This website uses cookies and other technologies to help us provide you with better content and customized services. If you want to continue to enjoy this website’s content, please agree to our use of cookies. For more information on cookies and their use, please see our Privacy Policy.


切換側邊選單 切換搜尋選單

Cross-strait Payment Services

Raking in the Renminbi


Raking in the Renminbi


In the newest development in cross-strait financial services, Chinese buyers can now pay online for products and services purchased in Taiwan. Small Taiwanese online vendors are seeing their sales go through the roof.



Raking in the Renminbi

By Chao-yung Huang, Chao-yi Lin
From CommonWealth Magazine (vol. 499 )

Smaller Taiwanese companies are now able to sell directly to Chinese consumers without having to establish outlets in China. More importantly, they conveniently receive payments in their Taiwanese bank accounts in New Taiwan dollars.

In mid-March Taiwan's E. Sun Commercial Bank and AliPay, China's largest online payment services provider, announced a partnership deal to facilitate online transactions between Taiwanese companies and Chinese consumers. The resulting new Internet shopping platform integrates cross-strait flows of money, goods, and information and enables Taiwanese enterprises to legally get paid in New Taiwan dollars.

When the joint venture was announced, at least 80 Taiwanese entrepreneurs were present, including Huang Yi-pin, president of Lugang-based confectionary brand Yu Jen Jai. "We've been looking all along for a legal way of selling our traditional pastries to Chinese consumers," he says.

The big pie of China's domestic market makes hearts beat faster. But not every Taiwanese company has the money and human resources to expand its brick-and-mortar business into China.

But now that online shopping and financial transactions have been strung together in this B-to-C e-commerce platform, smaller Taiwanese companies also see growth opportunities and want to seize the moment to tap Chinese consumer demand.

Instant Surge in Sales

Following the March announcement of the E.Sun Bank-AliPay tie-up, the new platform went online in April. Although just 11 online vendors were on board at the time, sales immediately skyrocketed, much to the delight of E.Sun Commercial Bank.

"A food company sold goods worth NT$1 million on Day 1 when it began to sell on the website. No one thought that on Day 2 sales would soar to NT$18 million," recalls E.Sun Commercial Bank chairman Gary Tseng. "Sales jumped 18-fold (in just one day), that's really hard to fathom."

But before the bank was able to achieve such "explosive growth" in cross-strait online transactions, it had been doing the legwork for more than half a year.

"Although this is just a matter of selling goods and receiving payments, we briefed the authorities in charge at least a dozen times altogether – virtually twice a month," notes Tseng in revealing the complexity of the matter.

Ultimately, cross-strait trade in goods involves taxation and delivery issues, so attempts need to be made all the time to work around the various obstacles as cross-strait financial markets gradually open up. In particular, since China and Taiwan have not yet signed a currency settlement mechanism that would allow the direct exchange of renminbi and New Taiwan dollars, solutions must be found within the existing framework.

"Innovation in soft power is much more difficult than innovation in the manufacturing industry," Tseng observes. He suggests that the cross-strait financial industry should work to redefine customer needs and determine how to maximize results at minimum cost.

"There is a clear trend for growth. We are not worried about scale. The point is that we need to be well prepared for the flow of information, goods, and money, in particular," Tseng points out.

Aside from the 11 companies that joined the e-commerce platform right in the beginning, another 200 are presently in the process of signing up. Most of the vendors are marketing snacks, souvenirs, tea leaves, and other local specialties from Taiwan. Prices typically range from a box of pineapple cakes for around NT$300 to tea gift packs for about NT$4,000.

E.Sun Commercial Bank is still forced to use the existing U.S. dollar-based settlement mechanism, but the participating companies, for their part, are spared the cumbersome task of exchanging renminbi into U.S. dollars and U.S. dollars back into New Taiwan dollars. This is made possible by third party payment service providers, a quickly growing industry in China, which handle the renminbi deposits.

In a nutshell, a third party payment service provider such as AliPay deposits payments from buyers when they order goods. The vendor ships his goods after confirming that the payment has been received.

In Taiwan consumers have long been used to paying for online purchases by credit card. But in China online shoppers usually pay via third party payment service providers.

E.Sun Commercial Bank, which advertises itself as "small but beautiful," is not the only one tapping the Chinese consumer market via online shopping. The big players in the industry are not exactly twiddling their thumbs either. Cathay United Bank, the consumer banking arm of Taiwan's largest financial services provider Cathay Financial Holdings, is providing online shopping services to Chinese customers by cooperating with China UnionPay, the only bank card organization in China.

Banks Scramble to Cash In on Cross-strait Online Shopping

Under the deal, e-commerce company Symphox Information Co. Ltd., a Cathay Financial Holdings subsidiary, was in charge of creating the shopping website "TreeMall/I Love Taiwan" ( to circumvent obstacles to the cross-strait flow of goods and money and to facilitate online purchases of local Taiwanese goods by Chinese buyers.

Yang Chun-wei, head of personal banking at Cathay United Bank, notes that the new platform enables China UnionPay customers to pay their online purchases by credit card. Cathay United Bank is the first Taiwanese bank offering online payment services for China UnionPay cardholders.

Before a currency settlement mechanism has been signed between Taiwan and China, other competitors still need to exchange renminbi for U.S. dollars and then again into New Taiwan dollars before they remit payments to vendors.

China UnionPay is the only financial institution that can legally directly exchange renminbi for New Taiwan dollars to settle transactions, a clear competitive advantage.

With a 10 percent market share, China UnionPay is presently China's third largest mobile payment services provider behind AliPay and Tenpay.

Symphox Information president Lin Yu-chen notes that his company's role has been to build a cross-border e-commerce platform. The biggest challenge in the future will be marketing the website and make it more widely known.

Chinese tourists visiting Taiwan spend most of their money on the following six items, according to statistics by Cathay United Bank: tea, watches and jewelry, hotels, clothing, cosmetics, and medical beauty treatments. All these product categories will be available on the website in the future.

"What we are looking at is not one-off consumption. We hope that Chinese visitors will continue to buy high-quality goods from Taiwan after returning home," explains Tseng. "These sales also count toward Taiwan's export orders, and enable small Taiwanese vendors to earn foreign currency, too."

Top Priority for Taiwan's Financial Industry

Taiwan's financial industry has been trying to figure out ways to tap Chinese consumer demand ever since Taiwan and China signed a memorandum of understanding on cooperation in financial supervision across the Taiwan Strait and the subsequent Economic Cooperation Framework Agreement (ECFA).

Bank SinoPac, for instance, posted net after-tax profits of NT$2.8 billion for the January-April period this year, 10 percent of which came from renminbi-related business, including renminbi-denominated loans by the bank's offshore banking unit (OBU) to Taiwanese companies in China and renminbi-denominated bond transactions.

Michael Chang, chief strategy officer of SinoPac Financial Holdings, the bank's parent company, believes that the Chinese market has already caused a shift in the structure of Taiwan's financial industry. "In the past everyone used to say that Taiwan had too many banks, but when it comes to entering the Chinese market, the number (of banks) isn't the problem," he points out.

Since July 21, 2011, when Taiwan's financial watchdog authorized OBU to do business in renminbi, renminbi deposits at Taiwanese banks have continued to increase rapidly, hitting 13 billion renminbi as of the end of April this year. However, this is still only a small amount compared to the 500-600 billion renminbi deposited in Hong Kong banks.

Against this backdrop, Chang is convinced that Taiwanese banks still have a lot more to gain from renminbi business.

"Given the mutually dependent trade relationship across the Strait, the renminbi deposits of Taiwan's financial industry have the potential to grow at least forty- or fifty-fold," Chang asserts. "Whoever is first to gain a firm command of these new products will emerge as the winner in the next round of financial industry competition."

Translated from the Chinese by Susanne Ganz