Nicknamed the ‘Paris of the East’, Shanghai was a riot of riches, glamour and vice in the days when merchant banks and trading houses lined the Huangpu riverfront, and the city’s cosmopolitan concessions played host to the British, French, Americans, Russians and Japanese.
Despite decades of upheaval after the founding of the People’s Republic of China in 1949, Shanghai emerged in the late 20th century as a centre for finance and commerce, and the marshy flats of Pudong mushroomed into one of the world’s great skylines. Today, business is booming, and the Shanghai Stock Exchange (SSE), suspended in 1949 and relaunched in 1990, is ranked fourth in the world by market capitalisation.
Besides being a leading centre for finance, Shanghai, China’s largest city with an estimated 24 million people, has also emerged as a fintech powerhouse, a natural alliance between the city’s aptitude for number-crunching and China’s advanced e-commerce economy.
The city has found its niche in the application of new technologies and the partnership of business and tech, as well as embracing big data, biometrics, blockchain, virtual reality and AI development. A thriving start-up scene – nurtured by huge government investment and incentives, as well as private accelerators and incubators – combines tech with e-commerce and lifestyle, with many companies run by a mix of Chinese and overseas management.
The city is home to 45 unicorns (start-ups valued at over US$1 billion), mostly in fintech and lifestyle. One of the most notable is Lufax, an online wealth management platform specialising in blockchain-enhanced peer-to-peer lending. To further boost innovation, President Xi Jinping announced in 2018 the launching of a Nasdaq-style innovation board to be established by the SSE, which is designed to encourage yet more local tech offerings – and in a first for the Chinese mainland, even allow startups to go public before they turn a profit.
The Person: Zhang Xuhao
Delivering success across China, one meal at a time
Zhang Xuhao’s multibillion-dollar food business started with a rumbling stomach after a night of online gaming with classmates at Shanghai Jiao Tong University. Without any food delivery options, he decided to start one himself called Ele.me – which roughly translates to ‘Are you hungry?’ The company started out small, but as the food delivery market exploded, so did Ele.me, which signed up thousands of restaurants through a partnership in 2014 with Dazhong Dianping, the Yelp of China. By 2017, Ele.me was processing more than nine million orders a day and in 2018, the unicorn was acquired by e-commerce giant Alibaba for US$9.5 billion.
Zhang became Alibaba’s special assistant of new retail strategy, pocketing billions of yuan in the process, but China’s food delivery war was far from over. Dazhong Dianping merged with food delivery start-up Meituan in 2015 to create Meituan Dianping, a super-app and bitter rival of Ele.me, as the battle for China’s food delivery crown continues.
Number of global brands that set up a China flagship store in Shanghai in 2018.
Number of passengers Shanghai Pudong Airport handled in 2018, up from 70 million in 2017.
Number of registered financial institutions operating in Shanghai in 2018.
The Product: Lufax
A data-driven lending platform
It’s no surprise that Shanghai, a global financial centre since the 19th century, has given birth to Lufax, which has been valued at US$39.4 billion after receiving funding in early 2019. Backed by Chinese insurance giant Ping An, the company is a peer-to-peer lending platform that matches lenders directly with borrowers (either individuals or small businesses), cutting out the middleman to offer better rates than banks.
Safe and seamless, the data-driven risk management framework allows accounts to be opened entirely online within just 10 minutes. Blockchain, AI and big data are employed to run multi-level checks on investors, including real-time face verification and name screening, while investors can use their mobile phones to capture key data, store identification documents and verify addresses by GPS.
As of December 2018, Lufax was one of China’s largest online lenders, with more than 40 million registered users.
Ones to watch
Yitu Smart ATMs
Yitu Technology is relegating debit cards to the scrapheap with its new facial-recognition technology, which has already been deployed in more than 12,000 ATMs nationwide. Simply key in your amount, smile and pocket your cash.
Literally the ‘little red book’, this app combines social media and shopping, and has racked up 200 million fashionable users. Many global fashion and beauty brands are now jumping on to the site to grow their China presence.
Chinese autos are getting an IQ boost thanks to this smart software from Alibaba-backed Banma, which upgrades cars with an array of smartphone-like features including navigation and entertainment.