By Leon Lee
As the popular saying goes, knowledge is power. This certainly holds true for businesses as the right kind of information can help them set effective business strategies and target the correct customers. But the difficult part is knowing where to get the information from.
“It’s true there’s a lot of information on the Internet. I used to believe that I can collect and build my own reports, but after many tries, I found that I was wrong,” says Alexander Lo, General Manager of CRIF’s Business Information, Greater China.
“If you want to do it in a structural way, it’s not that easy – even for a listed company. It’s not worth the money or the time. One of the problems is you go to a website but you don’t even know whether the information on the website is trustworthy or not.”
CRIF works diligently to ensure the quality of the information they provide to their clients. Business information is actually one of 14 business lines the global company offers. Started more than 25 years ago in Italy, CRIF specializes in credit bureau, business information, outsourcing and processing services and credit solutions. It provides credit bureau solutions in 18 countries around the world such as Ireland, Switzerland, Turkey and Russia. On a daily basis, 3,100 banks and financial institutions and more than 25,000 business clients use CRIF services around the world.
In Hong Kong, CRIF’s focus is on business information.
“Business information is very different to credit bureaus. A credit bureau is a membership club. Business information is more of an open-to-the-public business. What we do is we collect open information and then we sell it to anybody who is willing to buy legally compliant information. The purpose of buying that is to help them to run their business in a more efficient way,” Lo says.
Their sales people act as consultants as they show potential clients how to use the data and statistical analytics they receive from CRIF. Business information can be utilized by a variety of businesses for a variety of reasons. The most common applications are for credit management, sales and marketing, mergers and acquisitions as well as compliance.
Lo explains that before he met potential clients in his previous career in plastics and medical devices, he would look at their business information report to learn what their earnings and margins are in order to determine pricing. In other instances, he would look at who his competitors are, how their businesses are doing and the effectiveness of their salesforce. With information like this, he can compare how his team is performing with the rest of the industry and determine if any improvements are necessary.
For clients dealing with mergers and acquisitions, business information can provide them with input to help their decision-making. For example, there are two companies to consider for an acquisition – one with 30 patents and another with two. If every other conditions are the same, then the one with more patents is a more attractive choice since the larger amount of patents indicate that the business is focused on research and development and more innovation means higher potential in the future.
With credit management, business information reports can help companies determine how many days of credits to offer a client in order to make the deal while maintaining a healthy working capital.
“[The report] would tell you what is the average amount of outstanding days businesses are offering credit in the same industry. If they are offering 60 days and you offer 90, of course your client would have a higher chance of not accepting that. But what if you offer 58 days? Then you most likely get the business and control your working capital at the same time,” the senior executive explains.
A game changer
Lo learned the importance of business information during his time at General Electric earlier in his career as they use it to gauge themselves and charter their strategy. “They are number one for a reason,” he points out.
But it is still taking some time for Hong Kong businesses to get around to understanding the benefits of business information. Lo says that most don’t even think about it because of a lack of education and training in statistics and data. And it is this shortage of knowledge that has hurt Asian companies from expanding out of their own countries unlike Western businesses.
“One of the biggest things that they invest in is business information. Normally a Western company would launch market research before they go into a new market, they would know what happens in the industry in that particular country. This really helps the business reduce the probability of errors and increase their chances of success,” Lo explains.
“If [Asian companies] make use of business information, they will have a higher chance. And compared to any other costs that they put into expanding the market, the cost of business information is relatively low.”
However, there is a demand for business information in Hong Kong. It just took some time for CRIF to identify the products being demanded by potential clients in the region which was information on companies in China. This presented a tough challenge that the company had to find a solution for.
“We found out that it was extremely difficult [to get that information]. The reason is because information is everywhere but our Legal Department only allows us to acquire legally compliant data,” Lo explains.
“If you go to the court records website, it would tell you all the information cannot be downloaded, linked, used for commercial purposes. But a lot of the business information vendors actually collect the information from there and sell it. It took us a long time to find a solution with the Chinese government to legally license the reports to us. We’re probably the only one who has the legally compliant data. That was the hardest part.”
Growth and expansion
Besides local information, CRIF’s dominance in Europe offers plenty of valuable data as well. In four months, they have set up a global report platform that can provide reports from over 240 countries. It allows customers to have instant access to reports rather than to wait seven to 10 days to receive them like from other business information vendors. And since CRIF manages credit bureaus from a number of countries, the information from the reports are fresh and updated daily.
In Asia, the company is starting to establish the analytics business.
“CRIF is very supportive of Asia because it is the last piece for them. We’re working very fast, trying to build our presence in the region. We have a very aggressive big plan for greater China. This year, our Shanghai team has grown from zero to 10 people,” Lo points out.
As for Hong Kong, they will continue to develop business information.
“This is a huge market and we’ve only scratched the surface. We believe with the number of headquarters in Hong Kong, this is the right place to start. From Hong Kong, we’ll interface to the whole world, including China.”