IBS Journal May 2018
19
that we have the confidence of the Chinese government.” Geoswift aims to take the “pain” away from dealing with China.
Western bias
From a Western perspective, businesses and economies are used to things happening in a particular way. When things don’t go the way they are supposed to, strategists and analysts are quick to point at A, B and C as contributory factors. In China, when things look to have fallen apart, it can vary – “last week it was this thing, this week it’s something else” – it doesn’t mean that business is tough going in the country.
A business needs to be especially fluid, Miskin adds, especially when it comes to adapting to the fast pace of Chinese regulatory whims. “Where we work with the FCA or another regulator in Europe, they’ll normally say, ‘we’ve got something else coming in six months’ or 12 months’ time.’ China will say, ‘we need you to be compliant by next week’.” Being able to mould a business around that quick turnaround time, and gearing your people up to react at a moment’s notice will reap the enormous benefits that working with China can bring.
“Just look at the Chinese tourist industry,” says Miskin. “Over the last three or four years, about 83 million Chinese tourists have been travelling the world.” That figure is now up to 120 million. Appearing in parallel with this surge in Chinese tourism is a new acceptance of Chinese payment methods – QR, Alipay and so on. What this means is that new commercial and business relationships are appearing between Chinese payments firms and providers across the globe. An example of this pragmatism is the usage of pre-paid euro and pound sterling cards for Chinese tourists abroad, which enable tourists to take out cash at ATMs while abroad.
Occam’s Geoswift
Geoswift utilises an API connection that communicates between parties, and currently enables cross-border transactions between China and the outside world across sectors including ecommerce and education. Geoswift’s work with banks, however, could end up dwarfing both. “What we offer is a direct route through to China, without any intermediary partners in the middle, slowing the process down,” says Miskin. “There are many banks that want to do business with China but can’t, so the banking channel is a very important channel for us.” The firm is working with several banks, including some that are live right now. While it has taken time to get the FIs on board, the potential business for Geoswift is very real. Currently, about 30% of its business comes from the banking sector, yet Miskin predicts that it could grow exponentially in the next three to five years.
There are many banks that want to do business with China but can’t, so the banking channel is a very important channel for us
“
What are the mechanics of dealing with China, and how do you get to the end recipient? It’s not as simple as buying a big building in Hong Kong “If it was, we wouldn’t be in business,” says Miskin. “Having a presence in Hong Kong, with hundreds of staff and plenty of capital just won’t wash with the Chinese in any way, shape or form.” Miskin also doesn’t see that changing or relaxing any time soon.
“We’ve seen such massive change in China over the past few years,” he adds. The security council met in Q4 of 2017, and pulled the plug on WhatsApp following rumours about security issues. “Wherever there is a concern that outside influences might be damaging anything within the country, China will instantly cut the source off. I think that as we move forward and as China does open up a little bit to the outside world, unless you are at that forefront with acceptance from PBO and SAFE you’ll soon fall behind the curve.”
Geoswift is currently in the application stage for a store-valued facility (SVF) licence, which will allow it to take deposits for digital services. Raymond Qu, CEO of the firm, recently told Hong Kong publication DigFin that it would be considering the possibility of applying for the administrative region’s upcoming virtual bank licences, too.
“Our core business is based around bank-to-bank transfers,” says Miskin, when asked about what this might mean for the future of the firm. “We also are connected through Chinese wallets and have a pre- paid card section. It’s fair to say that we are working with a number of other wallet providers and looking into the possibility of Geoswift having proprietary wallet technology.” The firm is also in discussions over other channels such as virtual bank accounts, but that is just part of its overall strategy of innovation.
One new area is the provision of the aforementioned pre-paid cards for Chinese tourists abroad: travellers and students attending universities in Europe, the US and more. “These things don’t exist anywhere in the world at the moment,” says Miskin. To create a green field when it comes to Chinese business, it’s a case of “regulation plus technology plus the market.” If you have all those things ticked, he adds, and have as few middle-man partners as possible, success in China won’t be far off.
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