China’s financial services market is vast, with the wealth management segment alone projected to reach US$6.04 trillion by 2029, offering significant growth potential for global businesses. However, navigating its regulatory landscape and cultural nuances is complex, requiring strategic planning.

This guide explores:

Opportunities and challenges for physical expansion to China: Setting up a physical entity, such as a branch or subsidiary, allows direct engagement with Chinese customers but involves regulatory approvals and legal compliance.

Opportunities and challenges for digital outreach to China: For businesses that are not establishing a physical presence, leveraging a cross-border digital brand is a way to engage Chinese consumers. However, this equally comes with restrictions and often necessitates partnering with licensed local firms to manage payments, data localization, and customer support.

TL;DR: China’s financial services market is fast-growing and lucrative but is one of the most strictly regulated and challenging to enter. Strict rules, fierce local competition, and a unique digital landscape mean you’ll need sharp strategy and local know-how to win, whether you’re setting up an entity in China or engaging Chinese consumers with a digital strategy.

Disclaimer: This guide is informational and does not constitute legal advice. Chinafy is not a legal or corporate advisory entity, and, given that every business is different, we suggest consulting with your internal legal counsel if you would like advice on any legal or compliance-related concerns, or alternatively we can connect you with one of our partners.

Firstly, let’s cover what’s possible for financial services businesses looking to enter the Chinese market.

Is it possible to target Chinese consumers without a physical entity?

Yes, it is possible, but the feasibility and scope depend on your business model and strategy.

What kind of financial services businesses are permitted in China without a physical entity?

Cross-border offerings: Some services, such as wealth management for Chinese high-net-worth individuals residing abroad, trade finance for exporters, or digital insurance through licensed partners can be offered without establishing a local entity.

Digital platforms: Fintech solutions such as robo-advisors or foreign exchange (forex) trading platforms targeting outbound Chinese investors may operate from abroad, provided they secure the necessary cross-border regulatory approvals.

How can financial services businesses serve Chinese consumers from abroad?

Partnerships: Collaboration with licensed Chinese firms means a local partner can manage payments, compliance issues, and customer support.

Digital infrastructure: Your website and digital services must load quickly in China. This often involves optimization (e.g., using Chinafy technology) and possibly hosting data locally to meet the demands of Chinese regulatory frameworks.

Regulatory clearance: Even for digital operations, obtaining clearance for cross-border financial flows and ensuring strict adherence to China’s data and privacy laws (e.g., the Cybersecurity Law, PIPL) is non-negotiable.

Limitations for foreign financial services businesses entering China

Core services restrictions: Direct banking or lending typically requires a local entity due to licensing requirements. Purely digital fintechs can serve as an initial testing ground, but scalability may be limited without a physical base.

Example of a foreign finance business entering China:

PayPal initially entered China by offering cross-border payment services for Chinese merchants and consumers. By late 2019, it expanded its foothold via the acquisition of a Chinese payment company (GoPay) and, by 2021, became the first foreign payment firm with 100% ownership of a local platform.

Let’s dive into why China might be worth the effort for your financial services business and what you’ll need to consider.

What are the biggest opportunities for financial services businesses in China in 2025?

1. Financial services market size and growth opportunities in China

The digital investment market is expected to grow by 2.03% each year from 2024 to 2029, illustrating the opportunity for tech-focused financial services firms to capture a slice of the market.

Opportunity for physical expansion: Foreign players can establish a physical presence in China. For instance, foreign banks can set up wholly foreign-owned entities (WFOEs) or joint ventures, leveraging China's regulatory openings since 2020, which removed ownership caps for securities and fund management firms. There have also been developments that may suggest simplified licensing for payment services with stricter capital adequacy rules as of late 2024. For example, there appear to have been discussions from the NFRA to lower the asset requirement threshold for Hong Kong and Macao financial institutions to invest in mainland insurers. However, there are ongoing developments in this space.

J.P. Morgan in 2021 became the first foreign firm to fully own a China securities brokerage and Allianz made its life insurance joint venture a wholly-owner unit — the first 100% foreign-owned life insurer in China.

Opportunity for digital outreach: Digital channels can offer initial entry points for financial services businesses to reach some of the growing market. Partnering with Chinese platforms – like Tencent or Ant Group for online investment services – can help to streamline some of the hurdles we cover later in the blog.

2. Ride the fintech wave

China’s Fintech market was valued at USD 4.59 trillion in 2024 and is expected to reach USD 9.97 trillion by 2030.

Why is China’s Fintech market growing?

Driven by technological advancements, increased adoption of digital payments and a move towards Fintech-enabled personal finance solutions, China’s Fintech market is expected to grow by a CAGR of 13.80%.

What is e-CNY?

e-CNY is China’s central bank digital currency (CBDC). Launched in pilot form in 2019, the e-CNY—also known as the Digital Currency Electronic Payment (DCEP)—has gained substantial traction by late 2024, with transaction volumes surging as the PBOC integrates it into everyday commerce.

Opportunity for physical expansion: China’s dominance in mobile payments—like WeChat Pay and Alipay—and online lending creates a hub for innovation, now further amplified by the e-CNY’s rollout. Establishing a physical presence, such as a subsidiary or joint venture, allows foreign firms to partner with local fintech giants like Ant Financial or directly engage with the PBOC’s e-CNY infrastructure. For instance, the PBOC’s collaboration with the Hong Kong Monetary Authority in late 2024 to test cross-border e-CNY transactions in the Guangdong-Hong Kong-Macao Greater Bay Area opens doors for foreign firms to participate in this expanding digital currency ecosystem, leveraging China’s fintech hubs like Shenzhen and Hangzhou.

Opportunity for digital outreach: Foreign firms can also tap into the mobile payment market without a physical footprint by offering digital financial products—such as micro-loans or investment tools—through partnerships with platforms like WeChat, reaching millions of users seamlessly. Deutsche Bank is a practical example of a foreign firm using a partnership with a Chinese platform (WeChat, via Symphony) to engage with millions of users in China’s digital ecosystem. Now, with the e-CNY’s rise, foreign firms could further align their offerings with this state-backed digital currency, providing seamless cross-border payment solutions or e-CNY-linked investment products, capitalizing on China’s push to globalize its CBDC.

3. Serve a wealthy and aging population

By 2035, China’s population of 60+ year-olds is forecast to exceed 400 million (over 30% of the Chinese population). This older generation is fueling demand for wealth management, retirement planning, and insurance.

Opportunity to cater to an aging population: Financial firms can establish physical advisory offices in major cities or use digital platforms to deliver personalized investment strategies, estate planning, and other services to cater to the unique needs of China’s aging yet increasingly digital-savvy population.

4. Leverage government support for financial inclusion

China’s government is pushing financial inclusion, encouraging rural banking, microfinance, and green finance initiatives aligned with its 2035 carbon-neutral goals.

Opportunity for physical expansion: Banks or microfinance firms can establish branches in underserved rural areas or special economic zones (e.g., Hainan), benefiting from tax incentives and government-backed projects. Foreign firms entering physically or digitally might face new disclosure requirements, especially for "green" products like sustainable investment funds.

Opportunity for digital outreach: With 943 million mobile payment users in 2023, partnering with WeChat or Alipay allows firms to offer digital savings or loan products to rural consumers without a physical presence. Equally, global businesses can offer digital microfinance or sustainable investment options via partnerships with local platforms.

5. Engage digital-first consumers

70% of people in China are ready to open an account in a pure digital bank and 84% use mobile wallets, many relying on apps like WeChat, Alipay, and JD.com for payments, investments, and insurance purchases.

Opportunity for physical expansion: Integrate any physical parts of your business with China’s digital payment systems like WeChat Pay and Alipay to cater to consumer habits. For example, setting up branded ATMs or payment terminals in tier-1 cities like Shanghai or Shenzhen, linked to mobile banking apps, can build trust and accessibility.

Opportunity for digital outreach: Optimize your global financial services platform for China and launch targeted campaigns on WeChat, Douyin, or Baidu to engage consumers. Collaborate with local fintechs like Ant Group or JD Finance to integrate payment gateways, enabling seamless cross-border investment or savings products.

See how your site loads in China

6. Tap into cross-border business demand

China’s position as the world’s manufacturing and trade powerhouse fuels a surging demand for cross-border financial services, particularly in trade finance, foreign exchange (forex), and corporate banking.

Opportunity for physical expansion: Establishing corporate banking branches or trade finance desks near trade hubs offers a direct line to exporters and importers. Services like letters of credit, supply chain financing, and real-time forex hedging can address the pain points of businesses navigating volatile global markets.

Opportunity for digital outreach: Digital platforms can target Chinese companies expanding abroad. Offering online trade finance tools—such as blockchain-backed letters of credit—or partnering with local banks like Bank of China to provide seamless forex services can attract SMEs without requiring physical infrastructure.

In terms of opportunities, China’s financial services landscape is a goldmine of scale, innovation, and strategic value. That’s not to say it doesn’t come without its challenges, however. Let’s dive into the challenges you might face whether you’re setting up a physical entity or initiating digital efforts to attract Chinese customers.

What challenges do financial services businesses face in China?

1. Navigating regulatory and legal complexity

Foreign banks’ assets make up just 1.3% of the system assets in China (2023 statistic), largely due to the changing regulatory environment and the commitment that comes with establishing an on-the-ground operation. China’s financial sector is tightly controlled, with strict rules on foreign ownership, licensing, and data security under laws like the Cybersecurity Law and Personal Information Protection Law (PIPL).

A reminder that this guide is informational and does not constitute legal advice. Chinafy is not a legal or corporate advisory entity, and, given that every business is different, we suggest consulting with your internal legal counsel if you would like advice on any legal or compliance-related concerns, or alternatively we can connect you with one of our partners.

Physical challenges:

Regulatory commitment: China’s financial sector is tightly controlled by multiple regulators. Foreign institutions must secure explicit approvals from bodies such as the National Financial Regulatory Administration (NFRA) and the China Securities Regulatory Commission (CSRC).

Licensing: Establishing a physical entity often involves registering as a wholly foreign-owned enterprise (WFOE) or joint venture, which can be a lengthy and complex process.

Operational compliance: Beyond financial regulations, firms must comply with local labor laws, tax regulations, and foreign exchange controls—a multifaceted compliance burden that can slow market entry.

Digital challenges:

Restrictions: Unlicensed foreign financial activity aimed at Chinese residents is generally prohibited. This means that without local registration or a licensed partner, key services (like retail banking, lending, and insurance) may be off-limits.

Data privacy and cybersecurity: Handling personal data of Chinese users comes with strict obligations. Cross-border data transfers require government approval and often necessitate local data hosting, increasing operational costs and complexity.

Local ecosystem barriers: Foreign platforms must navigate China’s internet regulations and dominance of domestic players in digital marketing and payment ecosystems. This often necessitates partnerships to gain access to local user bases via channels such as WeChat, Baidu, or Douyin.

2. Adapting to cultural and consumer preferences

Chinese consumers have expectations shaped by a mobile-first culture and a preference for trusted local brands like ICBC or Ping An over unfamiliar foreign players. Platforms like WeChat, which seamlessly blend payments, social interaction, and financial services, dominate daily life, setting a high bar for convenience and integration.

Physical challenge: Establishing a successful physical presence requires more than just a storefront. Branches must employ Mandarin-speaking staff fluent in local customs, integrate widely-used payment systems like Alipay or WeChat Pay, and offer products tailored to Chinese preferences.

Digital challenge: A one-size-fits-all global website will struggle to gain traction in China. To compete, businesses must localize content and integrate with China-specific apps like WeChat or Douyin. Aligning offerings with emerging trends, such as gamified investing apps or socially-driven financial tools, can further capture the attention of tech-savvy consumers accustomed to innovative, all-in-one platforms.

3. Facing local competition

Domestic state banks, fintech firms, and tech giants have deep local knowledge and strong customer relationships. Foreign firms need to offer differentiated, value-added services to compete effectively.

Scalability challenge: Even after obtaining necessary approvals, foreign players often find that building scale in China has to be gradual. For example, despite decades in China, foreign banks’ assets account for just 1.3% of the total system assets—a reflection of both market complexity and regulatory caution.

4. Penetrating China’s digital ecosystem

China’s internet is a walled garden, dominated by Tencent, Alibaba, and Baidu, with little room for Western platforms like Google or PayPal.

Challenges of China’s unique internet landscape: Whether you’re entering China with a local entity or expanding your services digitally, it’s important to optimize digital assets from a performance perspective as well as localizing for Chinese consumers. Working with Chinafy to get your website working in China and forging strategic partnerships with licensed Chinese firms can make it easier to integrate with key digital ecosystems and to navigate the stringent regulatory landscape.

China’s financial services market is huge. It’s a big opportunity, but it’s not simple to enter by any means. You’ll need strategic partnerships, a grasp of local laws, and a way to connect with digital-first customers. Whether you’re setting up a physical entity or attracting digital consumers online, it takes planning and know-how to make it work.

Get in touch to see how Chinafy can support your China initiatives by making your website load fast and fully for consumers in China.