How China’s online microlenders reached a tipping point in world’s biggest mobile internet market
- Much of the country’s microlending industry has grown on the back of China’s massive mobile phone user base
- China’s tech giants have been able to apply their AI and big data capabilities to microlending, with algorithms crunching a range of user data
This is the fourth part in a series looking at fintech in China in the wake of regulators’ suspension of Ant Group’s IPO. This article looks at how the microlending industry has grown in the country on the back of high smartphone penetration and rapid adoption of mobile payments.
Historians have traced the earliest forms of lending to Mesopotamia around 4,000 years ago, when farmers began to borrow seeds and livestock issued against later repayment. Fast forward several centuries to the modern age and China has put a digital twist on this ancient practice.
Struggling to pay immediately for relatively expensive goods she wanted to buy online, college student Jessie Liu signed up four years ago for Huabei, the consumer loan service run by major Chinese digital wallet Alipay.
Back then, anything that cost more than around 500 yuan (US$76) was a stretch as she was on a fixed budget of about 2,000 yuan a month. As such, Huabei was a convenient way to buy things when needed, paying for them later.
“The application for a credit card as a student required way too many procedures and documents. In contrast, opening a Huabei account just took a few hits on the phone,” she said.
Today the 26-year-old company clerk in Shanghai pays for roughly half her monthly expenditure of 8,000 yuan via Huabei, which covers goods not only sold on Alibaba’s online shopping platforms but also a range of offline stores that also accept the credit service.
Alipay is owned by Ant Group, an affiliate of Chinese e-commerce giant Alibaba Group Holding, which owns the South China Morning Post.
