It is the only national-level distinctive town with "fund" as its leading industry.The town has China's first court and procuratorial service e-station for the fund industry. It was the first to pilot standardized fund industry services in China, and now is home to the first domestic investor education base for fund investors and managers.

For six years since its inception, Beijing Fund Town (BFT) has been an upholder of the bottom line in financial risk prevention and control. It has managed and guarded trillions of yuan of investor money by virtue of deriving autonomy from institutional reform and gaining momentum through sci-tech innovation.

A capital financial "micro-center"

On May 30, 2015, Changgou, a small town in Fangshan District of Beijing, caught the public eye with a new appellation—the Fangshan government just concluded a strategic cooperation agreement with Beijing Cultural Investment Development Group (BCI) to jointly build "Beijing Fund Town".

Over the past six years, BFT attracted more than 1,500 fund firms and relevant institutions, domestic and foreign, to move into the town thanks to its favorable natural environment and sound industrial ecosystem. The town now has more than 1.7 trillion yuan of assets under management (AUM).

Particularly in 2020, facing challenges posed by the COVID-19 pandemic, BFT coordinated epidemic response and economic development by improving services, moving to the cloud, and enabling greater efficiency.These efforts led to the landing of another 279 tenants and 695,680,000 yuan in tax payment. Though in times of difficulty, the town has seen sustained growth and increased tax payment in 2021.

"Several years ago, it would be unimaginable to bring all these financial institutions together in Fangshan. At the heart of the capital's "one core and two wings" and as an important node in the Beijing-Xiong'an Development Corridor, Fangshan District benefits from the Beijing-Tianjin-Hebei integrated development strategy. The District always proceeds from a high starting point, high standards and high-level planning in building BFT as a capital financial 'micro-center'," said Secretary of CPC Fangshan District Committee Chen Qing in an exclusive interview with China Comment. Chen noted that Beijing Fund Town, with fund as its pillar industry, continuously improves its supporting services and industrial ecosystem and enhances regional resource allocation efficiency to differentiate itself from Beijing Financial Street (BFS), the CBD and other areas, thus contributing to the balanced development between the north and south of the capital.

"Beijing is a magnet for professionals of the fund industry. Being based in the capital makes recruitment very easy," said Wu Xing, an HR manager at Sino-Ocean Capital which moved in when it was founded in 2017. "The town is about one hour's drive to downtown Beijing, 30 minutes' drive to Daxing International Airport and 60 kilometers away from Xiong'an New Area. Such a favorable location allows very convenient business trips and business activities."

"Geographical advantage alone is not enough to show the appeal of Beijing Fund Town," said Lv Chenfei, standing member of the CPC Fangshan District Committee and Executive Deputy Mayor of Fangshan District. Distinctive towns represent an emerging form of industrial space organization. Their development therefore requires a whole set of new systems and mechanisms that adapt to their needs and encourage sustainable innovation. To fully exploit the town's potential, Fangshan District Government introduced an innovative "government-led, business-centered and market-based operation" model. Fangshan established two governing bodies, i.e. Beijing Fund Town Development Office and Beijing Fund Town Administrative Committee, which are granted government functions to steer the course of the town. Beijing Fund Town Holding Co., Ltd. (BFT Holding), the market actor, is responsible for the physical operation and management of BFT.

"The goal is to create new mechanisms and systems by shifting from a 'government-guided' approach to a 'government-led' one to allow government to play a greater role in overall planning, industry cultivation, factor guarantee and other aspects. The innovative institutional design links up overall risk control of BFT with the interest of BFT Holding." Lv Chenfei believed that the Administrative Committee and BFT Holding, overlapping yet functioning separately, would together drive the high-quality development of the town.

A fund industry chain-wide service system

"The ecological environment and supporting policies of BFT are merely plus points. What really attracts fund firms is the industrial ecosystem—everything the government and BFT Holding does is intended to, in light of the needs of fund firms, pool capital, talent, and information factors to build an industrial chain or ecosystem that covers the upstream and downstream parts of the fund industry, from fund raising to investment, management and exit," said Zhou Yichen, Chairman of BFT Holding. He noted that BFT had seized the historic opportunity of China's sci-tech innovation and capital integrated development to build an ecosystem for the fund industry and establish itself as China's most valuable platform for fund industry exchange, fund industry research and innovation, fund issuing services, equity trading, and real economy financial services. BFT integrates the resources on the industry chain to support wealth management, serves the real economy, and steers the fund industry on to the course of scientific and sound development.

According to several companies including China Merchants Capital Management (Beijing) Co., Ltd., tenants in BFT have easy access to the filing, issuing and other aspects of funds; the forums, lectures and salons held in the town offer opportunity to consult and communicate face to face with competent industry authorities for answers and clarifications on relevant policies. As a result, the exchange and sharing of information and experience between peers are made a lot easier here.

Beijing Fund Town also keeps exploring the inherent patterns of the fund industry and taps its clustering effect to build a sound specialized service system. Wu Lei, Deputy Director of BFT Administrative Committee, told the China Comment reporter: "More than 100 banks, brokers or dealers, accounting firms, law firms, and industrial, academic and research institutions have signed up as strategic partners of BFT. These firms and institutions use their expertise to provide fund firms with whole-process services from fund raising to investment, management and exit. It effectively forms an ecosystem of the fund industry across the town "

In addition, BFT initiated the People's Fund-Related Dispute Mediation Committee to mediate risks. It developed a private fund evaluation system to provide early risk warning. It set up a procuratorial service e-station for the fund industry to provide judicial protection. It established the Fund Industry Court to handle legal risks. It built an investor education base for fund investors and managers to carry out risk prevention.

"BFT also formulated and released the Manual on Protection of Private Fund Investors together with China Securities Regulatory Commission (CSRC) Beijing Bureau and the Asset Management Association of China (AMAC). This manual is intended to help professionals foster a strong awareness to the bottom line and compliance, improve the industrial ecosystem, and better protect investors' interests," said Zhang Jian, Deputy General Manager of BFT Holding.

Representatives from fund firms read out the Declaration of the Chinese Fund Industry on Social Responsibility in Beijing Fund Town on May 5, 2018

Financial risk prevention first and foremost

The rapid clustering and high-quality development of the fund industry benefits from a guideline that has put financial risk prevention front and center from the start. "Unlike other industry clusters, BFT is founded on security. Once financial risks arise, all previous efforts will be in vain and no businesses will come in," said Zhou Yichen.

To ensure the lawful and compliant operation of businesses registered in BFT and avoid financial risks, for six years, BFT has worked with government authorities and industry experts to build a whole-process risk control system covering ex ante, in-process and ex post aspects, relying on technology-enabled regulation. Leveraging cloud computing, big data, blockchain, AI and other cutting-edge technologies, BFT supported the development of the "Due Diligence Cloud" system which allows intelligent management and risk early warning from 10 dimensions involving 338 risk indicators. This system enables comprehensive, dynamic, accurate and penetrating monitoring and control.

Strict ex ante controls are put in place. For each firm or institution newly established or relocated here, the "Due Diligence Cloud" system would investigate its sources of funding, funds flow, shareholders, executives and other aspects. To date, tenant reviews have rejected 366 fund firms. Over the past six years, no P2P company or its affiliate was allowed to move in the town. Wu Lei said, "all our efforts serve one purpose—to admit real fund-related institutions and say no to unqualified businesses."

"It is the industrial ecosystem that drew us to BFT in 2020. The town is now a 'golden name card' for us. Our partners, once they knew our tenancy in BFT, would show more trust," said Lu Danhe, Financial Controller of Ubiquant Investment (Beijing) Co. ,Ltd.

The town builds regulation into its whole-process butler services. After a tenant moves in, BFT Holding will handle all government formalities on their behalf, including business registration, social security, taxation and other issues. Zhou Yichen said, "This approach helps create a better business climate while fulfilling audit and management functions during the agent process."

Ex post problems are jointly addressed with government authorities. If a problem is identified, BFT will work with competent government authorities to require businesses concerned to rectify or leave within a prescribed period, and report the clues to superior regulatory authorities. To date, BTF has identified and removed 177 fund firms.

To effectively put in place ex ante, in-process and ex post regulation, BFT Holding also set up an independent, professional risk control team or an independent Risk Control Committee to function as the highest risk management authority. Zhou Yichen pointed out, "regarding which firms meet the criteria for moving in or which ones should be warned or asked to leave by a certain date, the judgment or decision does not lie with the Director of the Administrative Committee or the Chairman, but with the Risk Control Committee."

"Beijing Fund Town's experiment with fund provides a reference for China's financial risk prevention. It provides a new model of placing the principal responsibility on the Park and financial firms for sound risk control," said Lv Chenfei. Lv believed that risk control is a public product and individual financial firms's investment is limited. Therefore, to impose this responsibility on businesses, it should be first imposed on BFT. The town had to set up a professional risk control team for this purpose. Institutional design is necessary to facilitate closer cooperation between tenant businesses on the one hand and government authorities and the park operator on the other.