As part of the deal with FundPark, ECIC and French reinsurer Scor will provide insurance for a portfolio of trade loans underwritten by FundPark for Hong Kong-based e-commerce companies.
Scor will share ECIC's risk and indemnify FundPark in the event of default, which will reduce the credit risk faced by FundPark and facilitate lending to online merchants in Hong Kong.
“This is the first alternative data-based credit trade insurance to support Hong Kong-based e-commerce merchants, many of whom are small and medium-sized enterprises. [small and medium-sized enterprises]”This will enable small and medium-sized enterprises to get the pre-shipment funding they need to support their operations,” ECIC commissioner Terence Chiu Man-chung said in an interview with The Post. “This will enable small and medium-sized enterprises to get the pre-shipment funding they need to support their operations,” he added.
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A little boy skillfully packs products for a family business
A little boy skillfully packs products for a family business
“ECIC's mission is to boost Hong Kong's export trade with insurance and other solutions,” Chiu said. “We believe this new solution will address a pain point for many e-commerce merchants who find it difficult to access bank loans.”
Founded in 1966, the government-backed ECIC can insure up to HK$80 billion (US$10.26 billion) to more than 100,000 domestic exporters against risks arising from non-payment or late payments by overseas customers.
Typically, small businesses purchase insurance from ECIC to underwrite their risks, but the new policy is structured differently, with ECIC providing credit insurance coverage for e-commerce loans provided by FundPark.
Hong Kong-based Fundpark, co-founded by Anson Suen Wai-loi in 2016, offers loans to small businesses secured by their cash flow, inventory and accounts receivable, rather than traditional collateral like real estate. The company uses artificial intelligence to screen borrowers.
Chiu said ECIC had reviewed Fundpark's credit model and was satisfied with the company's risk management.Fundpark has partnerships with major e-commerce platforms such as Amazon, eBay and Tmall, as well as other logistics companies, to obtain data from these companies.
Since its inception, FundPark has provided US$2.5 billion in loans to approximately 17,000 small and medium-sized enterprises involved in cross-border e-commerce that require working capital in US dollars.
Fundpark, which offers loans ranging from $5,000 to more than $1 million, made about half of its loans last year.
The company expects its growth trajectory to continue over the next few years, with a goal of growing its loan book to more than $10 billion, said Suen, who also serves as CEO.
He said the default rate is lower than that of Hong Kong's banking industry, whose non-performing loan ratio stood at 1.6% at the end of September 2023, according to data from the Hong Kong Monetary Authority.
“While Hong Kong's traditional exporters have faced challenges in recent years, e-commerce businesses continue to report double-digit growth,” Suen said. “The new insurance and financing model will help many of Hong Kong's e-commerce businesses continue to grow.”
Meanwhile, the ECIC will encourage Hong Kong exporters to expand into new markets in Southeast Asia and the Middle East.
“E-commerce opens new opportunities for many Hong Kong exporters, allowing them to reach new customers in overseas markets without having to open physical stores,” Chiu said.
