Bank fills niche for cross-border firms

Updated: 2012-09-28 10:59

By Wang Jun in Los Angeles (China Daily)

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Bank fills niche for cross-border firms

Wing Lung Bank, founded 79 years ago in Hong Kong, opened its Los Angeles branch in 1984, becoming the first Chinese bank to enter the US market. Although it hasn't done much marketing in the United States, the bank is confident that expertise serving Chinese clients will bring success, Executive Vice-President Peng Jianyin said. Provided to China Daily

Less than 30 years after entering the US market, Wing Lung Bank has built relationships through which it serves Chinese investors and American businesses seeking a link to China.

"We excel at Chinese culture, American standards and Hong Kong efficiency. We understand Chinese culture at a gut level," Peng Jianyin, executive vice-president in charge of the bank's US operations, said of Wing Lung.

"For example, Chinese businesses are very sensitive to hidden fees, so Wing Lung provides all-inclusive packages to Chinese customers. Even though our packages may look somewhat more expensive than what other banks offer, we make sure ours is the best deal."

Wing Lung uses Chinese in signing agreements with customers from China. "That way, our clients feel respected," Peng said.

Founded in Hong Kong in 1933, Wing Lung was the first Chinese bank to enter the US market with the opening of a Los Angeles branch in 1984.

In 2008, the bank was bought by China Merchants Bank, the sixth-biggest lender in China by assets.

Peng, 46, a veteran banker with extensive experience in China as well as in the US said after the acquisition by China Merchants, many Chinese who had studied in the US and then joined the local work force applied for jobs at Wing Lung. He hired several for key positions in his management team.

"It was a big concern in China in the early 1990s to have so many students studying overseas," said Peng, who received a doctorate degree of economics in 1993 from Renmin University in Beijing. "But it turns out that many now work directly or indirectly for China after they graduate."

There is a large pool of bilingual, bicultural talent in the United States, a big advantage for Chinese businesses that want to grow, he said. "On the other side, these Chinese businesses can be ideal platforms for these professionals to fully utilize their talent, especially their cross-cultural abilities, which aren't acquired overnight."

Peng and his versatile team work out of the bank's sole US office, in the Los Angeles suburb of Alhambra, California, on Valley Boulevard - sometimes called the "Asian Wall Street" because of the profusion of Asia-based financial institutions with offices there. Peng aims to open a second US branch, in San Francisco, early next year.

Wing Lung hasn't done much marketing in the US but is confident its China expertise will carry the day, the executive said.

"KYC - know your customer - that is what we work on," said Peng, citing the example of a loan completion to a Chinese jet-fuel supplier in 30 days. "We know our Chinese clients well and were able to acknowledge their credit history in China," he said.

As a foreign bank, Wing Lung encounters some barriers in the United States. "It's impossible for a foreign bank to play a major role in another country," Peng said. "That's a universal rule. The United States doesn't want to see foreign banks competing with American banks."

According to the Federal Reserve, about 50 foreign banks operate in the US. Their total assets account for less than 10 percent of all banking assets in the country. The 127 foreign banks operating in China represent 1.8 percent of total banking assets there, according to a 2011 survey by PricewaterhouseCoopers Ltd.

Although Wing Lung is thriving in its niche of linking Chinese and US companies, Peng is realistic about Chinese investment overseas.

"I don't think it's necessary for most Chinese businesses to invest overseas, because China is far from having a capital surplus," he said. "I only recommend that Chinese business go overseas under two circumstances: They need resources in the foreign country or they can obtain new technology."

He advises clients to follow a "one-check" rule in investing abroad. "You set a limit in your investment. I suggest 10 percent of your total assets, and you don't add new investments on top of that even if it doesn't do well."

That doesn't mean Peng expects Chinese companies to fail in the US market. On the contrary, he said, this strict practice benefits his clients, a number of whom are management experts.

"People learned from the 'Tiger Mom' in terms of parenting. In business, there are many good practices that the world can learn from outstanding Chinese businesspeople."

"Most people also believe businesses in the United States, generally speaking, have a better credit rating than their counterparts in China. But that's not necessarily the case."

Before its takeover by China Merchants, Wing Lung had drawn interest from Industrial & Commercial Bank of China Ltd and Bank of Communications Co. China Merchants recruited senior managers from BoCom's Hong Kong office and from ICBC, and won the bid.

About 30 percent of Wing Lung clients are Chinese firms that invest in the US. Another 30 percent are major US companies with investments in China. The rest are local businesses, according to Peng.

"Our client base has expanded from Southern California to 10 states," he said. "A strong parent gives us a bigger vision."