We all know the lure of China’s consumers for retailers and merchants of all stripes and sizes operating across the globe. Gathering wallet share of hundreds of millions of young, urban and newly flush Chinese consumers as they search online for goods and services is increasingly attractive for merchants and marketplaces alike.
But what about the converse — where Chinese companies are conducting their own cross-border businesses, selling in every corner of the globe?
Enter PingPong Global, which makes it easier for SMBs, manufacturers and global brands to collect cross-border payments from customers across eCommerce marketplaces as ubiquitous as Amazon, Wish and NewEgg.
The firm, founded in New York in 2015 and now located in Hangzhou, with offices in San Francisco, Shenzhen and Luxembourg, has operated since February 2016 with Amazon as its anchor client. The company has been experiencing extraordinary growth, with GMV processing over $3B annualized.
PingPong Global’s niche is not only being the first, and only, FinTech company created solely to focus on sellers and merchants based in China. The company has also established the first secure and trusted compliance, vetting, KYC (Know Your Customer) and regulatory approval process for 75,000 China-based sellers (and growing) so that global marketplaces can have access to this massive eCommerce engine without operational, logistical, technological, payment or ERP fears.
Additionally, cross-border payments mean that firms have to work with banks, regulators, compliance and even cultural nuances that can all add up to friction that hinders smooth eCommerce. PingPong Global maintains that it has solved that complex part of the SMB business for its marketplace partners in the Chinese economy.
In an interview with PYMNTS’ Karen Webster, PingPong CEO Robert Chen said that his firm addresses a few key problems for Chinese SMB sellers, manufacturers and brands. Webster posited that the company is accepting the risk, and therefore the question must be asked: How can buyers be sure that a seller is indeed offering legitimate merchandise?
PingPong Global has developed a closed-loop, compliant and regulatory solution for China-based sellers and global marketplaces that vet them against the highest standards in eCommerce (including, but not limited to, AML, business registration, brand authentication, tax IDs, financial and ownership review). The firm also maintains that it creates a low-cost repatriation flow of funds from any marketplace in the world back to the sellers in the Chinese economy — wherever they might be located.
Real or imagined, some Chinese retailers are known to sell counterfeit goods, agreed Chen. “That is a battle that we work together with the marketplaces to fight,” he told Webster. Firms like Amazon have their own KYC process that must be satisfied before they onboard any sellers.
PingPong Global, said Chen, differentiates itself from its competitors by taking a secondary review of products and their sellers. Think of it as a second line of defense, with a bit of a new wrinkle: Experts from PingPong Global will ascertain that all is as it should be — in person. With headquarters in Hangzhou and an office in Shenzhen, the firm has what Chen said is a “deep understanding” of how regulatory frameworks work within the country. PingPong Global will send informal inspectors into merchants’ stores to see if there is anything suspicious on the shelves.
As a result of these combined efforts, the percentage of PingPong Global marketplace customers who encounter “bad actors, charlatans and fraudsters from China” is significantly lower than other providers across a much larger pool of potential sellers, Chen said.
In many cases, Chen continued, firms may violate intellectual property laws because they don’t understand where some compliance boundaries lie. Some companies, for instance, may use online photos to demonstrate a product, but a truly accurate representation may not be available. So, in lieu of the perfect document, those companies may take a computer image and tweak it a bit, which then, in turn, violates copyrights — all without intention. Here, PingPong Global might take a proactive approach and call that company, said Chen, alerting them to the possible pitfalls over IP (intellectual property).
In the end, agreed Chen and Webster, it is the perception of a violation (in the eyes of regulators) that can make all the difference and cause headaches for firms selling legitimate merchandise in the Chinese economy.
Currency controls also offer a challenge for businesses of all sizes in China, said Chen, with a “subtle regulatory environment” in place. The global payment networks are sometimes not as successful in China when tackling these controls.
To tap into China’s “outbound” commerce market, which is, of course, huge, Chen cautioned that, “You really have to immerse yourself in its culture and business practice and develop a deep relationship with the regulators and government agencies.”
This is where PingPong Global stands out from all FinTech players, said Chen. Most companies come to China and minimally staff an office in Hong Kong or Shanghai and/or loosely partner with other providers.
PingPong Global is embedded in the business, banking and regulatory community, knows the players and is a substantial employer in both of its offices. They simply know the terrain better than anyone else, he told Webster.
One of the key areas PingPong Global excels is in cost of repatriation. “We’ve reduced the cost of payments by about two-thirds or more,” Chen told Webster, adding that just a few years ago, a seller in Hong Kong might be paying as much as 5 percent to 7 percent per transaction on fees, with additional charges coming through FX (foreign exchange) activity. PingPong, he said, charges a low, flat fee with no variance.
