Date
25 September 2017
Davis Hui, H3C general manager for Hong Kong and Macau, says his company wants to work with Tencent on its plan to establish a private bank, which may be called Penguin Bank. Photos: HKEJ
Davis Hui, H3C general manager for Hong Kong and Macau, says his company wants to work with Tencent on its plan to establish a private bank, which may be called Penguin Bank. Photos: HKEJ

H3C eyes Tencent private bank business

H3C Technologies, the world’s second largest IP-based products and solutions provider, hopes to boost its ties with Tencent Holdings (00700.HK) by supporting the internet giant’s planned private bank.

“We would be interested in working with Tencent on [its reported plan to establish a private bank] as the infrastructure is already in place,” Davis Hui, H3C general manager for Hong Kong and Macau, told EJ Insight in an interview. “We have enough capacity to include the bank’s data in our current service.”

H3C, a unit of New York-listed Hewlett-Packard, built and manages Tencent’s two data centers in Hong Kong. It also handles 70 percent of the networking solutions for the company in the mainland.

“We only had four weeks to complete the first data center, which was challenging as it included the shipment, delivery, installation and testing, and for the second center, we were again given only four weeks, but we were still able to complete it on time,” Hui said.

On May 22, Tencent won a public auction for a land parcel in Shenzhen’s Qianhai district for 1.55 billion yuan (US$251.6 million), according to the Shenzhen Land & Real Esate Exchange Center. It plans to build on the 24,947 square meter site the headquarters of a private bank that will handle most of its internet-based finance business, according to mainland reports.

Tencent may name it Penguin Bank, after its corporate mascot, the reports said, although the company has not confirmed this. The State Administration for Industry and Commerce has approved Tencent’s application for the Penguin Bank name, according to a SAIC statement released on April 1.

H3C has quite a number of financial institutions for clients in China, including People’s Bank of China, the big four commercial banks and the privately funded China Minsheng Banking Corp. (01988.HK, 600016.CN). It has the second largest market share in the country’s financial sector.

The company would also like to see Hong Kong’s financial service sector as one of its top three revenue contributors. “We hope to see it in the next two to three years as Hong Kong is an international financial center. We will proactively work on that,” Hui said.

Among its clients in the city are Wing Hang Bank Ltd. (00302.HK), Chong Hing Bank (01111.HK) and several other banks.

“By using our system, companies could speed up the time to put new applications online by 90 percent while utilization rate can be enhanced by 50 percent,” he said.

Technology is changing many industries while solution companies are transforming as well. “We are shifting to a new IT system from the traditional one, which includes three layers, namely infrastructure, middleware and application. H3C will only focus on the first two.”

Banks who still use the traditional system experience high opportunity costs. “Technicians in banks might take some time to get used to the new system and they are also afraid of accidents because they cannot afford to stop transactions for even a single second,” Hui said.

New equipment investment and training costs also discourage banks from adopting new technologies.

The company is working hard to catch up with the world’s largest IP-based products and solutions provider CISCO. “It will take a long time as we are just 10 years old, far less than CISCO’s history, but in 10 years, we hope to be at the same level,” he said. “To achieve that, we also need to leverage on our parent to lure multinational companies.”

H3C is also expanding in Macau, where it has received an order from the biggest casino in terms of space. Hui did not name the casino operator. “There will be more casinos in the coming years, which will worsen the labor shortage in the city, so we expect more of them will be turning to electronic gaming tables for baccarat and other games,” Hui said.

Established in 2003, H3C, formerly known as Huawei-3Com, started as a joint venture between Huawei Technologies and 3Com Corp. The company was fully acquired by 3Com in 2007 and sold to HP in 2010.

– Contact the reporter at [email protected]

CG

Ayishah Ma is a financial reporter on Greater China issues.

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