Hong Kong-based LianLian Global bridges China-Middle East payment gap with fintech tool
Firm expects Dubai operations to contribute 10 per cent of its payment transaction volume in the first year of operations, Hong Kong head says
Hong Kong-based LianLian Global is reaping the dividends of its foray into the Middle East, as the digital payment provider’s solutions have made life easier for the region’s small and medium-sized enterprises (SMEs) to deal with partners in mainland China.
Foreign companies can process payments quickly through LianLian Global’s network that caters to about 6 million Chinese suppliers, manufacturers and exporters. LianLian Global is the international unit of Hong Kong-listed LianLian DigiTech.
“What we see is that [business] in Dubai will contribute at least 10 per cent of our total transaction volume in the first year [of its operations],” said Michele Fung, general manager of LianLian Global Hong Kong, adding that the company was setting its sights on Africa by using Dubai as a gateway.
The company has found a niche as it identified payment challenges faced by SMEs sourcing goods from mainland China in the Gulf Cooperation Council region – the six-nation bloc comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).
“There is no direct settlement because many are unbanked, so they can’t even use the Swift financial messaging system,” said Fung, referring to the secure global messaging network financial institutions use to facilitate worldwide money transfers.
Many SMEs currently rely on middlemen offering currency services who charge huge fees but offer poor services, creating barriers for cross-border trade. LianLian Global’s payment platform collects funds in Hong Kong from the Middle East before transferring them to merchants on the mainland.
The company sees big room for growth for its digital remittance services in the region as “they source everything from electric vehicles to solar panels from mainland China, and they all need to make payments”, said Fung.
LianLian Global, which entered the Middle East a year ago with a team of less than 10, plans to apply for a digital payments licence in the UAE, said Fung.
Last year, the company acquired a virtual asset trading platform licence in Hong Kong. It also obtained a licence in Luxembourg, allowing it to issue electronic money and provide payment services in the European country. The fintech provider has more than 65 regulatory approvals and licences globally.
LianLian Global entered into a partnership this month with UnionPay International – the global arm of China’s dominant payment network – to enable faster remittance services from Europe to the mainland.
Its Hangzhou-based parent LianLian DigiTech posted an adjusted profit of 78.7 million yuan (US$10.9 million) last year, compared with an adjusted loss of 403.24 million yuan – fuelled by the expansion of its global payments network and international licences, according to a filing to the Hong Kong stock exchange.
Its total payment volume surged 64.7 per cent year on year to 3.3 trillion yuan.