physical form. Instead of being backed by a traditional bank (like a normal currency), cryptocurrencies are organised through a distributed network known as blockchain. Basically an online ledger that keeps a secure record of all transactions which relies on all users to validate transactions instead of one central authority.

These assets can be bought, sold and traded but they aren’t really ‘stored’ anywhere – instead they’re accessed by a string of numbers (like a PIN code) that is known as a private key.

226

cryptohedge funds worldwide

Understanding the blockchain

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US$7,200 = 1 Bitcoin

*As of early September 2018

CRYPTO COMES OF AGE Cryptocurrency has never seen better days. Banks, hedge funds, everyday investors. They all want a piece. Pascal Gauthier and his Paris-based startup Ledger are on their way to the new frontier – Asia.

B

itcoin. If you haven’t bought any yourself, by now you probably know somebody who has. You might even know someone who bought early and who’s now lounging away their life on a secluded private island in the Bahamas.

The rest of us are left scratching our heads (read our explainer if this sounds like you) as to what cryptocurrency even is. The reality is the world is starting to catch on.

“There’s been a huge shift in sentiment regarding cryptocurrency, and it’s happened only in the past six months,” says Pascal Gauthier, President of worldleading French cryptocurrency security startup Ledger. “Where cryptocurrency was considered ‘toxic’ by banks and financial institutions only six months ago, now everyone wants in.”

More than the blockchain Hong Kong’s interest however has been largely limited to the other big ‘B’ of finance – blockchain.

of the world’s first bitcoin ATMs was installed in Hong Kong on Bonham Road. Although it’s now gone, three of the ATMs still exist in the city in Central, Tseun Wan and Mong Kok.

“Given our global experience I’d say that Hong Kong is still a little behind in the cryptocurrency world,” says Pascal. The US and Europe are both still well ahead regarding talent, sentiment and companies specialised in cryptocurrency, he explains.

While this may be a nice gimmick – the Central ATM is housed alongside a parody image of The Last Supper, a sword and a medieval helmet – cryptocurrency in Asia is nonetheless a new frontier.

“Hong Kong cannot afford to stay behind for too long, especially if its regional rivals start making the right investments. But Hong Kong being the competitive city that it is, I’m confident sentiment will change fast.”

It wasn’t that long ago, in 2014, that one

The Nikkei Asian Review estimates 70% of the world’s bitcoin ‘mining’ (the process where bitcoins are created by computers solving mathematical equations as part of securing the blockchain) occurs in mainland China.

The next piece of the crypto puzzle It’s why Pascal and Ledger are setting up HongKongEcho | 25

FINANCE | Crypto comes of age

This sentiment is shared by the likes of the International Monetary Fund, whose Managing Director Christine Lagarde remarked in April 2018 that “policymakers should keep an open mind and work towards

an

even-handed

regulatory

framework [for cryptocurrency] that minimises risks while allowing the creative process to bear fruit”.

Asia is still finding the right balance. South Korea has taken steps to legally recognise crypto assets, but has been equally rocked by major hacks of online cryptocurrency exchanges. Japan – who likewise has been largely supportive of the new asset class – has had similar woes.

Herein lies the key, according to Pascal. operations in Hong Kong to better serve the Asian market.

it’s important to clarify that this doesn’t mean the virtual currency is banned in the country. You can still own bitcoin in China

At only a few hours flight from other important markets like South Korea and Japan, the city’s location is ideal. “Hong Kong is both a regional hub and one of the biggest financial capitals in the world. In particular this is crucial for the enterprise product we offer. It’s a natural fit for us.”

China’s decision to ban bitcoin exchanges hasn’t swayed his optimism. Likewise,

– as many millions do – and trade from

Security – which has largely been an afterthought in the crypto revolution – will be the essential component for turning the substantial noise into a tangible future for

peer-to-peer on specific platforms.

cryptocurrencies like bitcoin.

Such regulatory friction is part of a global

“As more and more institutional money

pattern, Pascal explains. “All governments realise that they need to stay competitive

pours into cryptocurrency, security needs to be paramount. Traditional players like

for the future, so everyone is afraid. What

banks and hedge funds will demand the

I’m seeing is that there’s a consensus that

highest level of security and bring their

good can come out of crypto. We just need

best practices to this new area. That’s

to work towards the right regulations.”

where the future is.”

Ledger: a French startup at the forefront of security Ledger is a Paris-based startup with a mission to secure the world of cryptocurrencies for individuals and enterprises alike. Their product offering is two-fold. A hardware wallet, for individuals, and the Ledger Vault for businesses. Securing the Internet of Things (IoT) is next on their list of ambitions.

Their signature Ledger Nano S model hardware wallet looks like the Tesla of cryptocurrency.

Slick, stylish, strangely comforting. 1.3 million have already been sold across 165 countries worldwide.

A small interface to enter a PIN code ensures maximum security as the device stores your key (i.e. the access code to your cryptocurrency) offline, making it far more resistant to being hacked like an online exchange.

26 | HongKongEcho

FINANCE | A share of the spoils

A SHARE OF THE SPOILS

Hong Kong’s stock market is no stranger to competition. Its latest reforms recognise the need to take that competition head-on if it wants to survive as an IPO hub, says Louis Lau from KPMG. In its sights? Tech giants.

28 | HongKongEcho

T

here’s something inherently satisfying about the traditional Gong-ringing ceremony to mark the open or close of a trading day. For those lucky enough to list their company on Hong Kong’s renowned stock market, it’s an opportunity to bask in the glory, take the plaudits and smile to the throng of photographers.

But it’s a historical institution which, like all other financial actors, must evolve.

A lot has changed since the first H-share listing (essentially a mainlandestablished company listing on the Hong Kong market) in 1993. “Since then, there have been an ever-increasing number of mainland companies listing in the city.

Now roughly 50% of listed companies

are from the mainland, making for 60% of the market capitalisation,” says Louis Lau, Partner, Capital Markets Advisory Group at KPMG China.

Hong Kong benefited significantly from the state-owned behemoths choosing to list in the city with China’s own IPO market, at the time, being insignificant.

“Originally we saw mainland telecom giants, resource companies, and banks choosing to list in Hong Kong. Things have changed. China’s own IPO market is more relevant than ever and the stream of sizeable companies from the traditional industries has dried up,” he explains.

New economy, new listings The target now is the new economy

companies. Namely, tech giants.

“This goes right back to 2014 when Alibaba was considering whether it should list in Hong Kong or the US. Hong Kong’s listing rules had their limitations and ultimately Alibaba chose the US.” Today it’s still the biggest IPO listing in history at US$25 billion. “Hong Kong realised that those companies would continue to make the same choice if it didn’t make some real reforms to target major tech companies,” Louis says.

The result: in April 2018, the Hong Kong Exchanges and Clearing Limited announced a new listing regime which would open listings to technology HongKongEcho | 29

FINANCE | A share of the spoils

“Hong Kong shouldn’t forget that it’s not just about attracting mainland companies to list here.

International companies are also the target. Diversity is key.” giants with a dual class or multiple class shareholding structure; biotech firms without profit or revenue; and innovative companies currently listed in the US or the UK seeking a secondary listing.

“These new rules make sense and are necessary for Hong Kong. The city can no longer rely solely on traditional companies like state-owned enterprises and financial institutions to compete with overseas bourses.”

Not all smooth sailing The first major listing of a tech giant under the new regime came in June, with Chinese telecom company Xiaomi raising US$4.72 billion – valuing the company at just over half of the US$100 billion originally touted.

It was a disappointing start to the new listing rules despite being nonetheless the biggest global tech listing in the past four years. “The stock market has been affected by both the ongoing US-China trade war and uncertainty about interest rate movements. So I think, all things 30 | HongKongEcho

considered, it’s unfair to say it didn’t perform well,” he says.

Currently the only other major tech giant listed in the city is Tencent, but he expects Meituan Dianping (China’s largest on-demand online service provider) to be the next to test the waters of the new listing regime.

Biotech companies are the other focus.

“We expect there to be roughly 10 biotech listings by the end of 2018,” he says. But the going has been equally tough. Asia’s first pre-profit biotech listing Ascletis Pharma made an underwhelming debut under the new rules in August with prices tumbling in the first days of trading.

Still, he’s positive on the reform’s future prospects. “The point is that it takes time to develop the investor cluster. It won’t happen overnight.”

Compete or co-exist?

The shaky start to the city’s latest power-play to remain relevant in the

increasingly competitive world of IPO markets could cause some concern. But these concerns are nothing new.

“People have been questioning Hong Kong’s ability to stay relevant as an IPO capital ever since China’s market for IPOs opened up. The reality is that Hong Kong continues to hold its place in the top 5 markets worldwide in the past decade.”

Both the Shenzhen and Shanghai stock connect programs with Hong Kong are avenues for the city to complement the mainland’s booming market, rather than compete directly, Louis says. Over US$1 trillion in shares has been traded between the two links in the three years since the Shanghai program’s debut.

“But Hong Kong shouldn’t forget that it’s not just about attracting mainland companies to list here. International companies are also the target. Diversity is key.”

BRANCHES FOR THE UNBANKED Many of us may take having a bank account and a credit card for granted.

But these aren’t always accessible for all. E-wallets like Alex Kong’s TNG Wallet are an alternative which will change banking as we know it.

“T

here are two groups of people in Hong Kong, the well-banked and the unbanked,” says Alex Kong, Founder & CEO of Hong Kong-based startup TNG Wallet.

It sounds like the slightly ominous preamble to a dystopian novel, but the Malaysian-born serial entrepreneur assures us it’s simply the backdrop to a global shift in greater access to financial services.

Some 50% of the world’s population are without a bank account. In Hong Kong

31 | HongKongEcho

Alex claims the number is around 1 million people – a staggering number for a city that is (rightly) proclaimed as a global financial capital.

Many of those are the city’s domestic helpers, and now, Alex’s core client base.

Banking on the unbanked Take a stroll through the city any Sunday afternoon and you’re bound to see handfuls of domestic helpers lining up – sometimes for hours on end – to send cash payments to families in their home countries, mostly

Connecting the unbanked to financial services via a virtual wallet

the Philippines and Indonesia.

It’s costly, slow, draining.

Alex’s proposition? Real-time international transfers, low transaction fees – and all of it done on your mobile.

FINANCE | Branches for the unbanked

Essentially, it’s a streamlined mobile banking service without a bank account.

Instead of traditional physical branches, users can make deposits (or cash withdrawals) at any 7-Eleven or Circle K convenience store – making it the only e-wallet in Hong Kong offering such a service.

100%+ growth per month in the first 18 months of the company

“We haven’t changed much for the ‘wellbanked’ individuals because they already have a bank account, a credit card and an Octopus card,” he says. But for those traditionally neglected by banks, it’s a remarkable shift.

So too for cashless payments. If there’s a last bastion of resistance to the virtues of e-payments, it’s Hong Kong’s taxis. Here TNG has also made some ground, with some 2,000 taxis now accepting payment via the e-wallet.

Of course, others are at it too. The likes of WeChat, Alipay, Apple Pay and even Octopus all provide relatively easy access to alternative payment models. WeChat and Alipay in particular offer the kind

32 | HongKongEcho

of low-cost remittance payments to the Philippines which are used by domestic helpers, but their coverage to other countries is far less extensive than the 14 Asia-Pacific countries which are covered

by TNG. Traditional actors like HSBC have likewise entered the e-payment market with their own e-wallet, but of course users need to already be a customer of the bank.

Alex admits there are still limitations – there’s no interest given out on deposits and there is a payment ceiling that automatically bans further transactions once exceeded – but it nonetheless looks and feels like a bank, and yet it isn’t.

User-to-user chat facilities, as well as its planned 2018 rollout for an associated Mastercard which can be programmed with daily limits via your phone or cancelled entirely and a dynamic CVV code which changes every hour are likewise all features that go beyond regular banking app facilities.

It may not be as all-encompassing (or all-invasive depending on how you see it) as an application like WeChat, but its spread has been equally astounding since its creation in Hong Kong in 2015.

“We’re essentially a branchless bank and yet we have more than 400,000 non-bank branches in our worldwide network including convenience stores,

post offices, shopping malls and local ATM machines.”

A virtual reality Alex isn’t the only one scrambling to change the very definition of banking.

The upcoming virtual bank licencing from the Hong Kong Monetary Authority (for which TNG Wallet has applied) will further open banking services to customers who previously may not have engaged with traditional banks.

While the wallet service is already extensive, a virtual bank licence would allow for further enhancements.

Customers would be able to establish an

Dynamic CCV code to bolster security

account remotely by uploading personal documents for screening, with the whole process only taking roughly half an hour.

The ramifications of this for service providers like TNG Wallet – among others expected to enter the space – would be significant. Small companies operating in Belt & Road countries, Alex explains, would be able to set up accounts in Hong Kong remotely and make easy international payments.

“We’re able to bring financial management and responsibility to people who would never have had access to such a thing before.”

“Again, we’re not going after the traditional banks’ clients. In most of those countries, the majority of businesses are SMEs – banks are typically only interested in serving the giants, while we’re interested in taking care of the smaller players.” Likewise, he hopes employers will be the next to embrace this sort of alternative banking, with salaries being paid directly to the e-wallets of users.

Alex is keen to emphasise the basic

These, clearly, are transformative times. Despite these lofty ambitions,

really about working towards fixing a

fundamentals of what such apps can achieve - even if it’s still a business at the end of the day.

“Through virtual services like ours, we’re able to bring financial management and responsibility to people who would never have had access to such a thing before – that in itself helps to alleviate the conditions of poverty. For us it’s social problem.”

Alex Kong, serial entrepreneur and Founder of TNG Wallet.

His other endeavours include founding software company SINO Dynamic Solutions Limited, now one of the city’s largest enterprise software developers.

HongKongEcho | 33

FINANCE | The mainland movement

THE MAINLAND MOVEMENT Hong Kong has long played a role as a gateway for China’s foreign commercial trade. But an increasing number of mainland financial firms with a physical presence in Hong Kong is changing the makeup of the city’s vital finance sector as we know it.

T

he influx of mainland firms in Hong Kong over the past decade hasn’t gone unnoticed.

With the wallets to back them up, they’ve shouldered much of the blame for soaring real estate prices, making for incessant grumblings from existing tenants in the traditionally ‘Western’ Central district, whether their qualms be splashed across the pages of the SCMP or garnished as small talk in business circles.

The biggest wallets of all – you guessed it – are the Chinese banks. But there’s more to this movement than bricks-andmortar.

Progress of mainland banks In short, mainland banks are more present, more relevant and more globally minded than they were since the 1997 Handover according to analysts from KPMG, one of the Big Four consulting

34 | HongKongEcho

firms, in a December 2017 report.

This might seem obvious. But reeling off the names or number of the many mainland banks in the city is another question.

According to the Hong Kong Monetary Authority, the number of mainland financial institutions with a physical presence in the city has increased 170% in the past decade from 16 to 26.

To put that in perspective, mainland financial institutions now account for roughly 35% of Hong Kong’s total assets for similar institutions. That’s up from 11% at the time of the Handover.

Locally and globally relevant The local footprint is one thing.

But perhaps more importantly, the loan portfolios of these banks have become

“Hong Kong’s local – and foreign – talent will be at the frontline of this new era.” increasingly international through Hong Kong’s role as a global RMB hub.

The daily turnover of RMB foreign exchange transactions in Hong Kong equalling upwards of US$93 billion is just part of the fertile ground the city offers for mainland banks who seek a more international clientele.

At the time of the Handover, mainland banks were largely restricted to lending to the Hong Kong market itself. Twenty years later, the proportion of loans made by mainland banks in Hong Kong to customers outside the city reached above 40% in 2016.

Who are the Chinese banks?

The likes of the highly-visible Bank of China or the Industrial and Commercial Bank of China (ICBC) have had their names and logos splashed all over the city for some years. But who are the others?

Since the 1997 Handover, the likes of Bank of Shanghai, Industrial

Bank,

Minsheng

Bank

China (the

first

mainland bank to be majority owned

by

entities), Bank,

non-government China

Everbright

Shanghai

Pudong

Development Bank and China Development Bank have all set up branches in the city for the first time.

Talent does the talking Hong Kong’s local – and foreign – talent will be at the frontline of this new era.

HAYS, a global recruitment firm, lists ‘Mainland China’s impact… in the banking space’ and ‘Demand for Mandarin speakers’ as number nine and 10 respectively in their list of human resources trends for 2018 in Hong Kong.

English fluency remains crucial for the city. But with Hong Kong positioned as the key financing city for China’s ambitious Belt and Road initiative, banks (from the mainland or otherwise) are increasingly seeking talent who can

manage clients in the Greater Bay Area and beyond, and who are able to conduct business in fluent Mandarin.

An

unprecedented

number

Other lesser-known entities like Bank of Dongguan, China Bohai Bank, China Guangfa Bank, Hua Xia Bank all have

of

mainlanders who are returning home after studying abroad – with a global outlook and English abilities in tow – could raise new challenges for local graduates looking to carve out a career in the city’s lucrative finance sector.

representative offices in Hong Kong.

Keep your eye on Hong Kong’s new virtual banking licences – surely more than a handful will be from the mainland.

What this means for Hong Kong’s identity remains to be seen. But if history tells us anything, it’s that the city will find a way to adapt.

HongKongEcho | 35

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French real estate: why is it a safe and profitable market to invest in?

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A SAFE MARKET During the global economic crisis property prices in France fared relatively well unlike some of France’s neighbors, such as Spain and the Netherlands where property prices dropped by more than 20% and 40% respectively. Since 2008, public policies have been aiming at limiting the effects of the downturn by stimulating both supply and demand.

France is one of Europe’s core performing housing markets and is still attracting international investors, with stable year-on-year price growth.

The euro is also weaker than it has been in recent years, meaning foreign buyers can get a more attractive exchange rate for their property investments and essentially pay less for a property than in recent years.

France has always enjoyed one of the most inflationary housing markets in the world, and people considering a property investment in the country have reasons to be optimistic. ... THIS RESULTS FROM A VERY FAVORABLE CURRENT SITUATION

relative to growth in the number of households. Supply is restricted by insufficient production capacity and construction lead times.

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On any property owned in France, French law will apply as the governing law regarding real estate. It is the law of the country where the property is located that finally matters.

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You will then discover that different formulas will help you invest while removing all management constraints and sometimes even lighten the tax burden. You will nonetheless invest in a safe environment while achieving capital gains.

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Budgeting, choosing the most appropriate location, calculating the borrowing capacity, creating a funding plan, calculating the return on investment, understanding the tax system and the inherent charges are the many steps that we will look after and make easier for you.

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HongKongEcho | 36

Advertorial

38 | HongKongEcho

Advertorial

FinTech: a natural evolution for the financial industry

By Karen Contet Farzam, a French Foreign Trade Advisor (CCE), co-founder & chief hustler of WHub.io, Hong Kong biggest startup community, and founding board member of the FinTech Association of Hong Kong.

Hong Kong - From an International Financial Centre…

Hong Kong is one of the most powerful Financial centres in the world, ranking third worldwide and and first in Asia. In order to maintain this competitive advantage Hong Kong needs to develop itself as a FinTech Hub. … to a FinTech Hub FinTech is the combination of two words: Finance and Technology. The FinTech evolution is characterised by a fusion of technologies that is blurring the lines between the physical and digital world.

FinTech is becoming a new driving force and engine of growth for global financial markets and economies by virtue of its accelerating technological iteration, diverse participants, ever-increasing consumer base, globalised market, real-time services, generally flat organisational structure and genuinely technology-driven features.

FinTech accelerates change and disruption due to technological innovation in the areas of blockchain, AI/ machine learning, Big Data Analysis and Cloud Computing.

With an average FinTech adoption rate that has doubled in the past three years from 16% to 33%, FinTech has achieved initial mass adoption in most countries.

Hong Kong’s FinTech Ecosystem For many FinTech companies, having a presence in Hong Kong is important for penetrating the APAC market and carrying out key strategies of their businesses. The territory has an array of favourable conditions for the deployment of financial technologies: the relatively loose regulatory environment, strength of its financial sectors, strong talent pool, network of connections to the mainland China market as well as the West, and its safeguard for intellectual property and data protection. Hong Kong has also positioned itself as the conduit between China's TechFin giants - Baidu, Alibaba, and Tencent - and the rest of the world.

All these factors have provided further underpinnings for the realisation of Hong Kong as a global FinTech hub.

With over 2,800 startups, Hong Kong is the 5th fastest growing startup ecosystem in the world. The city has a diverse startup ecosystem counting about 12% of FinTech startups.

Since 2010, Hong Kong FinTech startups have raised US$940 million, compared with US$387 million raised by Singaporebased startups and US$714 million for those in Australia.

Last year, WeLab, the mobile lending company, raised US$220 million. Founded only in 2013, the Hong Kong FinTech Unicorn, backed by billionaire Li Ka-shing, is filing for an IPO in the local market. What better advert for FinTech in Hong Kong?

In September 2017, TNG wallet, an e-payment service, raised US$115 million in one of the largest FinTech Series A funding in the world.

FinTech startups’ offerings are attractive to underserved consumers, and usage will only rise as FinTech awareness grows, consumer concerns fall and technology advances to reduce switching costs.

Established firms will be required to offer similar propositions to remain competitive – which creates opportunities for collaboration between startups and incumbents.

Regulation - RegTech : the next opportunity Regulation is often seen as a necessary evil accentuating disparities and making Europe or Asia a more fragmented market, disabling companies from scaling fast. I actually believe regulation can also be an unexpected business opportunity. The 2008 financial crisis triggered unprecedented regulation and today's FinTech revolution is a direct consequence of it.

Today, companies are meant to think global from day one and scale fast. They need to think ahead about the different regulations and how to comply with them.

The rise of RegTech - Regulatory Technology - in a few points : • Since 2008, regulators have imposed more than US$300 billion in fines and penalties to firms that have failed to achieve compliance standards, • Investment in RegTech has more than tripled over the last five years, • The global RegTech market could reach US$6.45 billion by 2020, • Complex regulatory changes : Know your customer (KYC)/ Anti-money Laundering (AML), General Data Protection Regulation (GDPR), Markets in Financial Instruments Directive II (MiFID II).

Hong Kong regulators have been proactive for the past 18 months and are tech-savvy. They have announced a range of measures to encourage banks to work with third parties to promote financial technology such as: Open APIs, Faster Payment System (FPS), virtual banking, and sandboxes.

These latter encourage firms to utilise Financial Technology to expand the range and quality of goods and services.

The potential benefits of RegTech such as faster time to market, new business opportunities and more precise regulatory compliance may be difficult to calculate directly.

What if that RegTech solutions could prevent your company from paying a 4% of your company’s revenue in fines, thousands of expensive consulting hours, or enable your company to onboard clients in a faster, cost effective way in new markets?

France has always had a strong presence in Hong Kong's financial sector and is heavily involved in the FinTech space.

President Macron initiatives in FinTech augur well for an increased collaboration between France and Hong Kong in this field.

Karen CONTET FARZAM, Co-Founder & Chief Hustler WHub.io, Founding Board Member of the FinTech Association of Hong Kong HongKongEcho | 39

FrenchChamber

HongKongEcho | 40

French Chamber Highlights 42 Looking Back

· French Chamber celebrates French National Day

· Chief Executive Carrie Lam’s first official visit to France

· French Chamber welcomes delegation from world’s top railway companies

· Back to Work: China’s progress along its revived silk road

47 Members’ Highlights 52 New Faces 54 French Chamber Foundation

HongKongEcho | 41

LookingBack

French Chamber celebrates

French National Day

Bastille Day at Western Market

On 13 July, the French Chamber celebrated French National Day with 350

The event would not have been possible without our sponsors: Pernod Ricard

guests from the French, Hong Kong and international business communities.

and Crown Relocations.

Cheese, charcuterie, crêpes and – of course – cocktails made for a great evening to celebrate all things French. Adding to the festivities this year was

A further thank you to My Market, Montagne Noire, Brocéliande, La Crêperie,

live music from the Groupe Electrogène Fanfare Club who got the dancefloor

Bakehouse, Président and DPH for their support.

moving with a number of classic French tunes.

Lucky draw prizes offered by Club Med, Jemocracy and The Pawn restaurant A perfect way to celebrate ahead of France’s eventual World Cup win that

(Classified Group), helping to bring extra buzz to the evening.

weekend!

This event was held in collaboration with the Cronsulate General of France in

For more photos from the evening,

Hong Kong and Macau, HK Accueil and l’UFE.

visit our official Facebook page: facebook.com/fccihk/

Welcoming our guests

42 | HongKongEcho

Let’s celebrate the French National Day

Cheeses from our sponsor PrĂŠsident

Incoming French Chamber Executive Director, Sophie Leconte (left), with outgoing Consul General of France in Hong Kong and Macau, Eric Berti, and outgoing French Chamber Executive Director, Delphine Colson, Vincent Villepelet and Eric Douvier.

Le Groupe Electrogène Fanfare Club gets the night going

The evening in full swing

DJ SGF

Philip Poon (Fidelity International), Bianca Ho (Clare.AI) and Brandon Chung (SuperCharger)

HongKongEcho | 43

LookingBack

Chief Executive Carrie Lam’s first official visit to France: Greater Bay Area and technology on the agenda

The Bordeaux and Hong Kong delegations share a toast to 10 years of cooperation.

Chief Executive of the HKSAR Government, Mrs Carrie Lam, encouraged

strengthen and that French businesses in the wine industry will continue

French businesses to take advantage of Hong Kong’s position in the Greater

their active participation in Vinexpo Hong Kong, the Hong Kong International

Bay Area and further enhanced ties between our city and France in her

Wine and Spirits Fair and the Hong Kong Wine & Dine Festival itself.

inaugural six-day official visit.

Aviation was next on the programme with a whirlwind visit to Marseille Prior to touching down in France, Mrs Carrie Lam paid a short visit to Brussels

on 17 June, where Mrs Carrie Lam was welcomed at the headquarters of

on 14 June where she recognised the longstanding cooperation between the

Airbus Helicopters, accepting six of the French helicopters on behalf of the

European Union and Hong Kong. Welcoming Mrs Carrie Lam to the business

Government Flying Service to be used for rescue missions.

luncheon, European Commissioner for Trade Cecilia Malmström explained Hong Kong’s continuing value as a trade partner. “We consider Hong Kong

She spoke highly of both the flying service and Airbus Helicopters, taking the

as part of our circle of friends,” she said, citing a total of 48 billion EUR in the

time to tour the facilities and meet the CEO of Airbus Helictopers, Mr Bruno

trade of goods between the two regions which makes the European Union

Even. Also attending the ceremony to deliver the helicopters was the State

Hong Kong’s second largest trading partner after mainland China.

Secretary to the Minister for Europe and Foreign Affairs, Mr Jean-Baptiste Lemoyne, who said in his address that he treasures the long-standing and

Celebrating Hong Kong and France’s connections

close co-operation relationship between France and Hong Kong.

Next stop: Bordeaux. Accompanied by the Secretary for Commerce and Economic Development, Mr Edward Yau, the Chief Executive signed an

Opportunities for French businesses in the Greater Bay Area

agreement with the Cité du Vin, renewing the fruitful 10-year cooperation

The official visit culminated in a three-day rendez-vous in Paris starting on

between the two cities on the organisation of the Hong Kong Wine & Dine

19 June with the Greater Bay Area and innovation & technology high on the

Festival. She expressed her hope that this relationship will continue to

agenda.

44 | HongKongEcho

The French Chamber in Hong Kong was a supporting organiser of a morning

annual gala dinner, and we just had a very enjoyable one two weeks ago,”

conference organised by Invest Hong Kong on the Greater Bay Area which

– before encouraging French business to make the most of Hong Kong’s

marked the first joint effort of Guangdong, Hong Kong and Macao in

unique advantages in the context of the Belt and Road initiative.

promoting the region overseas.

Focusing on Innovation and Technology Alongside Mrs Carrie Lam was Mr Ouyang Weimin, Vice Governor of Guangdong Province, and Mr Jackson Chang, President of the Macao Trade and Investment Promotion Institute of the Macao Special Administrative Region, to highlight the unique business opportunities offered by the region.

Speaking in front of hundreds of high level French business leaders, Mrs Carrie Lam spoke about the Chinese Central Government’s continued

A visit the following day to Station F, the world’s largest startup incubator, was a key indicator of Hong Kong’s push towards further investment in innovation and technology. In the afternoon, Mrs Carrie Lam joined a business luncheon organised by the Hong Kong Trade Development Council and delivered a speech on the past, present and future of the relationship between Hong Kong and France.

emphasis on developing the Greater Bay Area. In particular, she acknowledged Hong Kong’s strong research and development capacity with

Attracting more research and development companies to Hong Kong is a

its proximity to Shenzhen’s manufacturing prowess as key to the Greater Bay

priority for the government especially in light of the planned Lok Ma Chau

Area’s ambitions to become an innovation and technology hub.

Loop (an innovation and technology park on the border with Shenzhen).

This point was further advanced during the previous day’s visit to the Paris-

Representatives from Schneider Electric, SUEZ, SURYS and CGN Europe Energy, among others, also spokeabout their first-hand experience of the advantages offered by the region as an ideal base for French companies.

The afternoon saw a closer focus on the Belt and Road initiative with a conference organised by the Chinese General Chamber of Commerce,

Sorbonne University where Mrs Carrie Lam indicated that she would like to promote further collaboration between universities in France and Hong Kong to drive the development of innovation and technology in the city.

It appears the already strong links between France and Hong Kong are set to

Business France and the China Federation of Industrial Economics and

be enhanced. But we’ll leave you with Mrs Lam’s own impressions that she

supported by the French Chamber in Hong Kong. Beginning her talk with a

revealed during her speech at the afternoon conference in Paris on 20 June.

nod to the French Chamber in Hong Kong – “For seven years in a row, I’ve

“Having spent five days in France, I can fully appreciate this slogan – ‘The

accepted the invitation of the French Chamber of Commerce to attend the

great nation of France is back’. Congratulations.”

Xavier Niel (left) introduces Carrie Lam and Edward Yau to the world’s largest startup incubator, Station F.

Carrie Lam addresses guests at the First ‘Bay Area’ Seminar in Paris, France.

HongKongEcho | 45

LookingBack

French Chamber welcomes delegation from world’s top railway companies On 3 September, the French Chamber was engaged to welcome a delegation from UIC (the International Union of Railways) to discover Hong Kong’s technology innovation ecosystem. Top management from the world’s largest railway companies including the likes of SNCF (France), FS (Italy) and NSB (Norway) made up the VIP group who toured Cyberport and heard from guest speakers from French transportation giant Thales and the Hong Kong University of Science and Technology.

Learning about new innovations in mobility was top of the agenda with further speakers from two startups incubated in Cyberport speaking about the improvement of security in transportation thanks to artificial intelligence and facial recognition technology.

For more information on the Chamber’s services organising business missions such as this, contact Jing Lei (jing.lei@fccihk.com)

Back to Work: China’s progress along its revived silk road On 6 September, the Chamber had the pleasure of welcoming Robert Koepp, Director and Chief Economist of the Economist Corporate Network, to cover the topic that seems to rear its head in discussion over all manner of industries.

China’s Belt & Road project will cover some 62% of the world’s population.

It’s a mammoth figure with even more mammoth ambitions to spread China’s influence further than ever.

Mr Koepp highlighted several key concrete projects spanning Asia to Africa to demonstrate the steps already under way to re-shape global geopolitics as we know it. There is still a long way to go before the ‘revived silk road’ is a total reality. But the ground is being set for infrastructure spending reaching the lofty heights of several trillion US dollars.

46 | HongKongEcho

Members'Highlights

Air France opens new Business lounge at Paris-Charles de Gaulle Air France opens new Business lounge at Paris-Charles de Gaulle.

After having revealed the first part last January and having already welcomed more than 200,000 customers, on 20 June Air France presented its entire brand new Business lounge located in Hall L of Terminal 2E at Paris-Charles de Gaulle Airport.

With a total surface area of 3,200 sq. m. and a capacity of 540 seats, this completely redesigned lounge offers several new features for optimum comfort: • ‘Le Balcon’, an exclusive space created by the designer Mathieu Lehanneur, • A chic and elegant cocktail menu created by the Hotel Lancaster in Paris,

• The largest wellness area of all the Air France lounges, • A Kids area to entertain children before their trip, • The ‘Gourmet Table’, a catering area where a chef prepares the dish of the day in front of customers, • Several other areas for a tailor-made experience.

When they arrive in the lounge, guests can easily find their way around thanks to an interactive plan at the entrance. They can browse all the services available, depending on how much time they have.

www.airfrance.com.hk

Alibaba Group and Bolloré Group announce global partnership agreement Alibaba Group and Bolloré Group announced in July 2018 a global partnership agreement in the fields of cloud services, innovation and digital transformation, clean energy and mobility, as well as logistics.

The companies signed an extensive Memorandum of Understanding outlining the areas in which their respective business units and subsidiaries, including Alibaba Cloud, Cainiao Smart Logistic Network, Bolloré Logistics and Blue Solutions, have agreed to cooperate and develop a number of relevant joint projects. In addition, the groups decided to share their expertise and market knowledge to explore new business opportunities, notably in China, Europe and Africa.

Cloud computing and innovation As part of the agreement, Alibaba Cloud, the computing arm of Alibaba Group, will provide a comprehensive suite of solutions to the Bolloré Group, encompassing cloud computing capabilities, big data, artificial intelligence, content delivery network and security solutions, which will be combined with the knowledge and strength of the Bolloré Group to create a joint value proposition.

Smart and clean mobility, clean energy • Alibaba Group and Blue Solutions will explore the opportunity to co develop solutions for Internet electric cars and buses, bringing the Internet experience (voice control, multimedia, navigation and autonomous driving) to the driving experience, • The two companies will also explore cooperation opportunities in the development of car-sharing solutions in China, • In an era when sustainability and electricity storage have become major concerns for citizens, cities and governments, the Bolloré Group draws on batteries and electricity storage technologies to deliver solutions for the production, storage and smart consumption of electricity. Alibaba and Bolloré groups will look at the feasibility to implement such clean energy solutions at Alibaba’s data centers worldwide.

Logistics • Bolloré Logistics, a global leader in international transport and logistics, number 1 in France and Africa, and among the top 10 players in the world, and Cainiao Smart Logistics Network, the logistics business of Alibaba Group, agreed to work together on identifying cooperation opportunities with their respective logistics capabilities, hubs and networks, in Asia, the Middle East, Africa and Europe,

47 | HongKongEcho

• The two companies will also share best practices and will look into the development of joint software and data management solutions, In making the announcement, Cyrille Bolloré, Vice Chairman and Managing Director of Bolloré Group, commented: ”We are delighted to have concluded this comprehensive partnership agreement with a leading international company such as Alibaba Group. We are looking forward to working with them and their subsidiaries to develop business in our respective markets and join forces in other parts of the world. The many areas of cooperation and several joint projects already identified by our respective teams are particularly promising. We are also very pleased by our common willingness to share best practices and expertise that will be of strong benefit to all our companies.”

Terry von Bibra, General Manager Europe, Alibaba Group, said: “We are extremely pleased to kick off this collaboration with a prominent player across key industries like Bolloré Group. As a global technology company, digital transformation and innovation in all fields are fundamental drivers of Alibaba’s mission of making it easy to do business anywhere, with the ultimate goal of better serving our consumers and stakeholders worldwide, today and tomorrow. Hence, we are confident that the expertise and skills brought by all the different parties will generate incredible value and opportunities as the partnership unfolds.”

Simon Hu, Senior Vice President of Alibaba Group and President of Alibaba Cloud, said: “Today’s landmark partnership marks an exciting step towards Alibaba Cloud’s goal to empower our customers with our inclusive and cutting-edge technology. We are proud to bring our cloud computing, big data and AI technology to the Bolloré Group and support their vision of being the pioneers in digital transformation. The sophisticated cloud services provided by Alibaba Cloud and the expertise of Bolloré Group will complement each other and create synergy in servicing our customers more effectively as well as providing them the opportunity to succeed in the digital age.”

www.bollore-logistics.com

Easyship co-founders named in Forbes 30 under 30 list 2018 Co-Founders of the Hong Kong-based e-commerce platform Easyship,

regulations, taxes and duties all in the one place, Easyship has taken the

Augustin Ceyrac, 29, and Tommaso Tamburnotti, 30, have been named in the

logistics world by storm.

Forbes 30 under 30 list for 2018 (Retail & E-commerce Asia). The list groups 30 young innovators under 30 years old who are “reinventing how we shop,

Their team has now reached over 30 staff in four offices around the world and

online and off”. The company had previously been awarded ‘Best Technology

boasts a user base of 15,000 companies.

Company of the Year (startup) 2017 by Computer World.

The platform aims to simplify the often over-complicated world of logistics with a strong focus on SMEs with e-commerce operations to allow them to boost their global reach. Providing transparency on international shipping

www.easyship.com

Pernod Ricard ranked in top 3% of global companies for CSR commitment The Vigeo Eiris ranking confirms Pernod Ricard’s position as the world

Pernod Ricard improved by +18 points compared to the last rating

leader in CSR performance in the beverage sector, with an overall score

in 2011. The Group has been awarded the ‘Gold Recognition level’,

of 63/100. The Group reports on an advanced environmental strategy, and

reserved for only 5% of the highest-ranking companies. Pernod

discloses a commitment covering all of its environmental responsibilities

Ricard’s commitment is the most effective in environmental issues,

with quantified targets to address water, energy, CO2 emissions, biodiversity, packaging and waste.

With a surge of five points, compared to November 2016, Pernod Ricard

rewarded with a score of 90/100.

Cédric

Ramat,

EVP,

Human

Resources,

Sustainability

&

joined:

Responsibility at Pernod Ricard said: “Today, we are very proud

• Euronext Vigeo Eiris ‘World 120’ index, which selects the 120 most

of the scores obtained in the rankings published by Vigeo Eiris and

advanced companies worldwide for corporate responsibility,

EcoVadis, two leading organisations in sustainable performance. We

• The Euronext Vigeo Eiris ‘France 20’ index, which selects the 20 most

truly consider that sustainable success should benefit all and therefore

advanced companies in France.

our ambition is to go a step further. In line with this, we have started an internal reflection on our sustainability and responsible approach

Pernod Ricard has been a constituent of the Euronext Vigeo Eiris ‘Eurozone 120’ and Euronext Vigeo Eiris ‘Europe 120’ indices since December 2014.

Vigeo Eiris specifically hailed Pernod Ricard’s commitments, actions and

piloted by Vanessa Wright, our new Group Vice President Sustainability and Responsibility.”

results in the fields of social and environmental responsibility.

EcoVadis highlights Pernod Ricard’s progress in social responsibility by awarding it a score of 75/100. It therefore is among the 3% of top global companies that have made the most advanced commitments to CSR.

www.pernod-ricard.com

HongKongEcho | 48

Members'Highlights

Société Générale closes financing of Sydney’s solar farm-powered metro railway The recent financial close of an 87 megawatts (MW) Beryl Solar Farm project

In 2016, renewables made a record-breaking contribution of 19.6 per cent

in New South Wales (NSW), Australia, will help deliver power to the new

to New South Wales’ electricity from hydro, solar, wind, bioenergy and small

generation metro railway services in the state capital Sydney. The majority of the clean energy generated by Beryl Solar Farm – approximately 134,000 Megawatt hours a year – will offset the entire operational needs of the new Sydney Metro Northwest railway, which opens in the first half of 2019.

hydro.

Reducing carbon emissions from transport will play an important role in achieving Australia’s sustainability targets. According to The Climate Counsel,

The Beryl Solar Farm, one of the biggest solar projects in the state, will be

transport is Australia’s third largest source of greenhouse gas emissions and

powered by more than 260,000 advanced solar modules and will produce

has the highest rate of growth, with cars being responsible for roughly half of

enough green energy to displace more than 167,000 metric tons of carbon

all transport emissions.

dioxide emissions per year – the equivalent to taking about 45,000 cars off the road.

Sydney Metro Northwest is the first stage of the AU$20 billion-plus Sydney Metro program of works and will become the first fully-automated metro rail

Société Générale acted as Mandated Lead Arranger, Bookrunner &

system in Australia. With services starting in the first half of 2019, it will deliver

Underwriter and Swap Bank on the approximately AU$150 million project

a much-needed fast and reliable public transport service to a region with

financing for the Beryl Solar Farm in Australia.

the highest car ownership levels per household in Australia. In peak times, services will arrive every four minutes.

The project is developed and owned by one of the world’s largest photovoltaic (PV) solar module manufacturers First Solar, headquartered in Arizona and listed on the NASDAQ.

“We are very pleased to close the financing of Beryl Solar Farm which will play a key role in fulfilling the State’s commitment to renewable energy.

Société Générale’s extensive experience in renewables in the region proved invaluable for the successful financing of this project,” said Kent Draper, First Solar’s Vice President of Project Finance and Asset Management for Asia Pacific.

“Société Générale has established a market-leading position in positive impact finance globally, which is a reflection of the bank’s commitment to support and drive forward the development of clean energy. We have been working with First Solar in different regions and are wellpositioned to continue to support our client providing clean, renewable energy worldwide. With the successful financing of Beryl Solar Farm, we are very proud to have now financed over 5.5 GW of solar, wind and

Australia has made strong commitments in recent years to reduce its

hydro generation capacities in Asia Pacific,” said Daniel Mallo, Head of

emissions and accelerate its renewable energy generation. In 2015, the

Natural Resources and Infrastructure for Asia Pacific, Société Générale

government reformed its Renewable Energy Target (RET) to achieve the

Corporate & Investment Banking.

large-scale generation of 33,000 GWh by 2020, meaning about 23.5% of the country’s electricity generation in 2020 will be from renewable sources.

Meanwhile, it has a 50-52 per cent reduction target in emissions per capita between 2005 and 2030.

49 | HongKongEcho

www.societegenerale.asia

Kering strengthens its organisation in Greater China and appoints Jinqing Cai president of Kering Greater China Kering is reinforcing its corporate team in Greater China in order to adapt

François-Henri Pinault, Chairman and CEO of Kering, said: “Kering

to the fast-changing business environment in this market, which has been

started to invest in Greater China some time ago and had built the foundations

continuously growing in importance for the luxury industry since Gucci

of a long-lasting and successful business, while continuously reinforcing our

opened its first store in China in 1997. This new management set-up

relationships with local partners. I am very pleased with the appointment of

will strengthen the existing corporate structure specifically dedicated to

Jinqing Cai, which is a further testament to our long-term commitment in

supporting the long-term development of Kering’s luxury Houses in Greater

Greater China.”

China.

Ms Jinqing Cai has been appointed President of Kering Greater China, starting from September 10, 2018. Her mission will be to reinforce the

With this new organisation, Kering will be best positioned to further support the rapid development of its luxury Houses in Greater China and to seize business opportunities in the Asia-Pacific region.

visibility of Kering in Greater China and to strengthen the links between the Group and its local partners. She will be based in Kering’s Shanghai office and will report to Jean-François Palus, Group Managing Director of Kering.

www.kering.com

SUEZ and its partners win a new contract in China for €436 million SUEZ NWS has signed, through its joint venture Changshu Sino French

responsibility has resulted in it being named one of the first “5A-Grade

Water, a 30-year contract with Changshu Water Bureau, to own and

Service Units” in China’s water business.

operate four wastewater treatment plants. The contract, worth a total of €436 million, is in line with the Changshu government’s ambition to

“Our 12-year partnership with SUEZ NWS has profoundly transformed

optimise water supply and sanitation services across the whole city.

water supply in Changshu and is a prime example of win-win international cooperation”, said Shen Xiaodong, Executive Vice Mayor of Changshu.

SUEZ NWS acquires ownership and operating rights of the four wastewater

“These results have boosted our confidence in growing and reinventing our

treatment plants for which it has managed operation and maintenance

partnership. We expect this agreement to continue our progress towards

services until now. The joint venture Changshu Sino French Water will

integrated water supply and drainage in Changshu.”

extend the four plants to a global capacity of 180,000 m3/day from the existing 80,000 m3/day. The four plants today serve roughly 900,000

“This new contract illustrates our successful partnership with the city of

residential, industrial and commercial users across 10 Changshu districts.

Changshu. The Group has been supporting local authorities since 2006

Changshu Sino French Water will treat the industrial and municipal

in producing 875,000 m3 of water and treating 120,000 m3 of wastewater

wastewater to ensure compliance with the existing rigorous standards. It

daily, thus contributing to improving the quality of life for local residents.

will also expand and upgrade the plants’ facilities where necessary, to meet

SUEZ is thereby consolidating its presence in China where it has built 260

even higher standards in the future.

water and wastewater treatment plants and provides its expertise to large cities and industries in the treatment and recovery of their waste,” said

With a presence in Changshu since 2006, Changshu Sino French Water

Bertrand Camus, Group Senior Executive VP - Africa, Middle East,

has invested over 1 billion RMB in water supply and the treatment of

India, Asia and Australia.

municipal and industrial wastewater for over two million residential, industrial and commercial users in Changshu. The outstanding track record demonstrated by the joint venture in services, safety and corporate social

www.suez-environnement.cn

HongKongEcho | 50

OnTheList launches in Singapore Founded in Hong Kong, OnTheList is an independent, members-only flash

Its success has indeed been phenomenal in turning old inventory into

sales concept platform that is set to revolutionise the luxury retail landscape

new opportunities as, in two short years, the small business went from

in Asia. In September it prepares to expand to Singapore, bringing its first

a few pop-up sales to over 150 flash sales and partnerships with over

overseas flash sale which will take place between 19 to 22 September

250 premium brands including Armani, Clarins, Diane Von Furstenberg,

2018 at Ngee Ann City in the iconic Orchard Road shopping district.

Ferragamo, Roberto Cavalli, and Ted Baker, Le Creuset and Havaianas.

Consistently producing stellar sales, it has cleared over a million items from

Founded in 2016 by two French entrepreneurs, Delphine Lefay and Diego

its brand partners at stunning rates - in 2017, selling a pair of Havianas

Dultzin Lacoste, OnTheList pioneered the unique concept of independent,

every six seconds over a four day sale in Hong Kong.

members-only flash sales in Asia.

In Singapore, the company will launch with monthly pop-up sales, Co-founder Delphine Lefay explains its founding, “When I was working in

announcing the brands being featured ten days prior to the sale.

Hong Kong’s retail industry, there was an absence of options for distributors and brands to clear old inventory occupying valuable warehouse space.

“We are expanding into Singapore because its retail market with many

To fulfil this gap, we founded OnTheList as an independent third-party

similarities to Hong Kong,” says co-founder Diego.

platform and it was the first of its kind in Asia.”

OnTheList also hopes to tap into the large tourism market in Singapore as “Through flash sales we hosted, we offered consumers access to premium

tourism receipts in Singapore have reached record highs in the past two

products at attractive prices and brands opportunity to clear past-season

years. Indeed as visitor arrivals from China, India, Indonesia, Vietnam, have

items and connect with new customers,” she adds.

increased tremendously, it’s an opportune time for OnTheList to attract high spenders from the region and use Singapore as a launchpad for future

“This method of clearing stock also promotes sustainability and minimises

expansion in Asia and beyond.

environmental impact within the retail industry as old inventory does not go to waste,” co-founder Diego Dultzin Lacoste notes. “OnTheList’s business model also gives brands the opportunity to reach out to a wider consumer database, engaging them through the flash sale platform as a first touch point.”

www.onthelist.hk

HongKongEcho | 51

NewFaces

WELCOME TO THE NEW MEMBERS OF THE FRENCH CHAMBER NEW PATRON MEMBER L’ORÉAL HONG KONG LTD L’Oréal, the worldwide leader of the Beauty Industry, operates in more than 130 countries. In 1907 L’Oréal developed the first synthetic hair colorants and since then the company has consistently focused on developing its business through the application of cutting edge scientific research.

Eva YU President and Managing Director, L’Oréal HK

Emmanuel GOULIN Managing Director, L’Oréal Travel Retail Asia Pacific

Jihane MELLANGER Chief Financial Officer, L’Oréal HK

Jochem ZAUMSEIL Executive Vice-President, Asia Pacific Zone, L’Oréal Group

NEW CORPORATE MEMBERS GLENEAGLES HONG KONG HOSPITAL

TIANG & CO Tiang & Co. is an independent Hong Kong law firm, dedicated to providing clients with seamless, end-to-end legal services in Hong Kong, across Asia and globally.

Gleneagles Hong Kong Hospital (GHK) is a state-of-the-art private hospital committed to providing Hong Kong people with high-quality and accessible healthcare services.

Dirk SCHRAVEN Chief Executive Officer

Alexander CHIU Chief Operating Officer

52 | HongKongEcho

Shahneela FARUQUI Consultant, Business Development

Brenda MAK Senior Manager, Business Development & Marketing Manager

Rebecca SILLI Partner

David TIANG Partner

NEW ENTREPRENEUR MEMBERS ALTO ASIA LIMITED

BERTH HONG KONG

Alto Asia provides premium language services to listed corporations, event organisers, banks and governments, worldwide. We specialise in Finance and Legal communication, as well as Corporate communication.

BERTH GROUP designs and manufactures highly specialised packagings.

Masha MALLET APAC Managing Director

Hugues DE SAINT SEINE Partner

Claude BINOVIC

CIGP

EXPERTIME LIMITED

Independent Family Office providing Private Wealth & Asset Management, as well as Investment Banking / Corporate Finance advisory services.

Expertime Open specialises in developing 3 main solutions: web solution (websites, intranet, extranet, automated workflow applications), e-commerce platforms and finally chatbots (event, assistant, internal, external etc.) that can be fully integrated to messaging platforms such as Messenger, Wechat, Skype etc. or native.

Valentin CHENAUX Assistant Vice President

Pierre DELAGE Business Development Lead

HongKongEcho | 53

FrenchChamberFoundation

PALO IT MOBILISES ITS COMMUNITY FOR THE FOUNDATION The French Chamber Foundation puts the spotlight on its sponsors and partners. Their commitment towards us is vital to sustain the impact of our project. We met Stanislas Bocquet, Founder and CEO of PALO IT, at their headquarters in Blueprint, Quarry Bay.

What are the values PALO IT wants to share with society?

At PALO IT, our values reflect our identity, support our vision, and shape our company culture. We are driven by the following: • ‘We care about our world’, our planet, local communities and the well-being of our Palowans.

• ‘We share, it’s in our DNA’, we feel a great responsibility to free the access to knowledge and unleash the global creative genius.

• ‘We deliver awesomeness’, we rapidly turn ideas into products that generate unprecedented value to end-users.

• ‘We act with courage’, we dare to pursue our ideas and we challenge ourselves to be bold.

• ‘We choose positivity’, with a solution-driven and positive mindset, we have the will to spread joy and continuously strive to improve ourselves.

Why are you supporting the French Chamber Foundation?

The vision and activities of the French Chamber Foundation perfectly correspond with the values I just mentioned. I believe the Foundation has a concrete positive impact at a local level in terms of sharing knowledge, educating people and empowering them. Not only are they focusing on fighting poverty; they also aim to find concrete solutions that can bring long-term change.

Wherever PALO IT is based, this local impact really matters to us. We want to be a global actor while keeping in mind the necessity to have a local footprint in the city that welcomes us. We wanted to relay the energy and positivity expressed by the French Chamber Foundation.

Stanislas Bocquet, Founder and CEO of PALO IT

Can you tell us more about your latest contribution?

In order to raise awareness about the Foundation, we found a creative way to communicate. To thank our clients for their trust, we sent them a box of 5 eclairs (French patisseries) on which we printed their company logo and some of PALO IT’s core values. For each photo of a box of eclairs published on social media with the hashtag #WeCareWithPALOIT, we committed to fund the French Chamber Foundation.

The initiative proved to be quite successful while being entertaining and fun at the same time! PALO IT will definitely continue to contribute through both innovative ways and the inspiration of others to support the French Chamber Foundation.

And about PALO IT and its missions?

PALO IT helps leaders of today and tomorrow to reinvent themselves in a rapidly changing future. We accelerate their digital transformation by helping them create new products, services and business models. We advise them on how they should leverage technology to disrupt their business and increase their productivity.

For instance, we are convinced that artificial intelligence will have a tremendous impact not only on businesses but on societies as a whole. It will dramatically change our way of interacting or sharing knowledge with others. Therefore, there is an urgent need to change mindsets.

With 360 experts and 6 offices across the globe, PALO IT values multicultural skills, perceptions and insights. Our clients are among the world’s most successful companies. We innovate with next-generation businesses, whether they are startups or Fortune 500s.

Visit our website at: www.fcf.hk The French Chamber Foundation was established in 2015 as a subsidiary of the French Chamber and is registered in Hong Kong as a charity. It is governed by a Board of Directors, and relies on donations from corporates and individuals, including the funds raised during the French Chamber Gala Dinner, to fund its operations.

54 | HongKongEcho

The French Chamber of Commerce wishes to thank its Patron Members:

THE FRENCH CHAMBER 21/F, On Hing Building, 1 On Hing Terrace, Central, Hong Kong Tel: (852) 2523 6818

EXECUTIVE DIRECTOR - C HIEF EDITOR Sophie LECONTE

communications@fccihk.com www.fccihk.com

COMMUNICATIONS MANAGER - EDITOR Kieran CASH

EDITORIAL COMMITTEE Philippe MASSONNET

PRINTING MAGNUM (OFFSET) PRINTING CO. LTD

HEAD OF COMMUNICATION & EVENTS Chantal ITURRIA

DESIGN MANAGER Louise HO

The views expressed in the publication are not necessarily those of The French Chamber. The editor accepts no responsibility for unsolicited material submitted.

Advertorial

TAX DEDUCTED AT SOURCE: A FOCUS ON PROPERTY INCOME A new ‘tax deducted at source’ regime will come into effect in France take effect from 1 January 2019 after a lot of hesitation. Wealth management experts Banque Transatlantique take a close look at how this could affect you from a property income perspective.

The new tax deducted at source (le prélèvement à la source) applied from 1 January 2019 in France will also apply to property income. It will take the form of an instalment paid by the taxpayer on a monthly or quarterly basis, and will be deducted automatically by the government on the bank account of the taxpayer.

income that “is not likely to be collected annually”, for example, arrears of rent are excluded from tax credits.

Property expenses The taxable property income of 2018 will be computed in a standard way taking into account the deductible expenses.

specific system for their accountability in 2018 and 2019. The work carried out in 2018 will be deductible in full to determine the net property income of 2018 and the amount of work deductible in 2019 will be equal to the average of expenses paid in 2018 and 2019. The work paid in 2019 will be fully deductible if it corresponds to emergency work or decided ex-officio by the trustee of co-ownership or work done on an immovable acquired in 2019.

These measures were extended to historic monuments.

Non-residents who receive taxable property income in France should note that this income will be subject to instalments on the same basis as residents.

Taking into account the CIMR and in order to avoid a postponement to 2019 of expenses for which the taxpayer is in control (so-called ‘controllable’ expenses, mainly works), the law provides for a

Deduction rate applied

Example

The deduction rate is computed by applying the rate of taxable property income. The government will compute two rates during the year for each household for tax purposes:

A taxpayer with property income plans to do €3,000 of work in 2018 and / or 2019:

A first rate applied from January to August will be computed on the basis of the income of Year N-2 while a second rate applied from September to December will be computed on the basis of income of N-1. The rate is computed taking into account only the income subject to deduction in disregarding reduction and tax credits.

Expenditure of work done

Taken into account Taken into account Total consideration in 2018 in 2019

2018 : €3,000 2019 : €0

€3,000

€1,500 (€3,000 + €0) / 2

2018 : €1,500 2019 : €1,500

€1,500

€3,000 €1,500 (€1,500 + €1,500) /2

2018 : €0 2019 : €3,000

€0

€1,500 (€0 + €3,000) / 2

Non-exceptional property income of 2018 will be eligible for CIMR to avoid a double tax burden in 2019. The law has adopted a very broad definition of exceptional income excluded from CIMR, namely, 56 | HongKongEcho

€1,500

Banque Transatlantique: (i) is a bank incorporated and licensed in France, regulated by the European Central Bank and Autorité de contrôle prudentiel et de résolution; and (ii) is not registered in Hong Kong nor regulated by the Hong Kong Monetary Authority.

In the event of an important variation in income, down payments may be discounted at the initiative of the taxpayer during the year.

Modernisation recovering on tax credits or CIMR (in abbreviation)

€4,500

Hervé Guinebert International Private Banking Department, Director, Hong Kong Representative Office

Banque Transatlantique has been providing dedicated services to French expatriates for over a century. The Bank has dedicated significant resources

to

support

these

international

T: +852 2106 0391

M: +852 9380 8917

customers over time, and is the preferred partner

E: bthongkong@banquetransatlantique.com

of French professionals living abroad.

Website: https://expatries.banquetransatlantique.com