Chinese travel agent can ‘carve niche’ in funds
Following the huge online success of the Yu’e Bao money-market product and others like it, the range of firms looking to sell funds through digital channels continues to grow. The latest is Tuniu Corporation, one of China's biggest online travel agents and the first of its peers to enter this space.
The company's Nanjing-based financial services arm has started selling mutual funds provided by China Universal Asset Management. The Shanghai-based manager put 25 of its funds on the Tuniu Finance online platform earlier this month, though it did not say when they would be available through the mobile app.
Tuniu Finance won a fund distribution licence from the China Securities Regulatory Commission on September 7, having soft-launched its finance platform in January. It partnered China Universal to launch TuniuBao, a money market fund (MMF) in the mould of Yu’e Bao.
Customers have been putting money into TuniuBao accounts as a precursor to switching it into the platform’s mutual funds. Tuniu has generated Rmb1 billion ($157.2 million) in sales of wealth management products in the past nine months and plans to introduce more equity-centric funds, said Chen Jie, Tuniu’s president of finance.
Jasmine Baker, an analyst at Shanghai-based consultancy Z-Ben Advisors, said: “Now is a good time to get involved in this business, as regulations have not yet caught up with its development and there is a lot of demand from sell sides and investors alike."
Still, Tuniu faces fierce competition in online fund sales, particularly from established players such as Alibaba, Baidu, JingDong and Tencent. These tech firms have been heavily promoting their platforms on the back of the success of ‘Baobao’ funds – that is, MMF-linked products like Yu’e Bao. They have also started offering funds via mobile apps, such as Tencent’s WeBank and Ant Financal’s Ant Fortune.
However, Baker is optimistic about Tuniu’s potential for developing a strong business in online fund distribution. The firm is unlikely to directly challenge the likes of Ant Financial or Tencent, especially in the short term, she said, but it could carve its own niche by tapping its existing 130-million strong user base.
Tuniu is a leading online travel agent and therefore has a huge amount of data on its customers, which it can analyse to recommend financial products based on users' holiday and travel habits, Baker said.
China Universal has keenly targeted online distribution, having partnered 16 online and mobile platforms so far, taking the view that technology will revolutionise the financial services industry.
The manager has followed the tried-and-tested route of working with well established tech companies, said Baker, rather than investing heavily in building its own online and mobile ecosystems.