CapitalWatch Interview With Henry Li, Chief Operating Officer of CLPS
Li tells CapitalWatch about the impact of Covid-19, global expansion plans, the future of fintech, and more.
Interview with CLPS' COO, Henry Li
CW: How has your business been impacted by Covid-19?
Li: We see the numerous industries that have been shut down. For example the hotel industry. Eventually, the financial demand will impact the banks, investment institutions, and other financial institutions. We see the impact, we see the financial institutions which is our key business affected. However, we don't feel that it has been greatly affected [by] Covid-19. First of all, we see that China has recovered from financial institutions quite quickly. Aside from CLPS, other companies in China have recovered quite quickly as well. In addition to this, even during the [Covid-19] situation, we were able to work from home. Because of CLPS's global footprint and the global company, for example, Citibank, eBay, and other companies. Our clients have shifted the focus in each area of the country. We are able to based on our global footprint to support customer business. We see the impact is not that significant, but we are closely working with our staff and our customers to eventually be able to overcome the situation.
CW: Peer to peer lending went from one of the fastest-growing industries in china to slow growth. Can you tell us about the regulations in China now with fintech, and how it has affected the industry? The company?
Li: China has been at the forefront of fintech growth and is the major fintech market in the world. People's Bank of China (PBOC), the country's central bank, has released a three-year fintech development plan that aims to improve the quality of financial services, strengthen regulation on technology-driven innovations, and prevent financial risks.
Most of our clients in the fintech industry have not been affected by this condition. CLPS always comply with the local regulation in all the market and we will continue to provide quality service to our clients.
CW: What do you find attractive most about expanding in California?
Li: The area has a number of fintech companies. Our CEO has visited the area a few times. We've also met our customers. We see business opportunities there. The key customers are there.
CW: What trends do you see developing in the industry?
Li: Fintech in China is still in the leading position. There are lots [of] technologies in the financial business. That enables the banks and the ecosystems to be verified and passed on in the China market. I think, for the time being, China will continue to be at the forefront fintech industry. The view also brings some of the best domestic experience [in] other countries. For example, we see there are some virtual banks in Hong Kong [and] Singapore. That concept has been in mainland China for a number of years. New technology will eventually bring convenience and its benefits to the companies. Everybody I think will eventually see the power of technology when integrated into financial services and the financial ecosystem. We also see a lot of Fintech companies bringing technologies to other countries. We also believe those countries see the benefits that fintech companies from China have introduced to them. We will continue to put our focus on new technologies, the other to make sure we are in the leading position in the industry and work with our customers and provide very closely.
CW: What's your opinion on investor concerns over Chinese-based companies listed on Wall Street? What are some of the challenges of being publicly traded in the U.S.?
Li: It's about integrity. We know there is something happening in the market, but for CLPS our core value will be always to have the principle of transparency. We believe the most important thing is to be able to maintain profitable growth to be able to bring value to our investors and our shareholders. From some of our big and well-branded customers like Citibank, which we have been working with for more than 10 years already; we have the confidence that we will continue to grow and provide good services.
CW: So continue to achieve profitable growth and you'll be able to win over American investors?
CW: What does the company have planned next for this year?
In the future, we will continue to implement our global expansion strategy and also [the] domestic market. We will continue to attract more clients from the financial industry but also the fintech industry as well. We will continue to put resources into technology innovation to provide new product value IT service to our clients and also to our potential clients in the market. That will be the plan for us for the rest of the year.
CW: Three challenges and three opportunities going forward for CLPS?
Li: I think the uncertainties of Covid-19 is a big challenge to us and most of the companies. How long will it take and how significant [of] an impact will it have on industries? It's a key challenge but we always say that the challenge or the risk will always come with opportunities. That's why we see some opportunities right now because our customer's strategies vary in terms of geographic areas. For us, we will continue global expansion strategies. Even during the Covid-19 crises, we were able to get more customers. We will fully use our structure and our experience to continue to provide good quality [IT] services to our clients. Working form home, we perfected our model and improved efficiency. Our key opportunities will be to leverage technology innovation to provide new products and more valued services to customers.
CW: Any other areas the company is looking at? Hong Kong or Singapore?
Li: Hong Kong is not only a key market for us. U.S., Singapore, and Asia countries are [part of] our key strategy of global expansion as well. When you see the number from last year (first half of the fiscal year 2020), the global/overseas business revenue increased from 5% to 10%, that's almost double. We see [a] significant [increase] from the global business. We also see the customers as part of our key drivers. We will set up [our] footprint wherever our customer needs our service. That is our strategy right now.
CW: Who are your biggest competitors?
Li: The market for IT services is highly competitive. We respect our competitors in the market. Domestically, we have Shenzhen Forms Syntron Information Co., Ltd., Sunline Tech, Amarsoft, and CSII. Those companies are domestic listed companies. They post a considerable market share in [the] IT services industry. They provide professional IT services and consultancies to large domestic commercial banks and other domestic financial services.
At CLPS, we deliver the service to our global institutions in banking, insurance, and the financial sector from both China and globally. That is the key difference from CLPS compared to other domestic companies. Our international competitors include Wipro, TCS Consultancy, and Infosys Limited, We don't actually compete directly with those very large global consultancies. For example Accenture, HP, IBM. Those companies are very big and they are engaged in large global projects. However, we compete with these firms if they are seeking smaller engagement particularly in strategy to enter the domestic Chinese market.
CW: Where do you see CLPS by the end of the year?
Li: We will continue to sustain our business growth, which is very important. We will enhance our service delivery, there will always be a better service to be delivered to our clients. We will also diversify our client base. Financial institutions [are] the key customer base and group, but at the same time, we are also expanding the customer base. Not only for the financial institutions but for fintech companies. Also [we will look to] further develop our oversea ventures.
CW: How about in five years?
Li: In the next five years, we will continue to enhance our global business expansion. That will be one of the key strategies for us. Even during the uncertainty period of Covid-19 we never changed our mind. We continue to put our effort and resources on global expansion. We closely work with our customers globally and at the same time, we will make sure to continue to provide successful business growth in domestic.
CW: How is CLPS fixed for capital currently? Are you seeking additional capital?
Li: In terms of financials, CLPS is currently cap healthy. At this moment we don't quite seek additional capital. However, we are always open; if we pursue our business development strategy such as M&A opportunities. At this moment, we don't see the additional capital required.
CW: Anything that you would like to tell your shareholders about CLPS that they may not know?
Li: For CLPS we adhere to the principle of transparency and regulated management. Everybody in CLPS is committed to bringing value to our shareholders. That is the key message that I would like to share with all the CLPS shareholders.