From 1st paper currency to world success story

Southwestern city cements status as a financial innovation pioneer

As a financial innovation pioneer, Chengdu has, in many ways, been the springboard for the growth of the modern financial services industry in China.

There are 60 banking institutions, including those from overseas, operating in Chengdu, which has been designated as a financial center in Southwest China by the State Council, China's cabinet. [Photo/China Daily]

But some industry experts point out that the city has played an important role in shaping the modern financial services industry by being the birthplace of the first paper currency in the world, the jiao zi, introduced in 1023 during the Song Dynasty (960-1279).

Much water has flowed under the bridge since then and the city, also famed for its pandas, today ranks prominently alongside peers such as Beijing and Shanghai in attracting foreign investment.

The State Council, China's cabinet, ranks Chengdu as the financial center of Southwest China. The city is the premier destination in central and western China for foreign-funded banks, insurance companies and listed companies, and leads all other cities in western China in terms of financial transactions.

In 2012, more international financial institutions started operating their western China branches in Chengdu, such as South Korean-owned Woori Bank and Cathay Insurance from Taiwan.

There are 60 banking institutions, 69 insurance agencies and 57 securities and futures firms based in Chengdu, the Chengdu Daily reported.

According to the Chengdu government's financial office, some international banks set up liaison offices in the city in the late 1990s, and most of the financial institutions, especially international insurance companies, have opened branches in Chengdu in the past five years.

"More and more multinational corporations are opening their branches in Chengdu, and the number of foreign financial institutions in the city is also increasing," said Ren Ruihong, head of banking and insurance at the local government's financial work office.

A total of 233 Fortune 500 companies operated in Chengdu last year, 26 more than in 2011.

Though most international financial organizations initially came to Chengdu to meet clients' requirements, many are now attracted there by the city's robust and fully operational international financial services system.

A total of 13 international banks and 14 international insurance companies have set up branches in Chengdu, while many others are awaiting approval from the China Banking Regulatory Commission to do so, Ren said.

"We hope the central government will speed up its approval process, so that we can attract more foreign financial institutions," he said.

The global networking system adopted by most of the international banks helps them provide commercial loans to multinational corporations through their branches in Chengdu, saving valuable time.

Xie Ling, the branch manager-designate for HSBC Bank (China) Co Ltd, said that if a London-based Fortune Global 500 company wants to set up a subsidiary in Chengdu, the parent company can make a financial guarantee to HSBC in the UK, and receive sufficient credit from the banking giant's Chengdu branch.

"It happens a lot in Chengdu now, and we actually invite many of our global clients to invest in Chengdu through the network," she said.

Xie, who was transferred to Chengdu lately from Xiamen, a major city in Fujian province, said she is amazed by the southwestern city.

"It is not just me, but every other co-worker from HSBC who has been to Chengdu. Many of them frequently flying in and out of the city are amazed by this highly developed and very international city," Xie said.

HSBC was one of the first foreign banks to start operating in Chengdu, opening a branch office in 1996 on the ground floor of Plaza Central, one of the earliest business complexes in downtown Chengdu.

Early next year, Xie will lead the branch in moving its offices from the downtown area to Tianfu Software Park in the south of the city.

"Our business is expanding rapidly in Chengdu, and we need more space to run our operations," Xie said.

HSBC was also the first international bank to be given regulatory approval to set up rural banks in China, and considers Chengdu a pivot for achieving these goals in western China.

"From the region, we will be able to cover vast tracts of the rural market in China. We believe this rural market has tremendous growth potential. HSBC will continue increasing its investments and services in the western regions to cash in on the huge growth opportunities," Xie added.

Many other international banks are also looking to increase their localized services in Chengdu.

Citibank's Chengdu branch has set up a commercial division targeting small and medium-sized enterprises in the city.

Rang Youmin, branch manager in Chengdu for Citibank (China) Co Ltd, said: "Besides top-tier local companies and foreign-invested enterprises in Chengdu, we also provide a full suite of products and services to SMEs, including cash management, trade finance and services, treasury products and corporate finance."

Much of the confidence shown by international financial institutions comes from the strong impetus provided by the local government to create a stable financial environment in the city.

Ren said: "Most of the employees in Chengdu's foreign banks are local hires. Graduates from universities such as Southwestern University of Finance and Economics as well as the University of Electronic Science and Technology of China, provide a good base for financial industry talent and the related financial outsourcing services in Chengdu."

Contact the writers at zhaoyanrong@chinadaily.com.cn and liyu@chinadaily.com.cn