Online investment products craze alerts China’s financial sector

Online investment products craze alerts China’s financial sector

Staff Reporter


Several Chinese internet and fund companies recently launched investment products and promised a return higher than those available in the market by subsidizing investors, reflecting the impact of online operations on traditional banks, the Chinese-language Global Entrepreneur magazine reports.

The latest company joining the online finance race is web portal Netease, which began accepting investor applications for its fund on Dec. 25, with a promised return of 10% on an annualized basis, the magazine said.

The launch followed search giant Baidu’s introduction of its online financial products under the Baifa brand two days earlier, which is advertised with an annual return of 8%, the magazine added.

These new products, the magazine said, sparked a debate on the different approaches used by internet companies and traditional banks for selling financial products.

Internet companies often call traditional banks “dinosaurs,” while companies in the financial sector responded by saying that subsidies could not last forever, according to the magazine.

Regulators have stepped in and made their stance clear on products promising higher returns with subsidies. Two online fund companies, and Shanghai Tiantian Fund Sales, were each fined for improper advertising that highlighted the promised returns.

The fine, the magazine noted, has reminded internet companies that the highly regulated market is difficult to break.

The person in charge of Netease’s fund service told the magazine that the web portal plans to launch three to four products before July, but the subsidies would not be limitless. Netease currently requires investors in its product to register with the web portal’s mobile instant messaging app Yixin.

Baidu pays subsidies to acquire user information with more details than those obtained through its search engine, and the costs of the approach are actually quite low.

On the other hand, the popularity of the online financial products reflects considerable market demand, which has led to the creation of a capital chain, of which banks are not a part, the magazine said.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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