On 14 November, QTrade officially announced the company would receive strategic investment from Tencent. Interestingly, Tencent closed a similar cooperation deal with JD Financial, the fintech company backed by e-commerce behemoth JD, on July 2018.
QTrade’s official announcement explained the nature of the deal: “This investment round has reached CNY 100 million (USD 14.39 million). Tencent will have equity participation and will not have a controlling power”. QTrade was originally created by Tencent and a Shenzhen fintech startup in 2016 and two years later it co-launched with Tencent Qidian (Tencent’s application for business), a system for over-the-counter bond deals. The service provided by QTrade helps traders to meet and negotiate prices online, having previously verified both parties’ identities.
Last year, the Chinese government made the regulations more stringent in bond market, forbidding traders from using their individual email and messaging accounts to place orders. According to QTrade, 70% of bond trades were conducted on applications such as Tencent’s instant message application QQ prior to the new regulations. The government feared the financial and security risks such platforms bring.
The development warranted a need for a platform that complied with the new regulations. With its platform, QTrade provided a safe environment for traders and regulators. Most of QTrade’s revenue comes from the fee it charges from financial institutions. Fiona Liu (also known as Liu Fangfei), QTrade’s co-founder, told Cailian Press,“The service is still young. QTrade was launched in August but more than 300 financial institutions use it already”.
QTrade is now offering discounts as part of its expansion plans. New subscribers have to pay a fixed annual fee of USD 71.95 good until the end of the year and USD 287.79 from 2019. According to CEO Zhou Jingyu, the price for consulting and analysis services will also go up.
Tencent Qidian is a subsidiary of Tencent Cloud and provides SaaS (Software as a Service) for businesses. Zhang Ye, Tencent Qidian’s CEO said, “Qidian redefined its strategy on March 2018. Before, we used to provide simple and standard SaaS products but after the strategic upgrade, we hope to provide all cooperative partners of the supply chain with an open platform, creating an ecosystem for mutual benefit”.
According to Cailian Press, more than 10 of Tencent’s cooperative partners are exploring new scenarios for in-depth solutions for businesses. Among them is Suqian International (宿迁际晖), a wholly-owned subsidiary of JD Finance. According to Tencent sources, Suqian is an ISV (Independent Software Vendor) of Tencent. Zhang Ye explained: “ISV know more about the industry. They can help us develop applications based on QQ's underlying technology”. The source explained the company’s future strategy: “Gradually, we will carry out more cooperation projects with our partners”.
JD Financial is also trying to develop its B2B services. On July 2018, JD Financial launched an institutional trading solution for the inter-bank market. The solution is based on a tool for front, middle and back-end practitioners in the inter-bank market. JD Financial released a business tool that allows a maximum of 100,000 friends and chat groups of 5,000 members and focuses on solving some of the industry’s pressing problems such as name verification and data analysis along the lines of QTrade. Apart from that, JD Financial’s solution also offers data protection for both the customer and the financial institution.
Though JD Financial launched the service in cooperation with Tencent Qidian, their relationship is different. JD Financial is one of the first partners of Tencent’s open platform. QTrade and Tencent have a product development technical cooperation. Sources from within JD Financial told Cailian Press: “Our product is developing normally and Tencent supports the development of its ISV as usual”.