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INTERVIEW Digging the well before the thirst
China looks to be the next great superpower for almost all market sectors. With the government more receptive than ever to outside dealings, IBS Journal spoke with Robert Miskin of Geoswift on how the opportunity can be grasped
Senior Fintech Reporter Alex Hamilton
G
eopolitical changes across the globe have shifted the spotlight onto China – a nation that holds vast potential for any company – yet can also be one of the most frustrating to deal with. Companies such as Google, Apple and Facebook, with all their clout and nous, have struggled to properly penetrate China’s Great Wall of regulation. Where technology drives innovation and change around the world, things operate a little differently in Beijing. There, it is procedure that sets the agenda. It’s a modus operandi that major financial players need to get to grips with if they’re to take advantage of China’s great possibilities.
Chinese GDP, at the time of writing, sits at $11.2 trillion, having jumped by 6.8% in the first quarter of 2018. The country, says Robert Miskin, managing director for EMEA at cross-border payments firm Geoswift, has emerged from a post-2008 slump with all guns blazing, and is prepared to begin working with the outside world. Despite this, the government’s policy when it comes to technology reflects on its ideological background.
“China still operates a closed currency and as a closed economy to a certain extent,” says Miskin. “If one wants to do business with China – whether you’re a huge multi-national or a bank – there are some difficult barriers. That includes understanding what regulations China needs you to comply with and how they affect your business.”
With it being a closed currency, very few can get to grips with it and how the fun flow works in China is difficult for some to get their heads around. From a collection and settlement perspective, there’s a “huge rift” between banks in China and banks outside of China who struggle to – or simply don’t – communicate properly with each other. On top of that, states Miskin, it’s incredibly difficult to open up a bank account dealing with China, as most consider it a high-risk proposition. The pre-paid card market in the country is dead in the water, having been banned, while Visa and Mastercard have had great difficulties gaining entry. From a wallet perspective, there are the obvious giants Alipay and
WeChat Pay, but traditional Western banks have never really considered proper connections with wallet-based systems like those.
Swings and roundabouts
Miskin jokes that all of the above sounds like a very convincing argument of why not to do business with Beijing. Yet, with a population of 1.3 billion and 15% of the global market, as well as a rocketing GDP, there are “huge, huge opportunities” on the horizon. “The Chinese government has started to look into reforms and opening greater and more flexible trade with the outside world,” says Miskin. Yet there are some dangers. Beijing is particularly wary of anything that smells remotely like money laundering or capital outflow, and pulls no punches when it comes to reneging on previously agreed deals. “China will wake up one morning at 3am, see something it doesn’t like and just pull the plug on it.”
So, how does one actually do business with China? The most straightforward is to go direct and attempt to build a strong relationship with either the Chinese government or with the country’s regulators. It’s a tough path to choose, according to Miskin: “Many have tried and many more have failed. Very few have succeeded.” The alternative is working via partners that have regulatory approval both in China and across the globe. These companies will be able to build a bridge between outside firms and the Chinese regulators. Geoswift is one such partner. The company has offices in Canada, the US, the UK, Beijing and Shanghai, as well as Hong Kong, handling remittances, offering debit and credit card solutions and providing currency exchange services to retail customers in China.
“We’re the only company in the world that is fully regulated, not only in China with a SAFE licence but with recognised licences in every territory we work in,” says Miskin. Geoswift has also been given the go-ahead for the handling of renminbi and yuan for the purposes of facilitating trade. “We’ve been privileged enough to begin approaching firms knowing
www.ibsintelligence.com | © IBS Intelligence 2018
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