Are Chinese Consumers Ready To Trade Stocks Again?

The past twelve months have not been great for China’s financial industry. The sharp plunge of China’s stock market, coupled with the $7.6 billion USD scandal by P2P lending platform Ezubao (e租宝), has chipped away at the zeal Chinese consumers once had for trading stocks and dabbling in online finance.

Still, Robinhood, a U.S fintech startup, believes that 2016 is the right year to enter China.

“China is a massive market where we know we can make a big impact,” Jack Randall, Robinhood’s Head of Communications, told TechNode. “There are many barriers to entry for Chinese citizens looking to access the US exchanges, and we are happy to lower them.”

On Monday, the company announced its plans to launch a Chinese version of Robinhood (罗宾侠) by Q2. Robinhood’s app lets users buy and sell U.S listed companies and ETFs (Exchange Traded Funds) without any fees, unlike its brick-and-mortar competitors, such as Scottrade and E*Trade. The company’s goal is to “democratize access to financial markets,” and has appealed to users not only through its zero-fees policy, but a minimalist and simple UI. In May 2015, the company raised a $50 million USD round of Series B funding and announced plans to expand into Australia, its first market outside of the U.S.

To prepare for its launch in China, Robinhood has started a ‘Pioneer Program’ so Chinese-American users of the app can invite friends and family in China to sign up for the waitlist.

“Our Chinese-American customers love Robinhood and we [want] to encourage them to share their love of Robinhood with their friends and family in China,” says Mr. Randall.

It’s unclear how effective Robinhood’s ‘Pioneer Program’ will be, as Chinese-Americans are significantly different from their Chinese counterparts and, in some cases, do not even identify with mainland China. Robinhood’s assumption that Chinese-Americans qualify as an entry point into the Chinese market suggests that the startup has not yet realized how challenging localizing their product for China will be.

Compared to Australia, entering China is a whole other game, and Robinhood will have to work hard to establish strong, local partnerships and adapt to China’s regulatory framework. The company has not yet disclosed any details regarding their strategy for the Chinese market, including information about local partners.

Founded in 2013, Robinhood is backed by a number of well-known investment entities, including Google Ventures, Andreessen Horowitz, and Index Ventures, and has raised a total of $66 million USD in funding.

Image credit: Robinhood