The Cross-Strait pioneer in financial services – Fong-Tai Wen, the Chairman of VTeam Financial Technology Service Corp.

2018-01-11
The Cross-Strait pioneer in financial services – Fong-Tai Wen, the Chairman of VTeam Financial Technology Service Corp.

In recent years, the most popular vocabulary in financial industry is “FinTech.” The financial industry has gone full-speed in expanding related businesses. VTeam Financial Technology Service Corp. (VTeam) started to “build the foundation” as early as 20 years ago since its establishment in 1998. It has developed a unique platform for FinTech service systems and created a one-stop e-market for receivables. Under the vision of the founder, VTeam Chairman Fong-Tai Wen (hereinafter referred to as Mr. Wen), VTeam has become the leading brand in innovative receivables and Supply Chain Finance business in Taiwan, Hong Kong and Mainland China. The company’s profits have multiplied each year and Mr. Wen was also awarded with this year’s Emerging Entrepreneur Of The Year Award, a recognition well-deserved.

Unique Vision
Developing the Blue Ocean of financial industry

When talked about entrepreneurial motives, Mr. Wen said that “what we are doing now is just putting the idea from 20 years ago into action.” In the past, when banks involved in corporate finance, their eyes were on the land, factories, offices and other fixed assets. “The objects were also collaterals.” But in fact, “current assets” such as accounts receivable, notes receivable and inventories can also be used as financing objects. Although there were inventory financing businesses handled by leasing companies and notes receivable financing businesses covered by banks and notes companies, accounts receivable financing was basically an untouched territory. Cailease Finance Co., Ltd, where Mr. Wen was employed at the time, was one of the very few companies that had factoring/financing department.

Mr. Wen said that when he did factoring/financing, it was all “offline.” He paid visits door-to-door to companies, asked for standard receivables and provided advance payments. “But I was thinking that if we can build an exchange market, where the enterprises who want to finance using accounts receivables and the financial institutions who are willing to accept factoring/financing can trade directly, wouldn’t the efficiency much improved?” It was this very idea that cradled the birth of VTeam.

However, VTeam did not rush to get started in the early days. Instead, it focused on the development of information systems (IT). “I call it the building of the foundation” said Mr. Wen. VTeam did not have a unique background nor backed by large financial groups. Had it started by pursuing the idea of an exchange market, the idea could have been replicated immediately. In order to build a strong foundation to deter the competitors, “We believe that we should start with IT so that all participants in the market use our IT system.” This is the first step of the blueprint envisioned by Mr. Wen.

Successful landing in the Mainland and capital infusion by SoftBank.

In 2001, VTeam extended its business across the Strait. “Our original goal was not to get into the Mainland’s domestic market but to spin-off the OEM business” said Mr. Wen. In early 2000s, VTeam’s IT sales grew exponentially. However, with the limited resources, Mr. Wen thought of outsourcing the OEM business.

“Instead of outsourcing to a company that was unfamiliar to us and it turned around to be one of our competitors after learning the know-how, it is better to found a wholly-owned OEM company.” Therefore, he decided to set up an IT center in Wuhan (hereinafter referred to as the Wuhan VTeam), to handle the standardized development work. The expansion of customer source, customer demand analytics, and customized services were still the responsibility of the Taipei Headquarter.

Beginning in 2003, VTeam and Fubon Bank (China) entered into a cooperation agreement and began to provide FinTech services to China’s commercial banks overseas. In 2004, Shanghai Pudong Development Bank (hereinafter referred to as the Pudong Bank) was ready to start the factoring/financing business and solicited advices from banks in Taiwan. Since VTeam had a fairly large market share in Taiwan’s IT financial service market at the time, “many banks in Taiwan recommended us to Pudong Bank.” In 2003, Pudong Development Bank became VTeam’s first Mainland China owned customer and marked VTeam’s official entrance to the Mainland China market.

Despite the seemingly smooth entrance, VTeam had faced some challenges in Mainland. In 2008, Mr. Wen believed the timing for stage 2 of the blueprint had ripped, which meant it was time to move from building the foundation, an IT service provider, to the factoring business that was originally intended. At that time, the China Banking Regulatory Commission (CBRC) visited VTeam and considered VTeam to have all the qualities that they were looking for. CBRC was willing to issue “conditional approval” (i.e. Franchising) so VTeam could become the first non-banking factoring institution under the supervision of CBRC.

“As soon as we obtained the permit, we immediately seek the assistance from Hubei Provincial Government, hoping to start the business. Hubei Provincial Government was also very cooperative and immediately hosted a seminar which gathered the province’s industrial, officials and academic organizations. All participants agreed that it would make a great contribution to Hubei Province and approval was immediately granted” said Mr. Wen. However, VTeam Wuhan encountered great obstacles when applied for the change the business classification due to its 100% of foreign investment status.

“In order to obtain the license, we tried many different routes and consulted with many people. However, the hurdles were just really hard to overcome” said Mr. Wen. However, a white knight suddenly appeared. SoftBank China came knocking on the door one day and expressed that, after 2-3 years of observation, they were interested in investing in VTeam and were willing to help resolve the problem. The only condition was to be the shareholder of VTeam.

Through SoftBank’s connection, Mr. Wen arrived Chongqing. Chongqing is a municipality that has higher autonomy. The then mayor of Chongqing was also one of a few people who has financial background in the top of China’s political party and was very welcoming to financial innovation. “They knew we were interested in applying for a license and was very welcoming. They immediately approved the change of business classification.” In 2011, VTeam obtained China’s first factoring license in Chongqing and became the first commercial factoring institution in Chongqing.

Enhanced Patent Position
Build Irreplaceable Competitiveness

As the market scale of China’s commercial factoring market gradually formed, the market competition became fierce. Although VTeam had a head start, the competition should be taken lightly. “We continue to strengthen the patent position. There are only 2 patents in account receivables risk management in current global market and we owned both of them.” Mr. Wen further pointed out that even though more and more competitors are entering the factoring market, “if we dissect the entire value chain, we have advantages in every sector, which is enough to distance us from the competitors.”

In addition, Mr. Wen also continued moving toward the stage 3 of the blueprint by actively cooperating with Chinese governmental officials at all levels. “We actively approached the all levels of governmental officials in Commission of Economy and information and received weekly visits from all levels of governmental officials.” We helped in building an investment and financing platform, industry association platform and a core business (central plant) platform. We were also actively promoting the e-confirmation in Taiwan.

After years of preparations and efforts, VTeam built a number of service locations in Greater China to serve their respective local customers. With the partnership and cooperation among financial institutions in Taiwan, Hong Kong and Mainland, we were able to provide services to a large number of companies. The Company also has a variety of international patents in receivables risk management and is the member in FCI. They are truly a leading brand in the innovative factoring/Supply Chain Finance business in Greater China.

Help SME
Take on Corporate Social Responsibility

For the future, Mr. Wen said that VTeam has started the stage four, which is to bring the traditional financial services from the “offline” to “online,” from B2B to B2C, and pump up the enterprises’ operating flow through the application of value-added services such as receivables securitization. By doing so, the SME can raise capital through direct finance, rather than indirect finance. Not only can the general investors act as a capital infuser, the barrier when financial institutions engage in indirect financial services can also be eliminated.

In addition, VTeam also established a “traceability management (production history)” mechanism, so that the debtor and creditor information is more transparent, reducing the risk of asymmetric information Mr. Wen believes that Vteam can create a new financial ecosystem supply chain by building the one-stop shop service and will be able to completely and effectively solve micro-financing problems within SME. “Only when SME prosper, can they improve employment opportunities and further stimulate economic growth.” This is also VTeam’s corporate social responsibilities.

Refer to : https://money.udn.com/money/story/5636/2923153