How to Launch An Online Lending Business in China
China has become the global leader in online lending , there are new regulations that will change the game, and creates opportunities.
Online Lending Business is Changing : opportunies for new comers
Online lending platforms connect potential borrowers with lenders who are seeking returns higher than bank-offered interest rates. As P2P lending platforms have taken shape, private capital that once sat idle due to limited investment opportunities has started to pour in.
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P2P lending platforms mushroomed from only 200 in 2012 to more than 3,000 in 2015. P2P loans reached RMB 252.8 billion by the end of 2014, then quadrupled to RMB 982.3 billion in 2015.
China releases draft rules for regulating online micro-lending businesses
China’s regulators and the central bank issued draft rules to improve oversight of online microlending. This is in an effort to curb rising debt levels in the coronavirus –hit economy.
The People’s Bank of China (PBOC), and China Banking and Insurance Regulatory Commission(CBIRC) have released draft rules that will allow micro-lenders to offer online loans to consumers either alone or in conjunction with banks. However, they limit the amount they are allowed to lend.
Because of concerns about rising defaults and poor asset quality, regulators are increasing their scrutiny on banks that heavily rely on micro-lenders and third-party technology platforms such as Ant Group to underwrite consumer loan. According to the PBOC, Chinese banks’ consumer loans sourced through tech firms amounted to 1.43 trillion yuan ($213.71 million) by June end.
China will increase SME loans by big banks by 30%
According to a report presented at the annual meeting, China plans to increase lending to small businesses by more than 30% from large commercial banks in 2021.
The draft is available for public feedback through Dec. 2. It imposes a new requirement on small online lenders that they provide at least 30% of any loan they jointly fund with banks.
The threshold of registered capital for micro-lenders offering loans online in different regions was also established at 5 billion yuan. Although the threshold is different between provinces, it is still well below 1 million yuan.
According to draft rules, micro-lenders who source borrower information from ecommerce platforms in order to assess their creditworthiness will have to share credit information with central banks.
Analysts predicted that banks would be less likely to provide joint loans to fintech lenders to consumers.
Premier Li Keqiang read the report in Beijing and stated that the government will allow small businesses to defer principal or interest repayments, guide banks to lower loan rates, and support industries affected by COVID-19.
When the pandemic decimated businesses and closed down shops for months, big commercial banks increased lending to small and micro businesses by over 50%.
China strengthen supervision over financial technology and financial holding companies to ensure innovation is followed regulation. It also wants to accelerate its efforts to encourage credit information sharing.
The government stated in last year’s annual work report that innovations in financial technology should lower the cost of financial services. This year, the sentence was removed.
China has suspended the initial public offering for Alibaba’s Ant Group in November 2020. Its financial regulators have asked the company to develop a plan to restructure the business as part of their efforts to strengthen fintech regulation.
CBIRC’s head of consumer protection said Monday in a commentary that users of Ant-owned consumer loans companies Huabei or Jiebei should be closely examined. Guo stated that such fintech loan companies perform the same functions as banks and should have similar risk controls.
According to the draft rules, licenses for eligible lenders will need to be renewed every three year. This is in line with regulators’ principle of not approving new micro-lenders who lend online across different regions.
Once the rules become official, lenders will have 12 months to conform.
Ant’s Jiebei-Huabei units were responsible for facilitating 1.7 trillion Yuan ($263 Billion) in consumer loans to 500,000,000 people. Only about 2% of Ant’s parent’s balance sheet is kept. The regulation will further limit growth. Analysts at Morningstar Inc. and other firms have slashed estimates of Ant’s value by half, from $280 billion prior to its scrapped listing.
Chinese companies are seeking bank loans totalling at least 57.4bn
Marketing strategies for Financial Services in China
Chinese millennials are looking for lending companies that they can trust.
Trust is built by building brand awareness, creating digital experiences that young people will use, as well as endorsements from celebrities. Financial services companies must have a strong online presence and a positive reputation, especially in China, where many people use social media, search engines, and Internet experts for advice and information.
The majority of China’s online lending is peer-to-peer (P2P)
1 A high-quality Chinese website: The beginning of your client journey
Your website must be well-organized, professional designed, informative, and optimized for Baidu (China’s No.1 search engine). It should also be hosted on a local server with an.cn domain. A quality Chinese website is essential for the concept of ‘face’ in China.
2 SEO – Search Engine Optimization.
Organic Results are ALWAYS best
After you have built your Chinese website, you will need to be visible on Baidu, which controls 82% of the Chinese search engines market in Finance.
It will be very helpful if you are one of the top results in search. Paid links, banner ads and PPC advertising can all be used to complement this. Customers must see that your company is a legitimate, established business in China. This is best demonstrated by a high rank on Baidu. Although this can be time-consuming, it is possible to increase your visibility by using the right keyword optimization strategies.
There are many ways to increase your Baidu rank.
Producing quality, original content , Content sharing and dissemination, Keyword optimization, Backlinks campaign, Chinese hosted server
Once your ranking has been established, you will be considered a legitimate business. Many companies make the mistake of trying to apply the same SEO strategy in China as they do in Western markets. China has a unique digital landscape. Baidu’s intelligent system, the ‘Spider,’ prioritizes Chinese-specific elements like a Chinese domain/URL and Chinese servers.
3 influencers: use them right
Partner with influencers to reach new markets and make your brand popular. Financial management is a complex business with many idiosyncrasies. Influencers are able to distill your message and make it relatable in a complex world of financial well being.
They can help reach millions of Millennials that don’t believe financial products exist.
They can help you attract new customers or energize existing customers.
Millennials don’t care about financial brands. They only care about their friends. They are interested in what their favorite people care about. These respected figures have the influence and connections to increase brand awareness and trust.
Reach out to them. It’s an easy way to ensure that your company is seen by millions of people.
4) Maximize visibility in financial news …. Because your clients read news
Chinese PR is the best way to raise awareness and build trust in the financial industry. Only quality news from reliable sources will be published by Chinese special publications. Because they are aware that what they read is strictly controlled by the government, Chinese consumers have confidence in their official news agencies.
It is therefore important to build a reputation and financial buzz in China’s PR industry.
5) Engage Your Prospect Through Wechat
You can engage your users by creating an online community using Wechat. Provide them with relevant and accurate content in Chinese. WeChat, which has more than 750 million users, is the most popular social media platform for China. It is an engaging platform with Chinese users spending 1.5 hours per day using it. You can discuss new trends, financial advice, investment news, and other topics on your official Wechat account to both attract new audiences as well as keep current ones.
China’s financial sector is an exciting area for investment and growth. Technology developments continue to change the landscape, creating new opportunities and challenges. The right digital marketing strategy is essential for financial services that want to win the trust of Chinese customers. Social media is a game for all industries in China.
You need to know how much your should invest to reach these potential clients?
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