RWA tokenization and fintech innovations make Hong Kong a springboard for affordable cross-border financing.

Small and medium enterprises venturing abroad often face high financing costs and limited access to capital. But a potential solution is emerging. In August, Ant Digital Technologies partnered with Longshine Technology to issue a cross-border real-world asset (RWA) tokenization, proving that physical assets can be digitized and financed on the blockchain.

At the recent Hong Kong FinTech Week, participants’ discussions around Web3, RWA, and related topics underscored the potential of these new financing approaches to support overseas-bound companies.

Industry experts view RWA as foundational in connecting Web3 technology with traditional industries. Hong Kong’s open regulatory stance toward RWA in recent years makes it likely that companies from mainland China will turn to Hong Kong as an initial stop in their global financing journey.

Hong Kong: The first stop for going global

Popular regions for Chinese companies expanding internationally include Southeast Asia, South America, the Middle East, and Africa. For many, Hong Kong serves as an ideal transition point between mainland China and global markets.

Hong Kong’s shared language and culture with mainland China, combined with its connectivity to global markets, provide a strong foundation for companies navigating international business practices. As a global finance and trade hub, Hong Kong offers a mature regulatory structure that appeals to companies seeking offshore operations or regional headquarters.

While Singapore and Malaysia also share cultural links to China, Hong Kong remains the strategic choice for its proximity to the mainland and larger financial capacity. For example, in April, the China Securities Regulatory Commission (CSRC) introduced five new measures with Hong Kong, including expanding the Shanghai-Hong Kong Stock Connect to exchange-traded funds (ETFs), incorporating real estate investment trusts (REITs), and supporting mainland companies in listing on the Hong Kong Stock Exchange (SEHK).

Hong Kong also offers flexible policies for mainland talent. Programs like the Quality Migrant Admission Scheme allow mainland residents to obtain Hong Kong residency without affecting mainland social insurance contributions. This year, Hong Kong received nearly 200,000 residency applications, approving over 120,000, with 70,000 new arrivals to date.

Financially, Hong Kong stands out as well. As of September, the Singapore Exchange (SGX) was valued at USD 665.95 billion, while Bursa Malaysia (KLSE) was around USD 463.84 billion. In contrast, SEHK was valued at USD 4.742 trillion, largely supported by its strong ties to the mainland. Currently, mainland Chinese stocks make up over 46% of companies listed on HKEX, with 1,224 firms.

Despite recent slowdowns in mainland IPOs on HKEX, new interconnection policies have sparked a turnaround. ChinaVenture Institute’s report shows that, in Q3 alone, 13 mainland companies listed in Hong Kong, raising a total of RMB 32.7 billion (USD 4.6 billion)—a 445% year-on-year increase.

This data underscores Hong Kong’s enduring role as a key international financing platform for mainland companies.

In his 2024 policy address, Hong Kong Chief Executive John Lee said that the government had engaged with over 100 leading technology firms by July to establish or expand operations in the city, resulting in a total investment of HKD 52 billion and creating over 15,200 jobs.

As more mainland companies move into Hong Kong, fintech firms are playing an essential role in supporting digital transformation and global expansion.

At this year’s Hong Kong FinTech Week, Ant Digital Technologies pledged an additional RMB 1 billion (USD 140 million) investment over three years to foster digital collaboration across the Greater Bay Area. Companies like Ant Digital, Du Xiaoman, and Tencent showcased their latest fintech solutions, highlighting the sector’s critical role in helping mainland companies expand efficiently.

Web3: A new phase for cross-border financing

This year’s strong focus on Web3 and RWA suggests that the latter could soon become a key channel for cross-border financing.

One of the major announcements at Hong Kong FinTech Week was Ant Digital’s debut of its “dual chains, one bridge” platform, which addresses new challenges for companies in an age of big data.

The overseas journey for B2B companies can be broken down into three phases.

In the early 2000s, telecom companies like Huawei and ZTE exported equipment to build global telecom infrastructure, laying the foundation for local digital development. Later, traditional companies began digital transformations, using cloud services to increase efficiency. Since 2015, Chinese cloud providers like Alibaba Cloud and Tencent Cloud have expanded their reach alongside these companies abroad.

Today, as data becomes a key asset, enhancing digital collaboration and creating secure trading systems have become central priorities for companies moving globally.

Blockchain and Web3 technologies align well with these needs. For example, traditional financing methods rely heavily on a company’s creditworthiness, limiting many firms’ access to local funding. Blockchain-enabled RWA, however, enables companies to tokenize physical assets, facilitating investor evaluation and cross-border financing, and increasing asset liquidity.

In one example, Ant Digital and Longshine Technology tokenized Longshine’s mainland-operated charging stations on Ant Digital’s platform, successfully raising RMB 100 million (USD 14 million) in Hong Kong.

The “two chains” refer to an “asset chain” and “transaction chain,” while the “one bridge” is the “AntChain Trusted Cross-Chain Bridge.” Zhang Chenguang, Web3 product lead at Ant Digital, said that the asset chain digitizes mainland physical assets, turning them into standardized financial products. The transaction chain focuses on the tokenization of funds, facilitating efficient capital flow through blockchain technology.

By digitizing physical assets, blockchain technology can enhance asset security, transparency, and liquidity, offering a novel approach for companies seeking to reduce cross-border financing costs.

Localization: The challenges of financial innovation

Fintech companies face their own challenges in deploying blockchain-based solutions for global companies. Ant Digital’s recent RMB 100 million RWA financing with Longshine was China’s first such deal using new energy physical assets as collateral. As a pioneering model, it remains in its early stages, and new challenges are likely to emerge.

The foremost challenge is regulatory compliance. While Hong Kong has embraced virtual asset transactions, global regulatory frameworks for RWA remain uncertain. This ambiguity could limit the model’s applicability in other regions, though early adopters might gain an edge by influencing industry standards.

Beyond RWA, mainland companies expanding from Hong Kong to other international markets face logistical and regulatory obstacles. For fintech companies developing financial-grade applications, these challenges are complex.

Sun Lei, Ant Digital’s vice president and general manager for China business development, highlighted three key challenges in new markets: localizing product features to match cultural norms, tailoring product presentations, and building new partnerships with local developers, distributors, and consultants. Establishing a reliable support network is essential for sustainable expansion.

“Only when these partnerships are established can we fully open up a market. Overcoming these three challenges is essential to replicating our success across regions,” Sun said.

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