As capital markets become more global, being able to target foreign investors effectively is invaluable. However, communicating with investors in a new region can pose unique challenges. China is known for its sheer geographical size and population, and in recent years, has become an attractive destination for foreign direct investment. With over $800 billion assets under management by sovereign funds, the China Investment Corporation (CIC) and State Administration of Foreign Exchange (SAFE), the country has amassed significant economic clout.
Its rapidly-developing business climate and growing investor base has made it a valuable target for foreign companies seeking institutional and retail investor support in its many hubs, such as Beijing, Shanghai, Hong Kong, Shenzhen, Tianjin, and Chengdu. Nonetheless, these ample opportunities may, at times, be accompanied by certain hurdles – media censorship, a stringent regulatory environment, and of course, language barriers.
With that, as an Investor Relations Officer (IRO) seeking to engage with Chinese investors, what advice can be doled out for gaining the most traction?
Know the Landscape
Learn about the type of investors you are reaching to craft the most effective content, and strategy. For example, retail buyers make up over 80% of China’s stock market. Chinese regulations also affect investor outreach. Note that Chinese investors can only invest in offshore markets if they are granted a Qualified Domestic Institutional Investor (QDII) license. To be most successful in investor outreach, becoming educated on key players in your industry will help you position future activities and relevant targets.
Become familiar with what cities and hubs are most relevant for your company and/or industry. For example, Shenzhen is often recognized as the best hub for Tech, whereas outreach in the Shangxi region may be more appropriate for those focusing on Resources.
Media censorship can be a challenge in news distribution. Many foreign websites, such as Google, Facebook, and Twitter, are blocked in Mainland China. To effectively disseminate news through sanctioned Chinese portals, and to avoid being “bounced” by censors, the choice of language used within any press release becomes paramount.
Language can add an additional facet of difficulty in communications. Teams should create content in a variety of language formats in order to satisfy potential differences in regional preferences. For example, Hong Kong often releases content in English and Traditional Chinese, while Mainland China relies on the use of Simplified Chinese.
Craft Your Content
“Communications” can be boiled down to a) content creation, and b) dissemination through relevant channels. Simple, right? Due to media censorship policies, news distribution can occasionally hit snags. To ensure the best possible outreach, and to minimize potential censor flagging, content should be factual and straight-forward (the less “PR”, the better!).
Mobile compatibility is key. China has a uniquely active mobile community. Investors are mostly finding and accessing financial information via their mobile devices. Mobile platforms have been innovative in their use of QR codes, banking capabilities, social integration, and are consequently a major access point to investors. Companies should aim to gain exposure on investment-focused channels like Xueqiu, Hexun, iFeng, Eastmoney, or Gelonghui. Exposure in these channels will ensure your company builds relationships with major investment advisers in the market.
Another very successful mobile application, used by both retail and institutional investors, is WeChat. With close to one billion active monthly users, creating content that can be viewed on WeChat can increase brand recognition and engagement. Companies may consider creating H5 Reports, which are ideally compatible with the WeChat platform. Here, companies can create engaging, visual content with relevant financial information catered to Chinese retail investors; this also allows for easy link sharing to a wider audience.
Did you know that the EQS Newswire is the only newswire licensed by China’s financial information regulator to distribute financial content into China? Contact us to learn more!
Forging personal relationships is a key element of success. Stephen Hughes of FedEx has been part of their Investor Relations team for over 20 years. After nearly two decades of gaining local know-how across Asia, Hughes highlighted the importance of persistence, the right introductions, as well as the importance of “thinking long-term”. FedEx is a perfect case study of a multinational company that has constantly expanded its international footprint and introduced its business to all corners of the globe.
Their IR team highlighted the value of patience, commitment, and face-to-face engagement in China, as well as Asia in general. When scheduling road shows, seeking local guidance and actively communicating with the sell-side was invaluable for setting up meetings. Many first meetings were often a “pleasant audience” to get to know the IRO. To gain traction in China, returning multiple times and fostering relationships were key to eventually “sealing the deal”.
A significant amount of financial content found online in China is written by “financial experts”, who may carry substantial authority among investment communities. Retail investors are a dominant group in China and often defer to suggested investment ideas flagged by the expert community. By making your content more accessible on regional social media platforms and portals, you may find it easier to build relationships with this important group.
Interviews with FedEx were conducted by Paulina Brown of EQS Group USABack to home