Big data conglomerate dreams big on Silk Road
Luo Feng, CEO of IZP Technologies Group, speaks at the 15th Forum on Internet Media of China in Zhanjiang, Guangdong province, July 17. [Photo/IC]
The driving force behind China's trade growth over the next decade lies in One Belt One Road initiatives and the development of Renminbi-led cross-border clearing, said a CEO mapping out ambitious moves along the routes.
"We aim to build Silk Road stations, a Renminbi-led Visa-like cross-border payment system and a second 'Frankfurt airport' along the routes in Italy to help deliver growth," Luo Feng, CEO of IZP Technologies Group, told chinadaily.com.cn.
The country's big data processing conglomerate operates e-commerce platforms Haixuan and Globebuy and online payment arm Globebill that has been licensed to set up a card organization in Europe.
The One Belt One Road initiative needs its own clearing infrastructure, where retailers overseas can buy Chinese goods with their home currency or exchange directly for Renminbi, Luo said at the 15th Forum on Internet Media of China in Zhanjiang, Guangdong province.
The forum, led by the Cyberspace Administration of China, provides guidance on what kind of roles media convergence and technological innovation can play in the context of the new normal, and how Internet media can better help boost the Silk Road.
The initiative refers to the Silk Road Economic Belt and the 21st Century Maritime Silk Road proposed by President Xi Jinping in 2013, with the network passing through more than 60 countries and regions in Asia and Europe, covering a total population of 4.4 billion.
Chinese enterprises invested more than $4.86 billion along the routes in the first five months of this year, according China's Ministry of Commerce.
A new "Visa" along the Silk Road
Improving cross-border clearing and settlement is crucial in elevating trade growth, said Luo, as he aims to set up a new "Visa" system along the Silk Road to drive down transaction fees and help small- and medium-sized businesses.
"Cross-border transaction costs could be as high as 5 percent, even more than certain sector's profit margin. Small and micro companies sometimes can't get a letter of credit which constrains exports," said Luo.
The IZP's Globebill, with customers from 104 countries, charges a transaction fee 40 to 80 percent cheaper than Visa, said the 43-year-old CEO. The platform was among the pilot companies approved by the State Administration of Foreign Exchange for cross-border e-commerce foreign exchange and payment.
"Nigeria has a population of 140 million, and to buy Chinese goods they first had to exchange for US dollars before then exchanging US dollars for Renminbi," he added. Consumers under Globebill's network can now make purchases using their home currency.
IZP signed an agreement with Belgian service provider Cnext at the end of June to work together for issuing a Euro-RMB dual-currency credit card, among many deals struck during Chinese Premier Li Keqiang's visit to Belgium.
The cooperation came after IZP signed a bank card settlement agreement with Lithuania's central bank, as Globebill aims at setting up a settlement network covering the whole of Europe, said the company.
"Our goal is to reach cooperation with regulators of 100 countries by 2017," said Luo, adding that IZP is now eligible to issue credit cards and deliver settlement with 30 of them along the "One Belt One Road".L
Luo Feng, CEO of IZP Technologies Group, signs a cooperation agreement with Cnext in Brussels, June 29, among many deals struck during Chinese Premier Li Keqiang's visit to Belgium. [Photo provided to China Daily]
The company plans to set up a Middle East center in Dubai overseeing the region, as Globebill reached an agreement in April to set up a payment system and bank card settlement system in Saudi Arabia.
The CEO dismissed a face-to-face competition with the industry behemoth. "We target Visa, though differently from its 98-percent focus on individuals. Globebill mainly serves corporate clients that have cross-border businesses with China," he said.
"The US dollar dominates the dual-currency card market right now, but in 10 years, it will be Renminbi plus one," said Luo. "No one can keep us from achieving the goal."
Silk Road stations
In the same way that stations were positioned along the ancient Silk Road where businessmen could rest and change to a faster horse, IZP has evolved the concept.
The new version would contain five key elements, including an O2O exhibition center, bonded export processing zone, cross-border financial infrastructures, standardized electronic custom clearance system and big-data based marketing network.
"Roads cannot work without stations," said Luo, adding that the company is setting up a 20,000-square-meter exhibition center in Belarus, Eastern Europe, expected to open in October, and another 35,000-square-metered in Colombia, Latin America.
He explained that travel expenses are within $200 for retailers on the same continent to see products on display before ordering online. "The exhibition centers will act like an updated 'China Import and Export Fair', reaching clients globally on a daily basis, sparing them the trouble of applying for a China visa while exchanging and carrying money around."
Proposing bonded export processing zones as a solution to resolve trade barriers, Luo said Chinese companies will benefit from moving part of their manufacturing to destination regions.
"The EU requires up to 35 percent of costs to be from the region in order to accept goods as 'EU made' and tariff-free," said Luo, adding that Lithuania, with well-trained English-speaking workers, has agreed to offer Chinese companies full tax-exemption for the first six years and 50 percent off over the next 10.
"We are also cooperating with Merchant International, a subsidiary of China Merchant Group, to forge port alliance and set up a standardized customs clearance system," said the CEO. According to IZP, the initiative has won more than 26 ports worldwide.
Speaking of the next move, Luo said it will include buying a second Italian airport, following IZP's acquisition of Parma airport last year, though he refused to disclose the name.
"Frankfurt is well-known as an air hub but is already overburdened. We want to build a second 'Frankfurt airport' in Italy," said the CEO, recalling hours of waiting for transit flights.
The airport acquired, able to accommodate Boeing 747s, will also contain a 60,000-square-meter bonded area where a duty-free store can be set up to entertain Chinese tourists on shopping sprees, said Luo, adding that the deal will move to settlement soon.