HSBC (LON:HSBA), which is headquartered in London, United Kingdom, has bug business interests in China. To grow their business in the country, the banking, and financial services company has now decided to open a $290 million (2 billion Yuan) lending facility for start-ups in the Pearl River Delta region. HSBC revealed that it will be for tech start-up businesses and other new industries.

Growth of the Chinese economy has slowed down over the last few months, though the country still has the second-largest economy in the world. However, the start-up scenario is different, particularly those in the technology sector. Many of them have successfully raised capital from equity investors, shunning traditional lending.

HSBC, Citigroup, and Chinese Lenders Are Attracting Start-Ups

Global banks, such as HSBC wants to be seen as a key player as well, particularly after the huge success of businesses like Alibaba (NYSE:BABA) and Tencent. Revenues of these companies have doubled in the last couple of years, in spite of the economic slowdown that has hurt many sectors like mining and manufacturing. Not just HSBC, even Citigroup wants to target this segment according to reports. The battle for a slice of this pie is sure to intensify in the coming years.

There are 11 industrial cities in southern China, which includes the cities of Guangzhou and Shenzhen. These cities are growing so rapidly that soon enough, they could fuse together to emerge as one very large megalopolis. The GDP of this region is bigger than Indonesia already. Traditionally, the region has been a manufacturing base, but that is changing. Tech companies are coming up here thick and fast.

HSBC Wants to Target Medium-Sized and Small Tech Companies

Montgomery Ho, who heads HSBC in Guangdong says, “The target customer will be high-end, high-tech start-ups and enterprises, enterprises that are upgrading the use of technology and ability to innovate like using robotics to manufacture more efficiently”. The morale is very high in the Pearl River Delta, Ho added.

He further revealed the innovation fund will be available for medium-sized and small firms in the delta region. Once the client base is boosted, HSBC will be able to introduce other banking services like cash management, foreign exchange, and hedging of interest rates to these businesses.

Montgomery Ho also says that HSBC (LON:HSBA) will offer preferential service fees and interest rates to these tech start-ups to help them do better.