Innovation meets opportunity in China’s commercial capital

Shanghai is undoubtedly the beating heart of China’s finance, commerce and shipping industries. In keeping with its impressive growth trajectory, the city’s economy is forecast to expand as much as 6.5% this year, exemplifying the sheer scale of opportunities available for investors and entrepreneurs.

With the recent opening of Westpac’s new office and co.lab, situated on the 54th floor of the Shanghai Tower, the world’s second-tallest building, we have a unique perspective of this teeming metropolis, which helps to bolster our main message that a commitment to Greater China and Asia is a smart investment.

Strengthening historic ties

On a personal note, Shanghai is significant to me as my father was born in the city in the 1930s. Visiting China reminds me of the impact it’s had on my family’s journey as well as Westpac’s.

Westpac traces its origins back to the merger between the Bank of New South Wales and the Commercial Bank of Australia - the latter of which counted two migrant Chinese businessmen among its major shareholders in the 19th century. Lowe Kong Meng and Louis Ah Mouy, both of whom were based in Victoria, were industrious merchants and investors who oversaw valuable cargo shipments between Australia and the rest of the world.

Their legacy is especially relevant today with China rising to become Australia’s most important trading partner. Australian goods and services bound for China, ranging from iron ore to healthcare, make up almost 31% of total national exports. According to our latest Westpac Australia-China Business Sentiment survey, the majority of Australian firms remain confident about China’s outlook despite the economic headwinds, indicating an appreciation of its long-term growth potential.

Innovation at speed

What I observe each time I go to Shanghai is the speed of innovation and the willingness to embrace it in the financial services sector. This, in my view, is unprecedented and will set a benchmark for the rest of the world to follow.

High tech and internet-based services are shifting the paradigm of how consumers, businesses and government agencies interact. China is now the world’s largest fintech market, with homegrown giants Alibaba and Tencent promoting a cashless society through their immensely popular platforms, Alipay and WeChat Pay*. The country’s population is increasingly paying for meals, clothes, groceries, taxi and train rides simply by scanning QR codes on apps linked to their bank accounts – a reality that visitors like myself find novel and fascinating. These activities saw China’s mobile payment transaction volume surge to USD41.5 trillion in 2018, up nearly 30 times from five years ago. Given this trend, it’s not surprising to learn that China accounted for 46 percent of all fintech investments last year.

To ensure Australian entrepreneurs are able to tap into China’s thriving innovation sector, Austrade operates a dedicated ‘Landing Pad’ in Shanghai alongside its other hubs in Singapore, San Francisco, Tel Aviv and Berlin. The Landing Pads offer market-ready Australian start-ups and scale-ups with insights and guidance on how to establish themselves and expand in these global creative centres.

This spirit of collaboration certainly reflects the ethos of Westpac’s co.lab spaces. Shanghai is our third location in the Asia Pacific region and will bring the best of Westpac expertise to work with a range of partners, including Austrade, to explore how we can better serve our customers.

Nurturing the next generation

Westpac also strongly believes in providing young, talented Australians an opportunity to see first-hand this dynamic and exciting environment through our Asian Exchange Scholarship. The central pillars of the annual programme are being forward-thinking, enterprising and Asia-ready. The initiative is proof of our belief that Australia’s future prosperity is inextricably linked to Asia.

The Westpac scholars receive financial assistance to study at universities in mainland China, Hong Kong or Singapore. Before their semester begins, we arrange a one-week residential experience in China where they are encouraged to be curious and ask questions, make connections and pitch ideas. It was a privilege to involve this year’s group in the co.lab launch, where they heard how Australian businesses are tailoring their products and services specifically to the Chinese market, whether it be package holidays, red wine or Southern Rock Lobster.

One of the students ended the event by telling our audience that the exchange marked her first time travelling outside Australia. Stories like this underline the importance of inspiring and nurturing the next generation of visionaries and leaders who will go on to play a crucial role in further strengthening our ties with China and advance the vital “Australia-Asia economic corridor”.

*I actually experienced this myself just a few months back when I was in Shenzhen and was trying to pay for my train ticket. It would have been easy if I had WeChat or Alipay, however finding an ATM which I needed to,took a very long time.

Photo credit: Mr Lowe Kong Meng published by Ebenezer and David Syme, Melbourne, 1866 Collection of State Library of Victoria.