We plan to open two settlement centres between the European Union and China. Lithuania was chosen as one of the two locations due to the broad approach of Lithuanians, friendly officials, and recommendations from Chinese companies investing in Klaipėda,” says Luo Feng, the CEO of International Business Settlement Limited in an interview with business daily Verslo Žinios. He shares what has been achieved so far and gives some advice to Lithuanian companies entering the Chinese market.
– We spoke more than a year ago in June 2015. What has been achieved since then?
We have achieved a lot during this time. The clearance system to handle settlements between China and the European union has been created. We have invested over $20 million, if we take into account all the servers, hardware and software. Besides that, we have established IBS Lithuania – our subsidiary in Lithuania. In addition, we will soon make a request to the Central Bank of Lithuania for an electronic money institution licence. Later we have plans to apply for a specialized bank licence. The latter would be useful for our company’s activities and the new system, which will most likely handle billions of Euros in transfers. We expect to officially start our activities in Lithuania and Europe this year, right after we receive the license from the Central Bank of Lithuania. On the other hand, we have already been here for almost a year so as to get the preparation process in order. The settlement centre is very important because the EU is China’s biggest trade partner, outdoing even the USA. Annual trade between the EU and China is worth approximately EUR 520 billion. Our platform will make international settlements for companies trading between the EU and China easier. In addition, it will be possible to carry out settlements not only in Euros or US Dollars, but also in the Chinese Yuan. We expect that this will lead to even greater trade between the two sides.
– Will Lithuania be the only location in Europe for settlement centres between the EU and China?
No. We have chosen two countries for this purpose – Lithuania and the United Kingdom. In every region we choose one to two countries. Well, we have three centres in Africa – in Djibouti, Togo and Ethiopia – as our business model is also a bit different there: in addition to international settlements, we also offer banking services for Chinese companies.
– Why have you decided to open a centre in Lithuania?
In replying to this question, I mentioned to your Minister of Finance, Rasa Budbergytė, that Lithuania was chosen due to its flexibility and broad approach. On this criterion you beat other countries. Another reason was that the officials from the Central Bank of Lithuania seemed to be very supportive and understood the potential of this opportunity. The third reason was down to a recommendation. We conferred with representatives from one IBS shareholder, China Merchants Group, a conglomerate of the core business sectors of transportation, finance and property. This company is currently investing in Klaipėda and their representatives are very satisfied with the cooperation they are getting; hence, they recommended that we too should consider Lithuania.
– Do you see Lithuania as the FinTech centre of Eastern Europe?
I think Lithuania will be more than that – it will be the European centre for FinTech. In these technological times, geographical location is no longer as important, and both your government and the Central Bank have the ambition to make Lithuania the centre of FinTech. You have everything that is needed to achieve this goal; thus, your strategies and ours coincide in this regard.
– How many employees do you already have in Lithuania and how many do you eventually plan to employ?
It is hard to say the exact number as many people work on the project in Lithuania: both local people (advisers, lawyers etc.) and people from China (initially developers and IT staff). At the moment there are about 20 people working on the project in Lithuania. We expect to double the number over the next year.
– Who will be the main clients of the centre in Lithuania?
We will start working with partners – commercial banks and payment institutions – first in Lithuania, then in the rest of Europe. They already have many clients – both companies and people – who are making and receiving payments from/to China. Our goal is to jointly offer these clients cheaper, safer and much speedier settlements first from and to China, and later from/to other countries in the world where we will have such settlement centres. Next, we are preparing for cooperation with European companies that trade with China and with Chinese companies that have operations in Europe. These companies will be able to carry out settlements directly through us.
– You say that you use block chain technology – a distributed database system that stores public transactions – to secure the settlements. Why was this technology chosen?
Block chain technology is very interesting for us and currently, together with several partners, we are thinking about a global network of settlement centres based on this technology. This technology can carry out settlements in different currencies more quickly, and the security of the whole system can be increased. At present we cannot reveal any information about most of our block chain projects, but we hope to be able to do so in the nearest future.
Source: Invest Lithuania.
– We spoke more than a year ago in June 2015. What has been achieved since then?
We have achieved a lot during this time. The clearance system to handle settlements between China and the European union has been created. We have invested over $20 million, if we take into account all the servers, hardware and software. Besides that, we have established IBS Lithuania – our subsidiary in Lithuania. In addition, we will soon make a request to the Central Bank of Lithuania for an electronic money institution licence. Later we have plans to apply for a specialized bank licence. The latter would be useful for our company’s activities and the new system, which will most likely handle billions of Euros in transfers. We expect to officially start our activities in Lithuania and Europe this year, right after we receive the license from the Central Bank of Lithuania. On the other hand, we have already been here for almost a year so as to get the preparation process in order. The settlement centre is very important because the EU is China’s biggest trade partner, outdoing even the USA. Annual trade between the EU and China is worth approximately EUR 520 billion. Our platform will make international settlements for companies trading between the EU and China easier. In addition, it will be possible to carry out settlements not only in Euros or US Dollars, but also in the Chinese Yuan. We expect that this will lead to even greater trade between the two sides.
– Will Lithuania be the only location in Europe for settlement centres between the EU and China?
No. We have chosen two countries for this purpose – Lithuania and the United Kingdom. In every region we choose one to two countries. Well, we have three centres in Africa – in Djibouti, Togo and Ethiopia – as our business model is also a bit different there: in addition to international settlements, we also offer banking services for Chinese companies.
– Why have you decided to open a centre in Lithuania?
In replying to this question, I mentioned to your Minister of Finance, Rasa Budbergytė, that Lithuania was chosen due to its flexibility and broad approach. On this criterion you beat other countries. Another reason was that the officials from the Central Bank of Lithuania seemed to be very supportive and understood the potential of this opportunity. The third reason was down to a recommendation. We conferred with representatives from one IBS shareholder, China Merchants Group, a conglomerate of the core business sectors of transportation, finance and property. This company is currently investing in Klaipėda and their representatives are very satisfied with the cooperation they are getting; hence, they recommended that we too should consider Lithuania.
– Do you see Lithuania as the FinTech centre of Eastern Europe?
I think Lithuania will be more than that – it will be the European centre for FinTech. In these technological times, geographical location is no longer as important, and both your government and the Central Bank have the ambition to make Lithuania the centre of FinTech. You have everything that is needed to achieve this goal; thus, your strategies and ours coincide in this regard.
– How many employees do you already have in Lithuania and how many do you eventually plan to employ?
It is hard to say the exact number as many people work on the project in Lithuania: both local people (advisers, lawyers etc.) and people from China (initially developers and IT staff). At the moment there are about 20 people working on the project in Lithuania. We expect to double the number over the next year.
– Who will be the main clients of the centre in Lithuania?
We will start working with partners – commercial banks and payment institutions – first in Lithuania, then in the rest of Europe. They already have many clients – both companies and people – who are making and receiving payments from/to China. Our goal is to jointly offer these clients cheaper, safer and much speedier settlements first from and to China, and later from/to other countries in the world where we will have such settlement centres. Next, we are preparing for cooperation with European companies that trade with China and with Chinese companies that have operations in Europe. These companies will be able to carry out settlements directly through us.
– You say that you use block chain technology – a distributed database system that stores public transactions – to secure the settlements. Why was this technology chosen?
Block chain technology is very interesting for us and currently, together with several partners, we are thinking about a global network of settlement centres based on this technology. This technology can carry out settlements in different currencies more quickly, and the security of the whole system can be increased. At present we cannot reveal any information about most of our block chain projects, but we hope to be able to do so in the nearest future.
Source: Invest Lithuania.