12 December 2019

Minsheng Bank finds a blue ocean in Hainan

China Minsheng Bank’s (01988.HK, 600016.CN) huge lending plan in Hainan represents one more example of how the nimble financial institution tries to steer away from the beaten track to create tailor-made products based on the needs of regional markets.

Aiming to become the largest financial services provider for the southern island’s agriculture sector, Minsheng plans to invest as much as 50 billion yuan (US$8.2 billion), mainly in the form of loans, in the next three to five years, according to Li Linhui, head of the modern agricultural finance department at the bank.

Dong Wenbiao {董文標}, chairman of Minsheng bank, told “We entered Guizhou and have stayed focused on its energy industry since two years ago. The lending scale has reached 28 billion yuan at present and saw 1.08 billion yuan profit.”

Minsheng is hoping to replicate the success of the program by tapping into new demand in an underserved segment in Hainan this time.

The medium-sized lender has set up outlets in Sanya, and positions itself as a modern agricultural bank. The lending and financing programs are specially designed for Hainan enterprises in farming, forestry and fishing industries. This could concentrate the bank’s resources in a few specific sectors in order to design better and more targeted financial products for customers.

Modern agriculture is an industry that is in dire need of financial support. One of the main financial programs of the bank is to help upgrade Hainan’s fishing boats. According to data provided by Minsheng, China has about 1,200 distant-water fishing vessels at present, but about 31 percent of them have nearly reached or surpassed their estimated useful life.

This is because fishing companies can hardly get financing from local banks, and thus productivity is limited, as a Yicai report noted.

Hainan’s modern agriculture could be seen as Minsheng’s blue ocean. The bank has stated that it won’t compete with other traditional banks on ordinary banking businesses in Hainan. Instead, it will focus its business on the region’s edge and support modern agricultural development in Hainan.

More than 42 percent of the country’s tropical land is in Hainan, which has 1,089 acres of farmland. Besides, two thirds of China’s maritime territory is under Hainan’s control, providing a vast capture area of 2.1 million square kilometers.

– Contact the writer at [email protected]