Green Finance Leading the Future of the Industry

Deepening combination between industry and finance Innovating green finance

GCL Financial (Group) Holding Co., Ltd. (hereinafter referred to as ‘GCL Financial Holding’) has recently opened new offices in Beijing and Shanghai, officially launching the first specialised financial segment of GCL. From thermal power, oil and gas, new energy to finance, GCL Group has developed over 20 years, and has entered this brand new ‘golden’ episode of combination between industry and finance and developing green finance.

However, combination between industry and finance and green finance are not merely empty words on paper.  To turn theory into reality is the key.  Which model will GCL choose for the developing the combination between industry and finance?  What is the prospect of green finance?  How to coordinate the financial business development between the financial segment and industry segment? ...... With all these questions in mind, the journalist from Xinhua News / Finance All Media interviewed Mr Shu Langen, CEO of GCL Financial Holding.

Natural extension of both industry and finance to create two wings on one body

Journalist:  Combination between industry and finance is a trendy term, and the state government has ordered 10 provinces to launch pilots.   What does ‘combination between industry and finance’ mean after all? Is it true that when an industrial group start its financial business then it is called ‘combination between industry and finance’?

Shu Langen:  I think the combination between industry and finance refers to a mutual connection through equity relationship to enable the two-way transfer and direct integration between industry capital and financial capital. The prerequisite of combination between industry and finance is to have strong industry capital to support the development of financial business.

Chairman Zhu Gongshan defines the combination between industry and finance in GCL Group as ‘one body with two wings’, i.e. the Group is the body, and the Industrial Holding and the Financial Holding are two wings to support the fast development of GCL as a whole. Similar to an aircraft, ‘Airline GCL’ has a very strong left wing of industry with assets over hundreds of billions, but the right wing of finance only just started. However, he believes in 3-5 years our financial asset will catch up in scale to match the other wing and enable the aircraft to take off steadily.

Development of industry capital is cumulative in growth, while financial capital is in exponential growth. For example the financial leasing company is able to reach the scale of 10 billion within a year.  The proposed Group strategic target of ‘building another new GCL in 5 years’ is therefore based on analytical facts, and we are confident about it.

Collecting 7 licences and setting industrial standards

Journalist: GCL Financial Holding has set the development target of being ‘all licensed’.  Why does it need to have ‘all licences’?

Shu Langen:  We are targeting all licences meaning all the 7 financial licences - banking, securities, insurance, trust, asset management, funds and leasing. Other licences including internet finance etc. can only be referred as ‘resembling financial licences’. Based on our strength, we have the necessary capabilities to obtain all the seven licences. We have had the financial leasing licence approved recently.  At the moment we are setting up a joint venture in West China and applying for the security licence. We are also trying to reform a city commercial bank in order to obtain a national banking licence.  Trust, asset management licences etc. are also under consideration. It is fair to say that under the current situation with increasing strength in capital, it is very likely for us to obtain all the licences in five years.

As for the ‘Green Finance’ requirements, GCL has been in the green business all along.  Of course, compared to traditional finance, our Green Finance is still in its early stage. We are setting up a Green Finance development research centre, hoping to create a private operating Green Finance research system for the industry. Just as Chairman Zhu said, first class companies set standards.  Second class companies work on branding. Third class companies make products.  We are going to be the standard setter of the Green Finance industry in China.

Inheriting excellent culture and focusing on risk control and management

Journalist:  GCL culture is largely production based, as a manufacturing type of company.  Since it is now exploring the financial industry with new team and staff, how are you going to build a GCL Financial Holding company culture that is based on GCL culture but with financial characteristics?

Shu Langen:  After 26 years of development, GCL Group has developed and passed on some unique and excellent company culture, which is one of the core competence of GCL that is not replicable. In particular, the recently promoted philosophy of ‘being entrepreneurial, innovative and customer creating’ by Mr Zhu Gongshan also well represents the essence of GCL culture.

While sticking to the original GCL culture, the development of a GCL Financial Holding culture requires special elements from the financial industry too. Compared to the industry segment, the financial unit especially needs to focus on the risk control culture. Finance is an industry that is of high leverage and high risk, light in assets and heavily people based.  With employee risk, market risks and operational risks, any carelessness could cause major disasters in the system. We must follow the rules of the financial industry while holding on to our industrial traditions, to be creative in establishing our own risk control and management culture. As a newly set up business segment, our team spirit, team culture, team work and team harmony will determine the future of this company, and will form the social basis of the healthy development of GCL Financial Holding company.