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1|PageChinaConsumerFinanceMarketInsightsWorkingGroupofCFAChinaShanghaiCrowdResearchProject*January2018*MembersofworkingGroup:ChenYan,CFA,GuYuan,CFA,LiChen,CFA,WangYingren,CFA,YingYi,CFA,ZhangShuguang,CFA,ZhaoYang,CFA2|PageTableofContentsResearchSummary.
3Introduction6ChapterIConsumersandConsumerFinancialBehavior.
6ChapterIISummaryofChina'sConsumerFinanceIndustryDevelopment.
6SectionIChinaConsumerFinanceDevelopmentEvents.
6SectionIIDevelopmentofChina'sConsumerFinancePolicies.
8SectionIIIHistoryofForeignConsumerFinance10ChapterIIICurrentSituationofChina'sConsumerFinanceMarket15SectionIIndustryChainofConsumerFinance15SectionIIConsumerFinanceCompanies16SectionIIIConsumptionScenarios.
23SectionIVConsumerFinanceInvestmentInstitutions.
34ChapterIVPredictionofChina'sConsumerFinanceMarket35SectionIMacroEnvironment35SectionIIConsumerFinanceCompanies39SectionIIIConsumptionScenarios.
42AboutCFAChinaShanghai.
47AboutCrowdResearchProjectofCFAChinaShanghai.
47Acknowledgments.
473|PageChinaConsumerFinanceMarketInsightsResearchSummaryAftermanyyearsofinitialdevelopment,China'sconsumerfinancemarket,withtherapiddevelopmentofInternetfinanceande-commerce,hasenteredaperiodofmarketeruption.
Nowitisrapidlypenetratingintoallwalksoflifeinthesocietyandcatchingtheattentionfrommanyinvestmentinstitutions.
Againstsuchbackground,weconductedanindustryresearchonthismarket,hopingtoexplorethedevelopmenttrendoftheindustry,putforwarddevelopmentproposalsfortheenterprisesintheindustry,andhelpinvestorstoidentifytheinvestmenttrend.
InIntroductionandChapterI,wedefineconsumerfinanceandthescopeofthisstudy,andanalyzetheconsumerfinancialbehavior.
Theessenceofconsumerfinancialbehavioristhatconsumerspaycertainfinancialcoststochangethedisposablecapitalflowwithinaspecifiedperiodtomatchtheirconsumptiondemand.
Targetcustomersofconsumerfinancearethosewhohavedemandforconsumptionbutlackliquidity,andarewillingtoadvancetheirconsumptionandhavesufficientrepaymentability.
InChapterII,wereviewthehistoryofthedevelopmentofChina'sconsumerfinanceindustryandtheevolutionoftherelevantpolicies.
WealsonarratetheindustrydevelopmentintheUnitedStates,EuropeandJapan,whichprovidesuswithreferencetoanalyzeChina'sfutureindustrytrends.
ChapterIIIcentersontheindustrychainofconsumerfinanceandexpoundsthecurrentdevelopmentoftheindustryinChina.
Itcoversdifferenttypesofconsumerfinancecompanies,includingbanks,licensedconsumerfinancecompanies,Internetgiants,P2P,e-commerce,start-upsandindustrycompanies,aswellasvariousconsumerfinancescenariosandspecialconsumergroupsincludingautomobile,travel,medicalcosmetology,education,ruralarea,houserental,homeimprovement,collegestudentsandblue-collarworkers.
Inaddition,wecountatotalof356financingincidentsamong52consumerfinancecompanies.
DatashowsMatrixPartnersChina,SequoiaCapital,BluerunVentures,SourceCodeCapitalandShunweiCapitalarethemostactiveinvestmentinstitutionsinChina'sconsumerfinancemarket,andintermsofmarketsegmentsarrangement,theyoftenfocustheirsupportononeortwopotentialenterprisestogivemanyroundsofinvestment.
InChapterIV,wediscussthefuturedevelopmenttrendofChina'sconsumerfinanceindustryfromthreeaspects:industrymacroenvironment,varioustypesofconsumerfinancecompaniesandvariousconsumptionscenarios.
Intermsofthemacroenvironment:4|PageChina'sconsumerfinanceindustryisstillintheearlystageofitsdevelopmentwithgreatmarketpotentialinthefuture.
ChinawillformauniquepersonalcreditreferencesystemwithChinesecharacteristics.
China'sfuturecreditreferencesystemmayformatwo-tierstructure:theupperlevelisthecreditreferencecenteroftheCentralBankandthegovernment-ledsocialcreditunion,whilethelowerlevelisafewlicensedthird-partycreditreferencecompaniesthatprovidethewholesocietywithspecificdataproductsandservices.
Theindustryriskcontrolisstrengtheneddaybyday,andthecalculationruleofthedefaultrateisinurgentneedofunification.
Wealsoproposeatime-weighteddefaultratecalculationmethodthatallowsbusinesses,consumers,investorsandregulatorstoassessandmonitorrisks.
Thiscalculationmethodisclearinstandards,objectiveandcomparable,andtheimpactitgetsfromthesharpchangeinendingbalanceisreduced.
Inaddition,thestratificationofdefaultrates(dividedbythedefaultperiodofdefaultloansinto:overdue1M,overdue3Mandbaddebtratio)helpstoinvestigateconsumerfinancecompany'sdefaultloancomposition.
Defaultrate=[∑(principalbalanceofdefaultloansatthebeginningoftheperiod*thecurrentperiod'sduration)+∑(principalbalanceofnewly-addeddefaultloansintheperiod*thecurrentperiod'sduration)]/[∑(principalbalanceoftheloansatthebeginningoftheperiod*thecurrentperiod'sduration)+∑(principalofthenewlyissuedloansduringtheperiod*thecurrentperiod'sduration)]Intermsoftheconsumerfinancecompanies:Nationalbankswillstilldigupthedemandforconsumerloansoftheirexistingcustomers,whilelocalbanksactivelyseekcross-regionalconsumercreditlicenses.
Theadvantagesoflicensedconsumerfinancecompaniesarebecomingevidentgradually,andtheiroverallmarketshareoftheindustryisincreasing.
Internetgiants(BATJ–Baidu,Alibaba,Tencent,JD)aretakingstrategicinitiativesthroughthetechnicaloutputandbusinesscooperationinvariousconsumptionscenarios.
P2Pcompanieswillseekbreakthroughtransformationinthecapitalcostandcustomeracquisition.
Consumptioninstallmentsservicewillbecomeamust-to-havefore-commerce,butitwillmainlybeprovidedbythirdparties.
Intermsoftheconsumptionscenarios:Automobile:Usedcarsarebecomingthenexthotspotinautomotiveconsumerfinancemarket.
Travel:Travelinstallmentmarkethashighentrybarrier,andthelicensedconsumerfinancecompanieswithindustrialbackgroundmaybecomeleaders.
5|PageMedicalcosmetology:Thepotentialofthemedicalcosmetologyinstallmentmarketishugewithundeterminedpatterns.
Thecomprehensiveoperationanddatatechnologycapabilitiesarethecoreofthecompetitiveadvantage.
Education:Theeducationmarketishugebutfragmented,andtheeducationinstallmentserviceswillmainlybeprovidedbythird-partyconsumerfinancecompanies.
Ruralarea:Ruralinstallmentpaymentmarket,asthelargestanddeepestinclusivefinancialmarket,isablueoceanforreclamation.
Houserental:Rentalagencieswillcontinuetoplayakeyroleintherentalinstallmentpaymentindustrychain.
Homeimprovement:Homeimprovementinstallmentpaymentmarketwillstillbedominatedbybanksandlicensedconsumerfinancecompanies.
Collegestudent:Thestudentinstallmentpaymentmarketwillmaintainitshighentrybarrierforalongperiod,andbanksandlicensedconsumerfinancecompaniesaremainmarketplayers.
Blue-collarworkers:Blue-collarmarketsegmentwillreturntothespecificconsumerscenariosinthelongrun.
6|PageIntroductionConsumerfinancecoversaverywiderangeoftopics.
Asitsnameindicates,itfocusesonthefinancialsubjectsinvolvedintheconsumptionprocessfromtheperspectiveoftheconsumers,includingpayment,riskmanagement,loans,savingsandinvestment.
InAdministrativeMeasuresonPilotConsumerFinanceCompaniesissuedbyChinaBankingRegulatoryCommission(CBRC),consumerfinancecompaniesaredefinedasthenon-bankfinancialinstitutionsthatprovideloansforindividualsforthepurposeofconsumption.
Itcanbeseenthattheconsumerfinanceisapproximatelythesameasconsumerloan.
Theconsumerfinanceinthisstudyreferstoconsumercredit,whichiscreditloanforshort-termconsumption.
Thescopeofthisstudydoesnotincludeloansforhousingpurchase,andmainlycoverstheconsumercreditforautomobile,travel,medicalcosmetology,education,ruralarea,houserentalandhomeimprovement,digitalproduct,etc.
Thetypicalconsumercreditperiodislessthantwoyearsandtheamountisbetween2,000yuanand200,000yuan.
ChapterIConsumersandConsumerFinancialBehaviorTheessenceofconsumerfinancialbehavioristhatconsumerspaycertainfinancialcoststochangethedisposablecapitalflowwithinaspecifiedperiodtomatchtheirconsumptiondemand.
Insimpleterms,itisthebehaviorofconsumerswhopayinterestforloansinordertomeettheirshort-termconsumptiondemandandrepaysprincipalandinterestwithfuturecashflow.
Customersofconsumerfinancialservicesmustfirstlyhavedemandforconsumption.
Theconsumercreditwithoutdemandforconsumptionusuallyaimsatfraudulentloans.
Atpresent,Chinaisstillintheearlydevelopmentstageoftheconsumerfinance,andmanyInternetcompaniesknowwellthegameof"subsidiesformarketcultivation".
Thepromotionmodelof"nointerestandnoprocessingfees"givestherisk-freearbitrageopportunitiestoconsumerswhohadnoneedforcredit.
Partofthemwillconvertintofuturecustomers,whiletherestarejustsimplearbiters.
Thepotentialcustomerswhodohaveliquidityneedsaredividedintoexistingandpotentialconsumersofconsumerfinancebasedonwhethertheychooseimmediateconsumption.
Theexistingcustomerswithnorepaymentabilityareimpulsiveconsumerswhilethosewithadequaterepaymentabilityarehigh-qualitytargetcustomersforconsumerfinancialservices.
ChapterIISummaryofChina'sConsumerFinanceIndustryDevelopmentSectionIChinaConsumerFinanceDevelopmentEventsIn1987,China'scommercialbanksstartedtheoperationofconsumerdurablegoodsloans,markingthebeginningofChina'sconsumerfinanceindustry.
In1999,attherequestofthePeople'sBankofChina,commercialbankslaunchedacomprehensiveconsumercreditbusinessforurbanresidents.
However,atatimewhentheentireChineseeconomywasimmature,theconsumptionpatternsandconsumerattitudeswererelativelyconservative,andthelevelofdevelopmentinscienceandtechnologyandfinancelaggedbehind,China'sconsumerfinanceindustryhasbeeninaverylongperiodofinfancyfor10yearsuntil2009.
Duringthatperiod,in2004,PPFGroup,amatureandsuccessfulenterpriseinconsumerfinance,setupa7|PagerepresentativeofficeinBeijing.
In2007,itsetuptheChinaheadquartersofHomeCreditinShenzhenandofficiallystartedtheconsumercreditbusinessinChina.
PPFGroupwasoneofthefirstnon-bankcompaniestodevelopconsumerfinancebusinessinChinaandwasthefirstwhollyforeign-ownedenterpriseapprovedtoestablishaconsumerfinancecompany.
InAugust2009,Chinapromulgatedthe"AdministrativeMeasuresonConsumerFinancePilotProjects"andestablishedfourpilotcitiesinBeijing,Shanghai,TianjinandChengdu.
AsChinabeganpilotingconsumerfinancecompanies,theconsumerfinancemarketusheredinmorediversifiedparticipants,whobegantoexplorenewmodesofconsumerfinancebusinessesbytheuseoftheInternet.
Since2013,therapidgrowthofseveralrepresentativecompaniesintheconsumerfinancemarkethasmarkedthestartingstageofthemarket.
InAugust2013,theinstallmentshoppingmall"Fenqile",whichfocusesontheconsumptionscenarioofcollegestudents,wasestablishedandofficiallylaunchedinOctoberofthatyear.
InOctober2013,JDFinancewasestablishedwithoperationsinsupplychainfinance,consumerfinance,crowdfunding,wealthmanagement,payment,insuranceandsecurities.
Amongthem,theconsumerfinancebusinessofferproductssuchasWhiteNote,GoldenNote,SmallWhiteCard(co-brandedcreditcard),andCoins.
InOctober2014,AntFinancialServicesGroupwasestablished.
Itslicensesincludeprivatebanking,securities,insurance,funds,fundsales,trusts,third-partypayment,crowdfunding,smallloansandcorporatecredit.
In2015,theconsumerfinancepilotswerefullyliberalizedandpushedfrompointtoareaacrossthecountry.
Consumerfinancestarteditsfirstyearofblowoutdevelopment.
Since2016,theconsumerfinanceindustryhasenteredaperiodofrapiddevelopment.
Theparticipantsoftheconsumerfinancemarketandinnovationsinvarioussegmentskeeppoppingup.
Onthecapitalsideoftheconsumerfinanceindustry,in2016bothQudianGroupandLexinGroupreceivedsignificantfundingofseveralhundredmillionU.
S.
dollars.
Inaddition,theinvestmentprioritiesoftheinvestorsarealsodifferentiated,andtheconsumerfinanceenterprisesfocusingonblue-collarconsumers,familyconsumption,youngpeople'sconsumption,decorationmarket,educationmarketandruralmarketalsogotfinancing.
Ontheassetside,accordingtoWindInformationStatistics,thefirstthreequartersofthisyearannouncedtheissuanceofasset-backedsecurities(ABS)atascaleof867.
193billionyuan,up66.
7%overthesameperiodoflastyear.
Amongthem,AntFinancialandJDhadthelargestissuance.
Fromanotherperspective,itverifiesthattheexponentialgrowthinthedevelopmentscaleoftheconsumerfinanceindustryhasprovidedalargenumberofbasicassetsforassetsecuritization.
Meanwhile,ABSprovidesfastercashreturn,furtherpromotingtherapidgrowthindemandforconsumerfinancialcredit.
Inaddition,afterthestringencyofthepolicies,consumerfinancehasbecomeoneofthedirectionsforthetransformationofthenetworkloanplatform.
InAugust2016,theInterimMeasuresfortheAdministrationofBusinessActivitiesofInternetLoansandInformationIntermediariespromulgatedbytheCBRCbecamethebasicbusinessnormsandpoliciesoftheindustry,clarifyingthetwo-prongedmanagementsystemoftheCBRCandlocalgovernmentdepartments.
Meanwhile,aceilingwassetforborrower'sloanbalanceandthe8|Pagetotalborrowingsonthesameplatform.
Manyplatformshavebeguntodiversifytheirbusinessesandcircumventtheceilingofborrowingsonasingleplatform.
Theyhavestrategicallyweakenedthego-betweenP2Pbusinesswhiletransformingtoothercategories.
Theconsumerfinancewithrealtradingbackgroundhasbecomeoneofthekeytransformationdirections.
SectionIIDevelopmentofChina'sConsumerFinancePoliciesIn2009,AdministrativeMeasuresonPilotConsumerFinanceCompaniespromulgatedbyCBRCmaderegulatoryrequirementsonthedefinition,establishment,alteration,conditionsofinvestors,businessscopeandoperatingrulesofconsumerfinancecompanies.
Thefoundingofthefirstfourconsumerfinancecompaniesmarkedtheformalentryoftheconsumerfinanceindustryintotheregulatoryera.
In2013,CBRCupdatedandpromulgatedtheAdministrativeMeasuresonPilotConsumerFinanceCompanies,whichloosenedtherequirementsoninvestorconditions,businessscopeandoperatingconditions,diversifiedequityownership,widenedthesourcesoffundsofconsumerfinancecompaniesandexpandedthepilotcities.
In2015,governmentdepartmentsandfinancialregulatoryauthoritiesintensivelyintroducedvariouspolicies,mostofwhichencouragedandpromotedthedevelopmentoftheconsumerfinanceindustryintermsoffinance,technologyandconsumption.
Drivenbyfavorablepolicies,theconsumerfinanceindustryhasrapidlyexperiencedstartingperiodandfastdevelopmentperiod.
However,somehiddendangershavegraduallyemergedduringtherapiddevelopmentandthecorrespondingrestrictivepolicieshavealsobeenintroduced.
Since2016,theregulatoryauthoritieshavepromulgatedanumberofrestrictiveandnormativepoliciesandmeasures.
Forexample,People'sBankofChina(PBC)'snormsgoverningcreditcardbusinesseshavere-regulatedtheoverdraftinterestrates,interest-freerepaymentperiodandminimumrepayments,liquidateddamagesandservicefees.
TheMinistryofEducationandCBRCjointlyintensifiedthesupervisionofbadonlineloans,setupcampusdailymonitoringmechanism,real-timeearlywarningmechanismandresponsemechanismforbadonlineloans;CBRCandMIIT(MinistryofIndustryandInformationTechnologyofthePeople'sRepublicofChina)regulatedthebusinessactivitiesofonlineloaninformationintermediaries,whichstipulatesthatonlineloaninformationintermediariesshouldberegisteredwiththelocalbankingregulatoryagenciesandtheonlineloansshouldbemainlysmallamountwiththebalanceceilinglimit;CBRCandlocalgovernmentsshallestablishcross-sectorcross-regionalregulatorycoordinationmechanism.
In2017,thespecialremediationteamforP2Plendingriskscleanedupthepaydayloanandcarriedoutthethoroughinvestigationandcentralizedremediationofthepaydayloanplatformsfeaturingunusuallyhighinterestrates,unsecuredloans,shortterm(1-30days)andviolentcollection.
9|PageTable1SummaryofChina'sconsumerfinancerelatedpoliciesTimeDepartmentThemeKeycontents2009CBRCAdministrationofconsumerfinancecompaniesThedefinition,establishmentandalteration,conditionsofinvestors,businessscope,operatingrulesandtheregulatoryrequirementsofconsumerfinancecompanies;thefirstbatchof4consumerfinancecompanieswereestablishedCBRCTightencreditcardbusinessNocreditcardshallbeissuedtostudentsunderAge18(exceptforancillarycards);bankingfinancialinstitutionsshouldbeprudentinimplementingcollectionoutsourcing2013StateCouncilFinancesupportstheeconomicrestructuringandupgradingImprovebankcardservicefunctions;meetreasonableconsumercreditneedsinhousing,serviceconsumption,etc.
;expandthescopeofthepilotconsumerfinancecompanies;strengthenpersonalcreditmanagementCBRCAdministrationofconsumerfinancecompaniesLoosentherequirementsoninvestorconditions,businessscopeandoperatingconditions,diversifyequityownership,expandthepilotcities,widenedthesourcesoffunds2015PBCMobilefinancialtechnologyinnovationLaydownfourdirectiveprinciples:safeandcontrollable,beneficialtostateandpeople,inheritinginnovationanddevelopment,serviceintegrateddevelopment;platformconstruction,innovationpilotsStateCouncilMarketaccessisopenedtoconsumerfinancecompaniesApprovalofconsumerfinancecompaniesisdecentralizedtoprovinces;continuetorelaxthebusinessscopeofcreditproductsCBRCNon-bankfinancialadministrativelicensingmattersReaffirmtheconditionsforthecorporatebody,theinvestorsofthefinancialinstitutions,andtheinvestorsofthenon-financialinstitutions,theproceduresforalterationandtermination,andthequalificationsoftheseniormanagement.
Adjustthescopeofbusinessandincreasebusinessvarieties:issuanceoffinancialbonds,ABSTenministriesincludingPBCPromotethesounddevelopmentofInternetfinanceSupporttheinnovationofproducts,servicesandfinancingchannels,promotethesupportingservicesystemofmutualfinancialservices,andimplementandimprovefiscalandtaxationpolicies.
Establishthedivisionofregulatoryresponsibilitiesforconsumerfinance:Internetpayment,onlineloans,crowdfundingofequityfunds,Internetfundsales,Internetinsurance,InternettrustsandInternetconsumerfinanceStateCouncilDevelopmentplanforinclusivefinanceBy2020,wewillestablishaninclusivefinancialserviceandguaranteesystemthatiscompatiblewiththewell-offsocietyinanall-roundway,includingconstructingsystem,enrichingproductsandservicemeans,promotingtheconstructionoffinancialinfrastructure,improvinglawsandregulationssystem,playingtheroleofpoliciesinguidanceandmotivation2016StateCouncilReportontheWorkoftheGovernmentEnhancethebasicroleofconsumptioninstimulatingeconomicgrowth;encourageinnovationinconsumercreditproducts;regulatethedevelopmentofInternetfinance;vigorouslydevelopinclusivefinanceandgreenfinancePeople'sCongressTheThirteenthFive-yearPlanDevelopinclusivefinanceandmulti-formatsmall,mediumandmicrofinancialorganizations;standardizethedevelopmentofInternetfinancePBC,CBRCFinancialsupportfornewconsumptionareasAseriesofdetailedfinancialmeasurestosupportnewconsumption:fosteringthedevelopmentofconsumerfinanceorganizations(institutions,outlets);promotingproductinnovation(optimizingmanagementmodels,productinnovationandencouraginginnovationinautomotivefinancebusiness);supportingthekeyareasofnewconsumption(eldercare,housekeeping,healthcare,informationandnetwork,greenconsumptionsuchasautomobile,tourismandleisure,educationandculture,andruralconsumption);improvingtheenvironmentforthedevelopmentofconsumerfinancecompanies(broadeningthefinancingchannelsforconsumerfinancecompanies,improvingpaymentservicesandsafeguardingtherightsandinterestsoffinancialconsumers)NDRCPromoteconsumptiontopromotetransformationandupgradingTenConsumptionExpenditureInitiatives(salessmoothnessofurbancommodity,ruralconsumptionupgrade,residentialhousingimprovement,promotionofautomobileconsumption,travelandleisureupgrade,healthandfamilyservicesexpansion,educationandculturalinformationconsumptioninnovation,sportsandfitnessconsumptionexpansion,greenconsumptiongrowth,consumptionenvironmentimprovementandqualityimprovement)PBCStandardsforcreditcardbusinessRe-regulatetheoverdraftinterestrates,interest-freerepaymentperiodandminimumrepayments,liquidateddamagesandservicefees,in-advancecashborrowingbusiness(moreflexible)NDRCNewconsumption'sleadingroleOverallrequirementsandbasicprinciplesforreleasingnewconsumption,creatingnewsupplyandformingnewimpetus;putforward50majormeasures.
PBCtakestheleadtosupportthedevelopmentofconsumercreditMinistryofEducation,CBRCBadcampusonlineloansIntensifythesupervisionofbadonlineloans,setupcampusdailymonitoringmechanism,real-timeearlywarningmechanismandresponsemechanismforbadonlineloansCBRC,MIITStandardsofthebusinessactivitiesofonlineloaninformationintermediariesOnlineloaninformationintermediariesshouldberegisteredwiththelocalbankingregulatoryagenciesandtheonlineloansshouldbemainlysmallamountwiththebalanceceilinglimit;CBRCandlocalgovernmentsshallestablishcross-sectorcross-regionalregulatorycoordinationmechanism2017SpecialremediationteamforP2PlendingrisksPaydayloancleaningupCarryoutthoroughinvestigationandcentralizedremediationofthepaydayloanplatformsfeaturingunusuallyhighinterestrates,unsecuredloans,shortterm(1-30days)andviolentcollection10|PageSectionIIIHistoryofForeignConsumerFinanceGlobally,therepresentativeregionswhereconsumerfinancedevelopedearlieraretheUnitedStates,EuropeandJapan.
ConsumerfinanceintheUnitedStatesTheUnitedStatesisthecradleofconsumerfinanceandthelargestconsumerfinancemarketintheworld.
AsofAugust2017,thetotalconsumercreditbalanceis3.
77trillionU.
S.
dollars.
ConsumerfinanceintheUnitedStatessproutedinthe19thcenturywhenpeasantsboughtfarmimplementsininstallments.
Withtheadventoftheindustrialrevolutionintheearly20thcenturyandtheurbanizationandindustrialization,automobilegraduallyreplacedfarmtoolsasthelargestconsumerproducts.
Thevigorousdevelopmentoftheautomobileindustryledtotherapidgrowthofconsumerfinance,withasubstantialincreaseinpenetrationrateandpopularizationrate.
Inthe1950safterWorldWarII,consumerfinanceusheredinexplosivegrowthintheUnitedStates.
Morecreditproductscoveredallaspectsoflife.
Meanwhile,thecreditsystem,dataprocessingcapabilities,lawsandregulations,andbigdata-basedriskcontrolsystemhaveallcontributedtothedevelopmentofconsumerfinance.
Withthecontinuousincreaseofpenetrationrate,thepopulationcoveredbyconsumerfinancecontinuedtoincrease.
Thecontentwasnotlimitedtothepurchaseofdailydurablegoodsbutextendedtosuchfieldsastravel,educationandbeauty.
Consumersalsoturnedfrompassivelyacceptingtomoreindependentlychoosingconsumptioncreditproductsandinterestrates.
Initially,consumerfinancewasinitiatedbymanufacturerstoincreasetheirrevenue.
In1930,morethan60%ofcarswerepurchasedbyconsumersininstallments.
Commercialbanksthenjoined.
Atpresent,themainplayersinthemarketarecommercialbanksandconsumerfinancecompanies.
Inaddition,creditunions,thefederalgovernmentandsavingsinstitutions,securitizationcreditassetpoolinstitutions,non-financialinstitutions,etc.
alsoprovideconsumerfinancialservices.
ThetargetgroupsofconsumerfinancecompaniesintheUnitedStatesarethosewithlowbutstableincome.
Theyaremostlyyoungpeoplewhohavegreaterfundingneedsineducation,marriage,decorationandtravel.
Theyarehardtobecoveredbycommercialbankseitherbecauseoftheirlowincomeorlessaccumulatedsavingsduetotheirshortworkinglives.
TheconsumercreditintheUnitedStatesisdividedintorevolvingcreditandnon-revolvingcredit.
Revolvingcreditmeansthatthebankgivesacertainamountofcreditaccordingtotheborrower'screditrating,andtheborrowercanconsumewithinthecreditlimit.
Revolvingcreditdoesnothaveafixedrepaymentterm,whichmainlyincludescreditcardloans,revolvinghomeequityloans,etc.
Non-revolvingcreditmeansthatwhentheborrowerdoesnotcompletetherepayment,thecorrespondingrepaymentamountcannotbeborrowedagain.
Itmainlyincludesstudentloans,autoloans,consumerdurablegoodsloans,unsecuredpersonalloans,personalfunds-revolvingloans,personaldebtrestructuringloans.
Intheresidentialloanstructure,thebalanceofhouseholdloansbyAugust2017was18.
37trillionU.
S.
dollars,amongwhichhousingloansaccountedfor79.
48%,andtheremaining20.
52%wasconsumercreditwiththebalanceof3.
77trillionU.
S.
dollars.
Inconsumercredit,revolvingloanswere1trillionU.
S.
dollars,11|Pageaccountingfor5.
44%ofthetotal,ofwhichthelargestamountwascreditcardloans.
Non-revolvingloanswere2.
766trillionU.
S.
dollars,accountingfor15.
08%,ofwhichthelargestpartswerestudentloansandcarloans.
ThecreditreferencesystemintheUnitedStatesisamarket-basedsystem,whichgeneratescreditreportthroughcommercialoperationsandprovidescomprehensivecreditinformationservicestothewholesociety.
Creditagenciesareresponsibleforcollecting,organizing,processinginformationanddata,aswellasprovidingcreditreports.
Thegovernmentisresponsibleforprovidinglegislativesupportandsupervision,regulatingtherulesforthecollection,organization,storageandprocessingofinformationsoastocreatefreecompetitionamonginstitutions.
Takingpersonalcreditserviceasanexample,ACRdevelopedtheunifiedcreditdatareportingformatandstandarddatacollectionformatforpersonalcreditreferencebusiness,whileagenciesheadedbyExperian,Equifax,andTransUnionareresponsiblefordatacollection.
Aftercollectingdata,creditreferenceagenciesformcreditratingproductssuchasFICOscore,vantagescore,creditreport,andfinallyapplythemtoavarietyofscenarios.
AmongcreditratingagenciesinthecapitalmarketareS&P,Moody's,Fitch,etc.
whileordinarycorporatecreditagenciesincludeDun&Bradstreet.
Inthepolicysupervision,theconsumerfinanceregulationintheUnitedStatesadherestotheideaofmakingtheconsumerfinancemarkettransparentandopen,focusingontheprotectionoftherightsandinterestsofconsumersandadoptingarelativelylenientguidingprinciple.
TheUnitedStatesdoesnothaveaninstitutionalregulationthatspecificallytargetsatconsumerfinancecompanies;instead,itmainlyregulatesconsumerfinanceasabusiness.
Nordolawshavestrictrestrictionsonthesourcesoffinance,businessscope,productcategoriesofconsumerfinancecompanies.
Inthe1960s,restrictionsonproductsandinterestrateceilingswereusedtoprotectconsumers.
Inthe1970s,statespassedlawstoprotectconsumersnotonlyintermsofproductsbutalsointermsofvariousproceduresofconsumerfinance.
Inthe1990s,throughtheFinancialServicesModernizationAct,thebanking,insuranceandbrokeragefirms'businessboundarieswereeliminated.
Banksstartedcross-borderoperationsandconductedlarge-scalemergerandacquisitionintegration.
Thefinancialinstitutionsintheconsumerfinancemarketswerediversified.
Afterthefinancialcrisisin2008,financialsupervisionwascomprehensivelyreformedandConsumerFinancialProtectionBureauwasestablishedtoprotectthelegitimaterightsandinterestsofconsumers.
Since2008,USconsumerfinanceregulationhasgraduallyenteredamatureandstableperiod.
RepresentativecompaniesofconsumerfinanceintheUnitedStatesinclude:AmericanExpressincreditcards,Searsinretail,andPaypalCreditontheInternet.
ConsumerfinanceinEuropeEuropeanconsumerfinancecompaniesstartedinthelate1950s,whichisalmosthalfacenturylaterthanthoseintheUnitedStates.
OneofthereasonswasthattheindustrialrevolutionandglobalexpansioninEuropebroughthugewealthanditsresidentsdidnotneedcreditspendingtomeettheirconsumptiondemand.
AnotherreasonisthatthewideacceptanceofChristiandoctrineofthriftinEuropealsoinhibitsthedevelopmentofconsumercredit.
However,aftertheWorldWarII,itseconomysufferedheavylossesanditsresidentshad12|Pagepoorlivingconditions.
Inaddition,duetothecyclicalover-supplycausedbytheindustrialrevolution,manufacturersurgentlyneededtoreducetheirinventoriesbyinstallments.
Residents(especiallymiddle-to-low-incomeyoungpeople)begantograduallyuseconsumercredittomeettheirneedsineverydaylife.
Sincethen,consumerfinancebeganexplosivegrowth.
NowEuropehasbecometheworld'ssecondlargestconsumerfinancemarketanditisinamaturestageofdevelopment.
FromthehistoryofthedevelopmentofconsumerfinanceinEurope,itcanbeseenthatconsumerfinancemainlytargetedatpeoplewithlowbutstableincome,especiallyyoungpeople.
SimilartotheUnitedStates,suchgroupshavearelativelyopenconceptionofconsumption.
Theyhavegreaterconsumerdemandfortravel,housedecoration,weddings,education,etc.
,andtheyareunabletobeincludedinthetraditionalbankingcreditreferencesystembecauseoftheirlowincomeorshortcreditrecords.
Theyarethekeytargetcustomersofconsumerfinancecompanies.
Fromthepurposeofconsumerloans,Europeanconsumerfinancecompaniesmainlyprovidecustomerswithspecificpurposeloansandnon-specificpurposeloans.
Specificpurposeloansincludehouseholddurableconsumergoods,POSmerchantsales,merchant'smembershipcards,carloans,homeimprovementloansandotherfunctionssimilartothenon-revolvingloansintheUnitedStates.
Non-specificloans,includingpaydayloans,cashadvances,revolvingcredit,etc.
,areusuallyunsecuredloanswiththeborrower'sintegrityandrepaymentabilityasabasisforlending;theyareequivalenttorevolvingloansintheUnitedStates.
MostofthemajorconsumerfinancecompaniesintheEUareaffiliatedtoEuropeanbanksorfinancialconglomeratessuchasCetelem(aconsumerfinancecompanyofBNPParibas)andHomeCredit(aconsumerfinancecompanyofPPFGroupinCzech).
Besides,BENEFICIAL,aconsumerfinancecompanyofHSBCGroup,CitiFinancial,aconsumerfinancecompanyofCitibank,andGEMoney,aconsumerfinancecompanyofGE,alsoconductconsumerfinancebusinessintheEU.
Inaddition,specializedconsumerfinancecompaniesarealsoanimportantpartoftheEUmarket,suchasSantanderConsumerFinanceLtd.
,whichwasestablishedinSpainin1963.
Itsmainbusinessesincludeautofinance(newandusedcars),personalloans,creditcards,leasing,durableconsumergoodsloansandotherbusinesses.
Intheacquisitionofcustomers,consumerfinancecompaniesinEuropehavetwomodes:directmarketingandindirectmarketing.
Directmarketingmeansthattheconsumerfinancecompaniesdirectlydevelopcustomersandtransactwithcustomers.
Thismodeloftenrequiresmorebranchesoroutletsasasupport,withCetelemasarepresentative.
Indirectmarketingmeansthatconsumerfinancecompaniesexpandtheircustomerbasebyworkingwithresellersorretailers.
Consumerfinancecompaniespartnerwithlargeresellers,andresellerssearchforcustomers,reviewcustomerrisks,screencustomers,gothroughloanprocedures,andcollectloans.
ArepresentativeoneisHomeCredit.
Increditreferencemodel,unlikethemarket-orientedcreditreferencemodelintheUnitedStates,publiccreditreferenceiscommonlyusedinEuropeancountries.
Thepubliccreditsystemmodeladoptsthesocialcreditmanagementmodethatfocusesonthecentralcreditregistrationsystemestablishedbythecentralbank.
Thegovernmentfundsthenationaldatabase,whichisestablishedtoformanationwideinvestigationnetwork13|Pagethatiscontrolledandsupervisedbythegovernment.
Thegovernmentalsousesadministrativemeanstorequiredataproviderstoprovidecreditinformationanddatatopubliccreditagencies.
ThismodelisusedbymajorEUmembercountriessuchasGermany,France,Italy,Spain,Austria,PortugalandBelgium.
Comparedwiththemarket-orientedcreditreference,publiccreditreferenceagenciescanestablishacomparativelyauthoritativecreditinformationdatabaseandcanguaranteetheauthenticityofinformationanddata.
Onpolicyregulation,DirectiveontheProtectionofIndividualswithRegardtotheProcessingofPersonalDataandontheFreeMovementofsuchData,EU95/46/EC,whichwaspromulgatedbytheEUin1995,stipulatestherulesforthecollection,preservation,processing,acquisitionanddeletionofcreditinformation,becomingtheprerequisiteandbasisfortheexistenceandoperationoftheEUcreditagencies.
Aseriesofbills,suchastheConsumerCreditDirective,theEUConsumerRightsDirectiveProposal,theConsumerCreditContractandDirective2008/48/EContherepealofDirective87/102/EEC,constitutearelativelycompletecreditreferenceandcreditconsumerprotectionsystem,withanaimtoprotecttherightsandinterestsofconsumersandsafeguardthestabilityoftheconsumerfinancemarkets.
ConsumerfinanceinJapanJapan'sconsumerfinancialservicesstartedinthelate1930safterWorldWarII,whichislaterthantheUnitedStatesandalmostatthesametimewithEurope.
InAsia,Japan'sconsumerfinancedevelopedearlierandisthemostmatureone.
Japan'sdepartmentstoresfirstlycarriedoutmonthlyinstallmentsofconsumercreditservices,whicharealsothecharacteristicsofJapan'sconsumerfinance:mainlythecirculationenterprisesandretailenterprisesprovideconsumercreditservices.
TakeJapan'sSaisonCorporationasanexample.
Itspredecessorwasaninstallmentdepartmentstore.
SaisonCompanyissuedalimitednumberofhousecardsforinternaluseandalsostartedtoworkwithVISAtoissueinternationalcreditcardsduringthegradualdevelopmentprocess.
Inthelate1970s,foreignconsumerfinancecompaniesfromtheUnitedStatesandEuropefloodedintoJapan.
Coupledwiththeever-changingconceptofconsumptionofJapanesepeople,theycultivatedthehabitofcreditconsumption,whichpromotedtherapiddevelopmentoftheconsumercreditmarket.
Sincethe1990s,theshareofmicro-financeinJapan'screditcardsandconsumerfinancecompanieshasincreased.
However,therapiddevelopmentofconsumerfinanceinJapanalsobroughtmanyproblems,suchasborrowerswithmultipledebts,consumerbankruptciesandlossofconsumerinterest.
Intheearly21stcentury,thebankruptcyofTakefujistimulatedJapantoreflectonmanyissuesunderthedevelopmentofconsumerfinanceandstartedtoformulateaseriesoflawsandregulationstoregulateallaspectsofthemarket,includingcreditreference,protectionofconsumers'rightsandinterests,collectionoffunds,protectionofconsumers,reliefofdebtors,andmaintenanceoftheindustryorder.
Foundedin1966,Takefujistartedoutfromsmall-sumconsumerloans.
Duringtheoverallexpansionoftheconsumerfinanceindustryinthe1970s,Takefujialsoenjoyedrapidgrowthandbecamethenumberonegiantinconsumerfinance.
However,inNovember2010,Takefujiwentbankruptcy,andthereasonsinclude:(1)Theinterestrateonconsumercreditwasgenerallytoohigh(about30%peryear),causingconsumers'14|Pagedifficultyinrepaymentandtheriseinnon-performingloanratio.
Thefinancialcrisisin2008madeitevenworse.
(2)Itconductedillegalandimpropercollection.
Manyconsumerfinancecompanies,includingTakefuji,notonlycollectedfromotherfamilymemberssuchastheirparents,butalsoenteredthehousesarbitrarilyandintimidatedtheelderlyandchildren.
Theyalsousedthegangsterstocollecttheloans.
Allthesecausedserioussocialproblems.
AsofMarch2017,Japan'screditwas127trillionyen,ofwhichthebalanceofrealestateloanswas94trillionyen,andthebalanceofconsumerloanswas33trillionyen.
Ofthat,5.
6trillionyenwascreditcardloans,accountingfor17%oftheentireconsumercredit.
ThesupplyofconsumerfinancialserviceinJapanisdominatedbynon-bankinstitutions,includingconsumerunsecuredlendingcompanies,creditcardcompaniesandinstallmentcompanies.
Commercialbanksmainlyservelargeenterprises,whilepersonalconsumerfinancialservicesarenottheirfocus.
TheservicetargetsofconsumerfinanceinJapanmainlyincludeworking-classpeople,housewives,students,etc.
;itsserviceareasarefinancialloansforautoloans,education,travel,healthcare,wedding,digitalproductsandotherconsumers;asfortheuseoffunds,itcanbedividedintoearmarkedandnon-earmarkedconsumerloans.
Inthecreditreferencesystem,Japanadoptsthemembershipcreditreferencesystem.
Afterthe1970s,thecreditreferenceagenciesinJapanbegantoconglomeratelocalagencies,movingfromdispersiontoconcentration.
Industryassociationsofsalescredit,consumercredit,andbanksinJapanintegratedtheirregionalcreditinformationcenters,whichgraduallydevelopedintoanationalindustrycreditreferenceagencies.
In1984,CreditInformationCenter(CIC)wasestablishedtointegratepersonalsalescreditinformationcentersthroughoutJapan.
In1986,33personalconsumercreditinformationcentersconglomeratedintotheJapanInformationCenter(JIC),integratingpersonalconsumercreditinformation.
In1988,Japan'sNationalBankInformationCreditCenter(BIC)wasestablishedtointegrate25banks'personalcreditinformationcentersacrossJapan.
Atthesametime,inordertofurtherdefinerisksandsolvetheproblemofmultipleliabilities,thethreemajorindustryinformationcenterssetuptheTripartiteInformationSocietytostarttheoperationoftheinformationexchangesystemandestablishacomprehensivecreditreferencesystem.
Inthesupervisorysystem,JapanpromulgatedtheInstallmentSalesLawin1961toregulatethedevelopmentoftheindustryintheearlystagesofthedevelopmentofconsumerfinance.
After20yearsofdevelopment,theRegulationonLoanIndustrywaspromulgatedin1983.
Withtherapiddevelopmentofconsumerfinanceinthelate1990s,Japanpromulgatedlawsfortheprotectionofconsumerinformation,includingthePersonalInformationProtectionLawofElectronicComputerProcessingHeldbytheAdministrativeOrgansin1998andtheLawontheProtectionofPersonalInformationin2003,whichprotecttherightsandinterestsofconsumersbyrespectingthebasicconceptsofindividualpersonality,theresponsibilitiesofstateandlocalpublicbodiesinhandlingpersonalinformationandthebasicmattersofpersonalinformationprotectionmeasures.
ThebrutalgrowthintheearlydaysofJapan'sconsumerfinancecausedserioussocialproblemsandeventhebankruptcyofTakefuji.
Withthepainfullessons,theJapanese15|PagegovernmentmademorestringentlegalsystemsthanthoseinEuropeandtheUnitedStates,aimingatthehealthydevelopmentofconsumerfinanceinJapan.
Japan'sconsumerfinancemarkethasfourgiants:Promise,asubsidiaryoftheSumitomoMitsuiFoundation,AcomandAtful,subsidiariesofMitsubishiFinancialGroup,andMobit,aconsumerfinancecompanyunderSumitomoMitsuiFinancialGroup.
Oneofthetypicalcompaniesofnon-bankinstitutionsisJapan'sOrientCorporation,establishedin1954.
ThetwomajorshareholdersareMizuhoFinancialGroupandITOCHU.
Itsbusinessscopecoversautomobileloans,shoppinginstallments,creditcards,creditguaranteeandfinancing.
AmongJapan'snon-bankfinancialinstitutions,Orientrankedfirstinthepersonalfinanceareawith4,887billionyeninconsumerfinancialassets.
ChapterIIICurrentSituationofChina'sConsumerFinanceMarketSectionIIndustryChainofConsumerFinanceCompaniesthatprovideconsumerfinancialservicesinChinacanbebroadlydividedinto:Banks:theearliestconsumerfinancefinancialinstitutions,whosemainconsumerfinancebusinessiscreditcardinstallment.
Licensedconsumerfinancecompanies:consumerfinancecompaniesapprovedbytheCBRC,whoseshareholdersaremostlybanksandlargeprivateenterprises.
Non-licensedcompaniesprovidingconsumerfinancialservicesinclude:Internetgiants(BATJ):Baidu,Alibaba,TencentandJD,whorelyontheirownecologyandresourcestocarryoutconsumerfinancebusiness.
P2P(Peer-to-Peer):P2Pcompanieshavebecomeanimportantsourceoffundingfornon-licensedconsumerfinancecompanies.
ManyP2Pcompanieshavealsoexpandedconsumercreditbusinessesbytheirown.
E-commerce:E-commerceprovidersbesidesthoseInternetgiantsabovearealsograduallypromotingconsumerfinancebusinessestostimulateconsumptionandimprovesalesperformance.
Start-upcompaniesandindustryenterprises:alargenumberofstart-upcompaniesandindustryenterprisesfocusonconsumersegmentsandspecificgroupsofpeople,relyingontheirunderstandingofconsumerscenariosformarketplowing.
Itcanbeseenfromabovethatconsumerfinancialcompaniesareoftenthosewhooftenhavetheadvantageoffundsoronline/offlinesaleschannelsintheindustrialchain.
Thegeneralprovidersofgoodsandservicesdonotcross-operateconsumerfinancialbusinesses.
BanksandlicensedconsumerfinancecompaniesarefinancialinstitutionsregulatedbytheCBRCandhavearelativelylowpolicyrisk,sotheyareknownastheregulararmyintheindustry.
Otherunlicensedconsumerfinancecompanies,thoughnotlicensed,havetheirownuniqueadvantagesandinnovationincustomeracquisition,riskcontrolsystem,andoperationalefficiency;theyarethenewforceintheindustry.
16|PageTable2:ComparisonofconsumerfinancecompaniesCategoryBanksLicensedconsumerfinancecompaniesNon-licensedconsumerfinancecompaniesTargetcustomersHighcredit,low-interestcontributorMediumcredit,higherinterestcontributorDifferentproductscoverdifferentpopulations;almostfullcoverageCapitalcostLowest(publicdeposit,etc.
)Lower(interbankborrowing,bankloans,exchangeABS,etc.
)Higher(bankloans,P2P,exchange/over-the-counterABS,etc.
)BaddebtratioLowestLowerHighOperationalefficiencyLowMediumHighPolicyriskLowLowHighCustomeracquisitionchannelsCross-saleforcreditcardholdersanddepositcustomers:statementinstallment,cashinstallment,promotionsofinstallmentpurchase,etc.
BranchnetworksOnlineandofflinebusinesscooperationBranchesorownpoint-of-salenetworksOnlineandofflinebusinesscooperationInternetplatformofitselfanditsshareholdersOfflineagentsorownpoint-of-salenetworksOwnInternetplatformCooperatewithotherInternetplatforms(relyingonverticale-commerceorthird-partypaymentplatform)RiskcontrolsystemCentralbankcreditreferenceandmanualreviewSlowreviewprocessMainlycentralbankcreditreferenceandmanualreviewSelfR&DofriskcontrolsystemCooperatewiththird-partycreditreferenceagenciesFasterreviewprocessthanthebankMainlyselfR&DofriskcontrolsystemCooperatewiththird-partycreditreferenceagenciesFastreviewprocessIntheindustrychain,creditreferenceagenciesprovideconsumerfinancecompanieswithcredit-relatedpersonalinformationandcreditinformationproductstohelpthemmeasurecreditriskandconductriskpricing.
Variouscreditinformationplatformsfacilitatethematchingtransactionsbetweenconsumerdemandsandcapital.
Governmentsandrelevantassociationsformulateandimplementvariouspoliciesandregulationstosupervisetheindustryandpromotethesoundandstabledevelopmentoftheindustry.
SectionIIConsumerFinanceCompaniesBanksFormanybanks,consumerfinancebusinessisequivalenttocreditcardstatementinstallmentaswellasthepaydayloanbusinessforcreditcardholders.
Bankcreditcardcustomersareoftenthosewhohaveastableincomeoragoodcredithistory.
Accordingtostatistics,atpresent,thereare0.
3creditcardspercapitainChina,andthestatisticsalsoincludethecaseof1personwithmorethan1card.
Therefore,itcanbesaidthattheconsumerfinancialservicesprovidedbybankscoveronlyasmallpartofthepopulation,whichalsoleavesavastmarketspaceforotherconsumerfinancecompanies.
Inaddition,somelargerbanksarealsoaggressivelyexpandingtheirreachthroughself-ownedsubsidiariesorareparticipatingconsumerfinancecompanies.
LicensedconsumerfinancecompaniesThelicensedconsumerfinancecompaniesarenon-bankfinancialinstitutionsthatareapprovedbytheCBRCandmorecomprehensivelysupervisedbythebankingregulatorydepartmentandspecializedinpersonalconsumerfinanceloansbusiness.
SinceJuly2009,withtheCBRCpromulgationoftheAdministrativeMeasuresonPilotConsumerFinanceCompaniesandtheapprovalfromtheStateCouncil,licensedconsumerfinancecompaniesstarted17|PagetheirpilotprojectsinfourcitiesincludingBeijing,Shanghai,ChengduandTianjin,andtheydevelopedrapidlyfrom2014onwards.
Thedevelopmentoflicensedconsumerfinancecompanieshasgonethroughthreestages:Thefirststageisfrom2010to2013.
Theinitialpilotmeasuresimposehighentrybarriersandstrictoperatingrestrictions,requiringmajorshareholderstobefinancialinstitutionswhosefundtakesupmorethan50%;onlythebusinessesintheplaceofregistrationcanbeconducted;asingleborrowercannotbeissueddirectlyforgeneral-purposeloans(paydayloans);instead,installment(installmentpurchase)loansmustbeissuedfirst,andonlywhentherepaymentrecordsareingoodcondition,thegeneral-purposeloanscanbeissued.
Duringthisperiod,onlyfourlicensedconsumerfinancecompanieswereopened,namely:BOBConsumerFinanceCompany(initiatedbyBankofBeijing),BOCConsumerFinanceCompany(initiatedbyBankofChina),JinchengConsumerFinanceCompany(initiatedbyChengduBank)andwhollyforeign-fundedHomeCreditConsumerFinanceCompany.
Overall,thepaceofdevelopmentwasrelativelyslow.
Thesecondstageisfrom2014to2015.
WiththeadventoftheInternetfinanceerain2013,personalconsumercreditenteredanunorderedandrapiddevelopmentphase.
Thegrowthleadersusheredinthefinancialsupportfrommainstreaminvestmentinstitutionsfromthesecondhalfof2013tothefirsthalfof2014,andtheirbusinessdevelopmenthasalreadyexceededthebusinessscopeoflicensedconsumerfinancecompanies.
Bothtraditionalfinancialinstitutionsandregulatorsfoundthemselvesunpreparedinfrontofthefast-changingbusinessmodels.
Therefore,theCBRCrevisedtheAdministrativeMeasuresonPilotConsumerFinanceCompaniesattheendof2013,whichloosenedentrystandardsandoperatingrestrictions.
Thesecondbatchofsevenlicensedcompanieswassetupinlate2014andearly2015.
Thethirdstagebeginssincethesecondhalfof2015,whentheStateCouncilfurtherliberalizedindustryentrystandardstoencouragetheparticipationofprivatecapital.
Atthispoint,localbanksworkwithprivatecapitalandInternetcompaniestospeedupthepreparationofapplicationsforlicenses.
Forexample,(1)BankofJiangsualliedwithHailanHomeand2345;(2)JiangsuWujiangRuralCommercialBankalliedwithHainanAirlinesTravelandHengtongGroup;(3)HaikouRuralCommercialBankalliedwithLilyNetwork;(4)BankofGuangzhoualliedwithGoldGroup,etc.
Localbankscanexpandtheirgeographicreachfromlocalplacestothewholenationthroughconsumerfinancelicenseswhileseekingstrategiccooperationopportunities.
AsoftheendofSeptember2017,22consumerfinancecompanieshavebeenapprovedandopened.
However,duetotherelativelyhighbarriertoentryandtheregulators'controlinlicenseissuance,thenumberoflicensesisstillscarce.
Table3:ListoflicensedconsumerfinancecompaniesNo.
NamePlaceofregistrationDateofestablishmentRegisteredcapital(100millionyuan)Ownershipstructure1SichuanJinchengConsumerFinanceLimitedLiabilityCompanyChengdu2010/2/263.
20ChengduBankCo.
,Ltd.
51%;HongLeongBankBerhad49%18|Page2BOCConsumerFinanceCo.
,Ltd.
Shanghai2010/6/108.
89BankofChinaLimited40.
02%;BrillianceGroupCo.
,Ltd.
20.
64%;ShanghaiLujiazuiFinancialDevelopmentCo.
,Ltd.
12.
56%;BOCCreditCard(International)Co.
,Ltd.
12.
37%;ShenzhenBodeInnovationInvestmentCo.
,Ltd.
9.
90%;BeijingSequoiaShengyuanManagementConsultingCo.
,Ltd.
4.
50%3HomeCreditConsumerFinanceCo.
,Ltd.
Tianjin2010/11/1070.
00HomeCreditB.
V.
100%4BOBConsumerFinanceCo.
,Ltd.
Beijing2010/2/258.
50BankofBeijingCo.
,Ltd.
35.
29%;SantanderConsumerFinanceCo.
,Ltd.
20%;LisiGroupCo.
,Ltd.
15%;DalianWandaGroupCo.
,Ltd.
5%;LenovoHoldingsCo.
,Ltd.
5%;BeijingJiuyuanChenguangVentureCapitalCo.
,Ltd.
5%BeijingLiandoInvestment(Group)Co.
,Ltd.
5%;HuaxiaDongBrothersTrading(Group)Co.
,Ltd.
5%;BeijingJingzhouEnterpriseGroup4.
21%;ShanghaiRuiyingBusinessConsultingCo.
,Ltd.
0.
5%5IndustrialConsumerFinanceCo.
,Ltd.
Quanzhou,Fujian2014/12/225.
00IndustrialBankCo.
,Ltd.
66%;Fucheng(China)Co.
,Ltd.
24%;FujianQuanzhouCityCommercialCorporation5%;Xtep(China)Co.
,Ltd.
5%6HaierConsumerFinanceCo.
,Ltd.
Qingdao,Shandong2014/12/265.
00HaierGroupCorporation30%;HaierGroupFinanceCo.
,Ltd.
19%;BeijingRedStarMacallineInternationalFurnitureBuildingMaterialsPlazaCo.
,Ltd.
25%;ZhejiangYiRongInvestmentCo.
,Ltd.
16%;BeijingTiantongSaiboInformationTechnologyCo.
,Ltd.
10%7MerchantsUnionConsumerFinanceCo.
,Ltd.
(MUCFC)Shenzhen2015/3/620.
00WingLungBankLimited50%;ChinaUnitedNetworkCommunicationsCo.
,Ltd.
50%8HubeiConsumerFinanceCo.
,Ltd.
Wuhan,Hubei2015/4/75.
00HubeiBankCo.
,Ltd.
50%;WuhanCommercialUnion(Group)Co.
,Ltd.
15%;WuhanWushangGroupCo.
,Ltd.
15%;TCLGroupCo.
,Ltd.
20%9SuningConsumerFinanceCo.
,Ltd.
Nanjing,Jiangsu2015/5/146.
00SuningBusinessGroupCo.
,Ltd.
49%;XianshengZaiKangJiangsuPharmaceuticalCo.
,Ltd.
16%;BankofNanjingCo.
,Ltd.
15%;BNPPARIBASPERSONALFINANCE15%;JiangsuYangheWineryCo.
,Ltd.
5%10MashangMSXFConsumerFinanceCo.
,Ltd.
(MSXF)Chongqing2015/6/1522.
10ChongqingDepartmentStoreCo.
,Ltd.
30.
62%;BankofChongqingCo.
,Ltd.
15.
31%;SunshinePropertyInsuranceCo.
,Ltd.
1.
63%;WumartHoldingsGroupCo.
,Ltd.
17.
02%;ZhejiangChinaCommodityCityGroupCo.
,Ltd.
1.
36%;BeijingZhongguancunBranchTechnologyCo.
,Ltd.
29.
08%;ChengduFunArtsandCultureCommunicationCo.
,Ltd.
4.
99%11ChinaPostConsumerFinanceCo.
,Ltd.
Guangzhou,Guangdong2015/11/1910.
00ChinaPostalSavingsBankCo.
,Ltd.
61.
5%;DBSBANKLTD.
12%;BohaiInternationalTrustCo.
,Ltd.
11%;LakalaNetworkTechnologyCo.
,Ltd.
5%;GuangdongHaiyinGroupCo.
,Ltd.
3.
5%;GuangzhouGrandbuyCo.
,Ltd.
3.
5%;GuangdongSanzhengGroupCo.
,Ltd.
3.
5%12BOHConsumerFinanceCo.
,Ltd.
Hangzhou,Zhejiang2015/12/35.
00BankofHangzhouCo.
,Ltd.
41%;BANCOBILBAOVIZCAYAARGENTARIASOCIEDADANONIMA30%;ZhejiangWangshengShengbaoCo.
,Ltd.
10%;HailiangGroupCo.
,Ltd.
10%;ZhonghuiRayonCo.
,Ltd.
4.
5%;ZhejiangUnionInvestmentGroupCo.
,Ltd.
4.
5%13HuarongConsumerFinanceCo.
,Ltd.
Hefei,Anhui2016/1/196.
00ChinaHuarongAssetManagementCo.
,Ltd.
55%;HefeiDepartmentStoreGroupCo.
,Ltd.
23%;ShenzhenHuaqiangAssetManagementGroupCo.
,Ltd.
12%;AnhuiXin'anAssetsManagementCo.
,Ltd.
10%14ShaanxiChang'anBankConsumerFinanceCo.
,Ltd.
Xi'an,Shaanxi2016/11/13.
60Chang'anBankCo.
,Ltd.
51%;HuitongXinchengLeasingCo.
,Ltd.
25%;BeijingYideChenxiangInvestmentCo.
,Ltd.
24%19|Page15JinshangBankConsumerFinanceCo.
,Ltd.
Taiyuan,Shanxi2016/2/235.
00JinshangBankCo.
,Ltd.
40%;QifeiXiangyi(Beijing)SoftwareCo.
,Ltd.
25%;TianjinYuxinYichengTechnologyCo.
,Ltd.
20%;ShanxiHuayuCommercialDevelopmentCo.
,Ltd.
8%;ShanxiMeetAllSupermarketChainCo.
,Ltd.
7%16ShengjingBankConsumerFinanceCo.
,Ltd.
Shenyang,Liaoning2016/2/253.
00ShengjingBankCo.
,Ltd.
60%;DalianDexuEconomicTradeCo.
,Ltd.
20%;ShunfengInvestmentIndustrialCo.
,Ltd.
20%17BaotouBSBConsumerFinanceCo.
,Ltd.
InnerMongoliaBaotou2016/12/213.
00BSBCo.
,Ltd.
73.
6%;ShenzhenSamoyedInternetTechnologyCo.
,Ltd.
26%;BaizhonghengInvestmentandDevelopment(Beijing)Co.
,Ltd.
0.
4%18HenanZhongyuanConsumerFinanceCo.
,Ltd.
Zhengzhou,Henan2016/12/295.
00ZhongyuanBankCo.
,Ltd.
65%;ShanghaiYiQianNetworkInformationTechnologyCo.
,Ltd.
35%19HunanBankofChangshaFifty-EightConsumerFinanceCo.
,Ltd.
Changsha,Hunan2017/1/163.
00BankofChangshaCo.
,Ltd.
51%;BeijingCityNeighborsInformationTechnologyCo.
,Ltd.
33%;ChangshaTongchengHoldingCo.
,Ltd.
16%20HarbinBankConsumerFinanceCo.
,Ltd.
Harbin,Heilongjiang2017/1/245.
00HarbinBankCo.
,Ltd.
59%;SuzhouTongchengSoftwareCo.
,Ltd.
15%;BeijingBoshengceTechnologyDevelopmentCo.
,Ltd.
10%;ShanghaiStratfordRealEstateCo.
,Ltd.
9%;HeilongjiangSEGInternationalTradeCo.
,Ltd.
5%;HeilongjiangXindaAuctionCo.
,Ltd.
2%21HebeiHappyConsumerFinanceCo.
,Ltd.
Shijiazhuang,Hebei2017/6/143.
00ZhangjiakouBankCo.
,Ltd.
38%;UcarCo.
,Ltd.
33%;BlueWhaleHoldingGroupCo.
,Ltd.
29%22ShanghaiShangchengConsumerFinanceCo.
,Ltd.
Shanghai2017/8/1710.
00BankofShanghaiCo.
,Ltd.
38%;CtripTourismNetworkTechnology(Shanghai)Co.
,Ltd.
37.
5%;ShenzhenDeyuanYixinInvestmentCo.
,Ltd.
12.
5%;WuxiChangyingTechnologyCo.
,Ltd.
12%Thecurrentbusinessoflicensedcompaniesismainlyanextensionoftheretailbankingbusinessofcommercialbanks.
17outofthe22licensedconsumerfinancecompanieshavetheirmajorshareholdersfromcommercialbanks.
Theirbusinessframework,ITframeworkandriskcontrolsysteminheritthecharacteristicsandexperienceofretailbankingbusinesstoalargeextent.
Comparedwiththedirectoperationofconsumerloanbusinessbycommercialbanks,thebusinessdifferencesmainlylieintheloweredriskcontrolstandardsandlargercustomerbase,includingeligiblenon-creditcardusersandthosewhoneedtouseitasasupplementwhenthecarduserslackconsumptioncredit.
Fornationalcommercialbanks,thescopeofitsbusinesshasalreadyincludedpersonalconsumerfinance.
Theycanchoosetosetupanindependentsubsidiaryorbusinessdepartmenttoservethispartofcustomers;ortheycanalsochoosetoapplyforconsumerfinancelicenses.
Forlocalcommercialbanks,whenapplyingforconsumerfinancelicenses,theycanextendtheirscopeoftheconsumerfinancebusinesstothewholecountry.
TheycanalsoallywithcommodityretailersandInternetplatformstoapply,whichmaybringstrategiccooperationopportunities.
Exceptforthese17companies,currentlythelicensedconsumerfinancecompanywiththelargestregisteredcapitalandloanscaleisHomeCreditConsumerFinance.
Itis100%heldbyaforeigncompanyHomeCreditspecializinginpoint-of-saleloans,anditsbusinessmodelalsofollowsitsparentcompanywhileseekingoptimizationandinnovationbasedonthecharacteristicsoftheChinesemarket.
Inaddition,thereisHuarongConsumerFinance,whosemajorshareholderisanassetmanagementfirm,andtherearealsoMashangConsumerFinance,HaierConsumerFinanceandSuningConsumerFinance,whosemajorshareholdersareindustrialgroups.
20|PageThelicenseofconsumerfinanceisadouble-edgedsword.
Ononehand,licensedcompaniescanobtaininterbankborrowingfundsandtheirshareholdershavestrongcapabilitywithlowercapitalcosts;theiroperationsareregulatedandtheirbaddebtrisksandoperationalrisksarecontrollable;theirbusinessscopeapprovedbyCBRCincludesinstallmentpurchaseandgeneral-purposeconsumerloans(ceilingforsingleuseris200,000yuan),sotheycanjustifiablycarryoutconsumercreditbusinesswithsmallpolicyrisks.
Ontheotherhand,theincreaseofregisteredcapitalandtheintroductionofnewshareholdersaresubjecttotheapplicationforapprovalandtheproceduresaremorecomplicated.
Sincetheyareundersupervision,theymaynotengageinbusinessbeyondthescopeofbusinesswithoutapprovalandshallnottouchtheareaswithunclearpolicies.
Forexample,theyshallnotissueover-the-counterasset-backedsecurities(ABS)onitsown;theyaremoreorlessaffectedandrestrictedbytheshareholdersintermsoforganizationalstructure,remunerationmechanismandinnovationprocess,anditsgrowthrateisrelativelylowerthanthatofInternetfinancecompanies,financialtechnologycompanies,andstart-upcompanies.
Eachlicensedconsumerfinancecompanyalsohasitsownfocusonthebusinessmodel.
Giventhehugeprofitinonlineshoppinginstallmentsandpaydayloans,allofthemaredevelopingthesebusinesses.
Intheshortterm,thereisatendencyofconvergenceinbusinessdevelopmentmodelanditstilltakestimetoformaclearanddifferentiatedcompetitionpattern.
Table4:ComparisonoflicensedconsumerfinancecompaniesBusinessmodelRepresentativeenterpriseShareholderscharacteristicsProductandbusinessfeaturesCompetitiveadvantageCompetitivedisadvantagePoint-of-saleloansHomeCreditMatureforeignpoint-of-saleloansproviderMainlyofflinedurableconsumergoodsinstallmentpurchase.
Personnelaresenttolargeandmedium-sizedelectricalappliancesellers,departmentstoresandsupermarkets.
WithrealconsumptionscenariosandF2Fsigning,theriskcontrolisguaranteedMoreoutlets,betternewbusinesspromotion,widercustomerrangeStandardizedandthoughtfulcustomerserviceWideoutletsdistribution,highoperatingcostsExtensionretailbankingbusinessBOCMUCFCChinaPostBankasthemainshareholderAsasupplementtothelowercreditratedretailbankingcustomers.
Theproducttypesaresimilartothoseoftheretailbanking,mainlycashinstallment,andonlineinstallmentpurchase.
Basedonthetraditionalbankcontrol;lowbaddebtratioTheapprovalprocessanddocumentationaremorecomplicatedSmallerrangeofpotentialcustomersE-commerceadditionalinstallmentpaymentservicesHaierSuningVerticale-commerceasthemainshareholderObvioussynergieswiththesalesofthemainshareholder;mainlyonlineandofflineinstallmentpurchase.
Closetoconsumptionscenarios;low-costincustomeracquisitionThespeedandscopeofbusinessexpansionarelimitedbythedevelopmentoftheshareholder'smainbusinessStart-upfinancialtechnologycompaniesMSXFDecentralized;lessdirectsynergywithshareholdersDiverseproducts;innovative;coveringonlineandofflineinstallmentpurchase,andpaydayloan,etc.
AdvancedITinfrastructure;ResearchanddeveloptheirowncorebigdatatechnologyUnstableproductsandservices,highcomplaintsrateInternetgiants(BATJ)Internetcompanieshavegraduallyextendedtheirbusinessestoavarietyofdomains,includingconsumerfinance,inwhichtheleadingfourgiantsareBATJ.
21|PageBaidusetupChongqingBaiduMicro-LoanCo.
,Ltd.
in2015.
Atthesametime,Baidu's"Umoney"educationloanbusinessbegantooperate.
WiththesupportofBaiduWalletAPPandintelligentselectionssuchaswhite-listreviewingandscoringrating,itprovidesexcellentcustomerexperiences.
What'smore,itcoverssomeothersections,includinghomeimprovement,realestate,tourism,medicalcosmetologyandpaydayloansaswell.
Inaddition,AiBank,wasfoundedonNovember18,2017bythejointestablishmentofCITICBankandBaidu.
AntFinancialofAlibabamovedintotheconsumerfinancefieldin2011,sincewhenithasbeenapioneerandinnovationleaderinsmallandscatteredABSmarketinChina.
Withthelargeamountsofreal-nameusersandconsumptiondataofAlipay,untilJune2017,theAntFinancialhasissued65.
5billionyuanHuabeipublicofferingABSthroughChongqingAntCommerceSmallMicro-financeCo.
,Ltd.
,andissued50.
9billionyuanJiebeipublicofferingABSthroughChongqingAlibabaMicro-LoanCo.
,Ltd.
DuringthetransitionofInternetusersfromPC-sidetomobile-side,TencenthasacquiredawiderangeofclientswiththeleverageofWeChat.
Tencentgraduallyfocusesitsstrategyonthe"twoandahalf"corebusinesses,"two"referringtocommunicationsplatformsanddigitalcontents,and"ahalf"meaningtheInternetfinance.
InJanuary2015,PremierLiKeqiangwenttovisitWeBank,thefirstInternetbankownedbytencentinChina,thatwasthebeginningofitsenteringintofinance.
Lateron,WeChatPaymentandWeChatLoanweresuccessfullyintegrated.
Relyingonlargeamountsofsocialmobiledata,WeChatLoanhasaccumulatedtoloan300billionyuanandthebalanceachieved100billionyuanintwoyearssinceitsestablishment.
ThebirthofJDBaiTiaostimulatestheshoppingneedsofconsumersinJDMallandeasesthefinancialpressureofsuppliers,whichmakesthefundchaininJD.
COMmoreefficientandsmooth.
Withthispositiveeffect,JDCenturyTrade,theoriginalownerofJDBaiTiao,acceleratesitspacetofurtherexpansionanddistribution,whichwillbringroundafterroundequityinvestmenttowardsthetradingcompaniesandthird-partypaymentcompaniesservinginJD.
COM.
P2PSince2016,manyP2PInternetfinancialplatformsareseekingtransformationandconsumerfinancehasbecometheirkeyareaoffocus.
RegulatorshavemadeitclearthatP2Poperationsshouldbe"small"and"scattered",andconsumerfinancebusinesswellsuitstheregulatorydirections.
P2Pplatformshavehighercapitalcoststhanthatofbanksandlicensedconsumerfinancecompanies.
Traditionalconsumerfinancialproducts,suchascreditcardloansandautomobilemortgageloans,aregenerallydominatedbycommercialbanks.
P2Pplatformsdonothavethequalificationforissuingcreditcards;andtheirownfinancingcostsareoftenhigherthantheinterestratesofbankmortgageloans.
Comparedwithe-commercesuppliers,P2Pcompaniesarelackofdataadvantage.
JD,Alibaba,Suningandotherplatforms,withnotonlytheabundantfinancialresourcesbutalsorichconsumerdata,areabletoimplementtheirlowcostriskpricingstrategy.
FormostP2Pplatforms,thecreditreferenceprocessisdone22|Pagemanually:creditcheck,lawenforcement,blacklist,callorevenhomevisits,causingveryhighcreditcosts.
Therefore,manyP2Pssimplycoverhighdefaultrateswithhighinterestrates.
However,futuretrendsinconsumerfinanceshouldbetowardsdifferentiatedriskpricing.
WhileP2Pplatformshaveneithercostadvantageovertraditionalconsumerfinancialinstitutions,nordataadvantagecomparedwithe-commerceretailplatforms,theirshort-termtransformationdirectionscouldbepaydayloanormicro-finance.
Inparticular,paydayloanhasinherentattributesofwithoutconsumptionscenarios,lowrequirementsofriskcontrolandhighinterestrates.
TheriskcontrolreviewrequirementswhicharepulleddownbythehighinterestratescanjustmakeupforP2P'sdisadvantageinhighcostofriskpricing.
However,inthelongrun,P2Pstillneedstobuilditsowncorecompetenceincapitalacquisitionorassetmanagement.
TheoutlookofP2PcanrefertotheHongKongmodel.
HongKongstipulatesthatonlylicensedcorporatebodiescanbeengagedinlendingbusinessandtheannualizedinterestratebelow48%islegitimate.
AftertheInternetbubbleof2000,P2Pcompanies(financialcompanies)retreatedoneafteranotherandeventuallyoligopolywasformed.
By2015,onlytwoP2PcompaniesexistinHongKongandbothhaveseizedgreatmarketshares.
ThesustainableandhealthydevelopmentofP2PinHongKongowestothekeyattributessuchasmaturefinancialmarket,creditreferencesysteminparticular,aswellasthecompletelegalsystem.
E-commerceE-commercehastheadvantageofflowentranceandconvenientpaymentinconsumerinstallment.
Itscustomersaremainlytheyoungpeoplewiththeadvancedconsumptionconcept,highlyoverlappingwiththeconsumersoftheconsumerfinance.
Ononehand,sincee-commerceprovidershavemasteredcustomerdata,theycananalyzecustomercharacteristics,creditriskandthelikeandcanprovideaccuratemarketingtocustomersbyprocessingthebigdata.
Ontheotherhand,providinginstallmentpaymentcanincreasetheirsales.
Thus,e-commerceprovidershavethemotivationforinstallmentpayment.
However,thesurveyshowsthattheself-operatedinstallmentpaymentservicesonlyaccountforasmallpart,andthemajorpartoftheinstallmentpaymentservicesareprovidedincooperationwithbanks,Alipayandotheragencies,withbankstakingupmorethan50%andAntHuabei30%.
Althoughthee-commerceindustryhasastrongdesiretopromoteinstallmentpaymentbusiness,theincreaseinrelatedcapitalandlaborcostsbroughtbyself-operatedinstallmentpaymentpromptedmoste-commerceoperatorstochoosetofocustheirprimarybusinessone-commercesalesinsteadofinstallmentpaymentconsumption.
Takingintoaccountofthe100%coverageofAlipaychanneline-commerce,theadvantagesinthird-partypaymentchannelscanbringAlibabatheuniquecompetitiveadvantage,formingtheoligarchictrendintheindustry.
However,duetothehighprofitcausedbythehighinterestrateandthelowthresholdcausedbythesmallamountofindividualconsumption,wecannotruleoutthepossibilitythatinthefuture,withthecomingofnewentrantsortheincreaseinself-operatedinstallmentpaymentofe-commerceproviders,theinterestratewilldecrease,andsowillbetheprofitability.
23|PageStart-upsandindustrycompaniesAlargenumberofindustrycompaniesarealsoactivelyplanningconsumerfinancialserviceswiththehopetopromotethegrowthofrelatedbusinesses;inaddition,manystart-upcompanieswillalsochoosetoenterasegmentscenarioandexploittheconsumerfinancemarket.
SectionIIIConsumptionScenariosAutomobileDuringthetwosessionsofthecountryin2015,theconceptof"Internet+"wasadoptedintheGovernmentWorkReport.
PremierLiKeqiangputforwardthe"Internet+"plantopromotethemodernizationofmanufacturingindustrybycombiningthenewInternetindustrywiththetraditionalrealeconomy,promotingthesounddevelopmentofnewindustriessuchase-commerceandInternetfinance.
"Internet+AutoFinance"ispreciselytheproductofthistransformationbackground,whichoriginatedfromthetraditionalautofinanceenterprises.
IttakestheuseoftheInternettoimprovetheprocessof"automobileselection,purchase,useandchange".
Inaddition,itfurtherextendsthecustomeracquisitionchannelandimprovestheuserexperience.
Meanwhile,thecontinuousinnovationsoftheInternetenterprisesandInternetfinancialplatformsindataaccumulation,userexperienceandtransactionpaymentalsogivebirthtomorediversifiedbusinessmodelsoftheautofinancemarket.
AccordingtoChinaAutomotiveInternetFinanceDevelopmentReport2017,in2015,thetotalamountofautomobileconsumerfinancemarketinChinawas746billionyuan,ofwhichtheamountofconsumerloansthroughcommercialbanksaccountedfor49%,andthecreditcardautomobileloaninstallmentthroughcommercialbanksaccountedfor20%,consumerloansthroughautofinancecompaniesaccountedfor24%,andtherestaccountedfor7%.
Thenationalaveragepenetrationrateofautomobilecreditreached25%.
Attractedbythemarketwithatradingvolumeofhundredsofmillions,Internetgiantsaregettingintoautofinance.
BaiduinvestedinUber,CarEveryDay,51Car,YouxinSecond-HandCar;AlibabasetuptheAliAutomotiveDivisionandsetupajointInternetcarfundwithSAIC;TencentinvestedinRenrenCarwiththeC2Cdirectsellingmodelofthecar,andYouxinpaiwiththeB2Bmodel.
TogetherwithJD,TencentalsoinvestedinBitautoinanearlymonopolisticwayincashandexclusiveresourcesandthusownsTiantianPaichewiththeC2Bmodel.
Inaddition,manyotherplayersalsocametoparticipateinthismarket,suchasvarioustypesofP2P,crowdfundingplatformsandotherInternetfinancialplatforms,automobilee-commerceproviders,Internetautofinancialserviceplatforms,includingMicro-CreditNetwork,InvestmentNetwork,No.
1CarLoan,MelonSeedsUsedCar,Laiyongche,etc.
The30-70profitruleoftheautomotiveindustryhasbecometheindustryconsensus;thatis,only30%ofprofitshavebeencreatedintheproductionofautomobileswhileabout70%ofprofitscomefromcirculationandafter-salesservice.
Therefore,inadditiontothetraditionalfinancialservicesforcarpurchase,Internetautofinancecompanieshaveextendedtheirbusinesstothewholeautomotiveindustryandperipheralindustries,includingmanufacturing,trading,dealers,4Sshopsandothermiddlemen,licenseplateauction,scrap,drivinglicense24|Pageapplication,rescue,parking,maintenanceandrepair,aswellastheusedcartransaction.
Tradionalautobusiness,suchasmediaconsulting,carloans,autoinsurance,andfinancialleasing,hasbeenconvertedintoonlinebusiness,likee-commerceandO2O,whichwillbringabrightandbroadfuturetoAutoInternetfinance.
TravelAsChina'stravelindustryentersmasstourismera,Chinaisbecomingthelargesttourismmarketintheworld.
AccordingtothestatisticsofNationalTourismAdministrationCenter,domestictouristsreached2.
537billionperson-timesinthefirsthalfof2017,bringingrevenueof2.
17trillionyuan.
By2020,themarketsizeofChinatourismindustrywillreach6.
7billionperson-times,withatotalinvestmentof2trillionyuanandtotalrevenueof7trillionyuan.
WiththepopularizationoftheInternet,theOnlineTravelAgent(OTA)hasatremendousimpactonconsumerbehaviorandtourismmarketstructureduetoitsconvenienceanddiversification.
AccordingtoiResearch,thetransactionscaleofChina'sonlinetravelmarketwas593.
46billionyuanin2016,up34.
0%overthepreviousyearandtheonlinepenetrationratewas12.
1%.
Intermsofmarketshare,Ctripistheclearwinner.
AfterbuyinginoracquiringTuniu,Tongcheng,E-Long,Qunaretc,Ctriphastakenupover30%ofthetotalmarketshare.
Secondly,Fliggy,Alibaba'sself-builtonlinetravelplatformisactivelybuildingitsglobalseamlessservicetoalltheirclientsacrosstheworldbackedbyAlipay's400millionactivemonthlyusersandAlibaba'scapitalstrength.
UndertheimpactofOTA,thetraditionallarge-scaletravelagenciesbegantoactivelypartnerwithonlinecompaniestobuildtheirownInternetplatformsbyusingtheirtraditionalresources.
RepresentitiveparntershipsincludeCYTSwithAoyou.
com,U-tourwithUzai.
comandQyer.
com,KaissaTourismwithJD.
Ingeneral,thetraditionaltravelagenciesareactivelyembracingtheInternetwhileOTAsarealsopenetratingintotheofflinemarketandbuildingdeeperbusinesscooperationwithofflinetravelcompanies.
Itisforseeablethatthetourismdevelopmentisonline-offlineintegrationandgroup-orienteddevelopment.
Meanwhile,installmentpaymentfortravelingistakingitsshape,especiallyinlarge-amountsegmentssuchasoutboundtravelandvacationtravel.
Onlineandofflinetravelgiantshaveclearlyseenthetremendousmarketpotentialofconsumerfinanceinthetourismindustry.
Enterprisesinthetravelindustryhavelaidouttheirconsumerfinancebusinessesinsuccession.
However,duetothelackofexperiencesandcapabilitiesofself-builtconsumerfinancebusinesslines,tourismcompaniesarecurrentlyexpandingtheirtravelconsumerfinancebusinessesthroughcooperationwithfinancialinstitutions.
Atpresent,inadditiontocooperatingwithtraditionalbanks,therearethefollowingtypesofjointserviceproviders:Thefirsttypeislicensedconsumerfinancecompanies.
Consumerfinancelicensesareveryrare.
NowtheonlycompanyspecializinginthetouristmarketsegmentisShangchengConsumerFinanceCo.
,Ltd.
,ajointventurebetweenCtripandBankofShanghai.
25|PageThesecondtypeisInternetfinancecompanies,includingJDFinance,AlibabaandSuning.
Forexample,JDFinancegotintotourismconsumerfinancebymakingastrategicinvestmentofShoufuyou.
Thetwopartieslaunchedajointtourismproduct-Shoufuyou,realizingtheintegratedoperation.
Thethirdtypeisthethird-partypaymentagencies.
Third-partypaymentagenciesarepaymentchannels.
Theyrelyonbigdatamining,modelingandriskcontroltoprovidethird-partycreditservicesandconnectwithconsumptionscenariosthroughthecooperationwithtourismcompanies.
TherepresentativeenterprisesincludeQuantGroup,Shanbaitiao,etc.
Thefourthtypeissmall-loancompanies.
Theyaregenerallythesubsidiariesundertravelcompanies.
Byprovidingconsumerfinance,theyserveasagoodcomplementtotheirmainbusinesses.
Thetablebelowshowsthelayoutofthemajortravelcompaniesinthetourismconsumerfinancesector.
WecandetectthatboththemainstreamOTAsandofflinetravelagencieshaveparticipated.
Althoughtheindustrydevelopmenthistoryisnotlong,thebusinessmodelhasbeenmorecomprehensiveandmature.
Inthefuture,withthedevelopmentofconsumerfinancebusinesslines,notonlytourismbusinesscandrivegrowth,butalsocustomers'repaymentbehaviorafterusingofconsumerfinancialproductswillalsobedetectedandaccumulated.
Asaresult,tourismenterprises'integratedoperationalcapabilityintheindustrialandfinancialintegrationwillbenurturedandimproved.
Table5:ConsumerfinancemovesofmajortravelcompaniesTypeCompanyNameOperationModeofConsumerFinanceOfflinetravelagencyTempusTFTpayself-builtplatform,independentoperationofInternetfinanceEstablishedthesmall-amountloancompanyRongfasttosolvethefinancingneedsofdownstreamagentsU-tourSetupthejointventureBeijingYoujiuTechnologyCo.
,Ltd.
with9fFinancialCo.
,Ltd.
Setupasmall-amountloancompany-GuangzhouYouDaiKaiserToursimConnectedwiththefinancialservicesofHNA'sYishengFinancialService,buildingtheindustryecosystemCYTSToursimWorkedwithEverbrightBankwiththeintentiontolaunchaconsumerfinancecompanyOTATuniuJDmadestrategicinvestmentinTuniutolaunchatravelinstallmentpaymentproduct"DownPaymentDeparture"QunarWorkedwithQuantGrouptolaunchtheconsumerloanproduct"Naquhua".
DatacontrolwasdonebyusingQuantGroup'smachinelearningexpectationmodelCtripEstablishedajointventurewithShanghaiShangchengConsumerFinanceCo.
,Ltd.
,obtainedtheconsumerfinancelicenseLvmamaIndependentplatform-Xiaolvfinancialplatform;launchedXiaolvBaitiaowithShanbaitiaoTongchengTongChengFinancialserviceprovidessupplychainfinanceandconsumerfinancialservicesMedicalcosmetologyWiththeacceleratedconsumptionupgradeinChina,themarketdemandformedicalcosmetologyincreasesrapidly.
AccordingtothestatisticsoftheStateStatisticsDepartment,thepopulationofwomenagedfrom16to65inChinaisover400million.
Assumingthat3%ofwomenofthetargetagereceivemedicalbeautyserviceswithanaverageannualspendingof8,000yuan,themarketsizeisabout96billionyuan.
Ifwecalculatewiththe6%penetrationrate,themarketsizeofthetransactionwillreach192billionyuan.
In26|Pageaddition,beautycareerandbeautyeconomyhavegotnotonlytheattentionofwomen,butalsoofmanymen.
Itcanbesaidthatthemedicalcosmetologyserviceindustryhasahugegrowthpotential.
Medicalcosmetologyisaseriesofbeautytreatmentstoimprovethephysiologicalfunctionofhumanbodybychangingtheexternalshape,colorandpartofthehumanbodythroughmedicalmeans,includingdrugs,instrumentsandsurgery.
Comparedwiththeusualbeautycare,medicalcosmetictreatmentismoresophisticated,withlongerlastingeffectandhigherprices.
MedicalcosmetologyinstitutionsaremedicalinstitutionsthathavetheadministrativeapprovalfromDepartmentofHealth.
Doctorsmusthavemedicalcosmetologyqualifications.
Specifically,therearetwotypesofmedicalcosmetology:cosmeticsurgeryandcosmeticdermatology.
Cosmeticsurgeryofferssurgeryprojects,suchaseyelidplasticsurgery,liposuction,rhinoplastyandbreastaugmentationsurgery;cosmeticdermatologyoffersmicro-plasticitems,includinginjectionandlaserbeauty.
Atpresent,themedicalcosmetologyindustryinChinaisdominatedbymicro-plastictypes,accountingforabout60%.
Accordingtostatistics,therearemorethan4,000medicalcosmetologyinstitutionsinChina,ofwhich500areplasticsurgerydepartmentsofpublichospitals,500areplasticsurgerybeautyhospitalchains,andtheremaining3,000aresmallandmedium-sizedhospitalsandclinics.
Overall,themarketishighlyfragmentedbyalargenumberofprivatehospitalsoccupingabout85%ofthemarketshare.
Specifically,largeplasticsurgeryhospitalsprovideconsumerswiththehigherleveloftechnicalsolutionsandbetterservices.
Theytargetthemid-to-high-endconsumerswiththesinglespendingamountover8,000yuan.
Smallandmedium-sizedchainhospitalsandclinicsmainlytargetmid-endconsumerswithsinglespendingamountof5,000-8000yuan.
.
ThemedicalcosmetologyindustryinChinaisstillintheearlystage.
Themedicalcosmetologyinstitutionshavenotyetformedtheirnationalbrandreputation.
Theyacquireconsumersthroughmarketingchannels,mainlylikeadvertisingandcooperatingwiththediversionplatforms.
Diversionplatformsincludeadvertisingagencies(onlinesearchengines)andmedicalcosmetologyAPP.
Atpresent,Baiduisthefirstlarge-volumetrafficentranceforconsumerstoobtainmedicalcosmetologyinformation.
MedicalcosmetologyAPPisanewtypeofdiversionserviceprovider.
Accordingto2017MedicalCosmetologyIndustryWhitePaper2017releasedbySoYoung,theleadingproviderofmedicalcosmetologyAPP,theaverageannualgrowthrateofmedicalcosmetologyAPPhasexceeded200%inthepastfouryears.
MedicalcosmetologyAPPprovidesinformationabouthospitals,includingprices,items,hospitaldoctorevaluation,plasticdiaryandbookingadvice,etc.
,andthecustomerschoosehospitalsaccordingtotheirneeds.
ThisintegrationofonlineandofflineresourcesisconvenientandfastformedicalcosmetologyAPPproviderswithuniqueadvantages.
Inthefuture,theymayexceedBaidutobecomethemainstreammedicalcosmetologytrafficentrance.
Atpresent,themarketlandscapeofdiversionAPPshasbeeninitiallyshown.
SoYoungAPPisinadominantpositionwhileGengmei,Yemay,Meidaila,MEBandMeiLiMeiareinthesecondtier.
WithmoreandmoreconsumersmakingtransactionsonAPPs,offlinebeautycareproviderscaneffectivelyreducetheirsalescostswhilefocusingonthemedicalservices.
Accordingly,becausethemedicalcosmetologyAPPsowncustomerresources,theywillhavethestrongerpricingpowerintheindustrychain.
27|PageOnonehand,themedicalcosmetologyindustryitselfhasgreatmarketpotential.
Ontheotherhand,thefeaturesofmedicalcosmetologyconsumptionmakeitselfagoodmatchforinstallmentpaymentbusiness:withrespecttoconsumptionamount,thepriceformedicalcosmetologyisabout3000-20000yuan,belongingtolarge-amountspending;withrespecttoconsumerfeatures,urbanwomenwithstableincomearethemajorcustomers.
Theseyoungwomenareintheirascendantperiodoflife,andtheyareindependentwithstrongspendingpower.
Therefore,manyconsumerfinancecompaniestreatthemedicalcosmetologysegmentasanimportantscenario.
Majorprovidersofmedicalcosmetologyfinanceservicesinclude:(1)SoYoungBaitiao:basedonSoYoungAPPSoYounghasawebsiteandanAPP,creatinganew"community+e-commercesupplier"modelformedicalcosmetologyindustry.
Withmicro-plasticbuisnessasastartingpoint,itconstructedaclosedloopfrompreoperativeconsulting,consumption,topostoperativecare.
Bydoingso,itsolvestwoindustry-widepainpoints:thecustomerhaslessknowledgeofchoosinghospitalsanddoctorswhilethemedicalcosmetologyinstitutions'customeracquisitioncostsremaintoohigh.
SoYoung'sself-builtinstallmentpaymentproduct-SoYoungBaitiaowaslaunchedin2016andoperatedcompletelythroughtheInternet.
Productsarepromotedontheplatform,andconsumersmustusethemobilephonenumberthathasbeenusedforatleast6monthsandregisteredonSoYoungAPPatleast3monthsagotosubmittheapplicationonAPPforinstallmentpaymentandtreatmentappointment.
Consumersprovidethepersonalinformaitononline,andtheplatformcooperateswithSesameCredittoreviewtheinformation.
Afterthecreditreview,paymentisdirectlymadetothehospital.
(2)Mi-Me.
com-Me-meCredit:Aconsumerfinancecompany(unlisenced)foryoungwomenMi-Me.
comisaconsumerfinancecompanythatprovidesfinancialservicestoyoungwomen.
InOctober2015,itstartedthemedicalcosmetologyinstallmentproduct:MemeCredit.
Intermsofbusinessmodel,Mi-Mereliesonthecooperationwithoffineinstitutionstoacquirecustomers.
Ontheotherhand,ithelpsthepartnersenlargethetransactionscalebyprovidingcreditservices.
Whentheuserhastheinstallmentpaymentdemandintheoffinescenario,thecooperativemerchantmayrecommendMemeCredittohimorher.
TheusercanapplyforinstallmentpaymentontheMemeWalletAPP.
Afterapproval,thefinancialinstitutionwilldirectlygivethefundtothemerchantwhoensuresthefundisearmarkedforitsspecifiedpurposeonly.
Theuserrepayseachperiodtotheplatform,andtheplatformrepaystothefinancialinstitution.
Asforpricing,itadoptsunifiedfeeratesofabout20%annually,includingservicefeesandinterest.
Asforthebusinessdevelopmentwithcooperativemedicalinstitutions,Mi-Medoesnotrelyonthird-partychannels;instead,ithasaself-builtlocalbusinessdevelopmentteam.
(3)BaiduUmoney:Baidu'sconsumerfinanceproductInJuly2015,BaiduWalletwaslaunched,providinginstallmentservicesforeducation,andmedicalcosmetology.
Ithassetupawiderangeofcooperativebusinessesacrossthecountry.
MedicalcosmetologycustomersaredirectedtoBaiduWalletfromBaiduSearchwebsite.
Themaximalamountofmedicalcosmetologyfinancingforonepersonisupto150,000yuan,andthedealcanbeapprovedinseconds.
28|Page(4)StarProgram:subordinateproductunderPayMax,aleadingserviceproviderforblue-collarinstallmentpaymentsStarProgramisafinancingproductdevelopedbyPayMaxformedicalcosmetologyscenario.
PayMaxistheearliestconsumerfinancialstart-upcompanyonceengagedinblue-collar3Cinstallmentpayment,andStarProgramisrunbyanindependentteamof50people.
LaunchedinSeptember2016,ithassetuppartnershipswithmorethan200medicalcosmetologyinstitutions,andhassharedfemalecustomerswiththeoriginalPayMaxplatform.
Althoughthemedicalcosmetologyinstallmentandblue-collar3Cinstallmenthavedifferencesincustomergroupcoverage,therearestillalotofcommonplacessuchasspendingamount,consumptionbehaviorpattern(bothareimpulsiveconsumption)andcooperationmodelwithofflinemerchants.
Therefore,theproductdevelopedveryfast.
EducationInChina,educationinstallmentservicesmainlyfocusonnon-academiceducationandtrainingmarket,amongwhichthevocationaltrainingisthelargestsegment.
AccordingtoBaiduFinance,in2017China'svocationalskilltrainingmarketisabout210billionyuan,covering30millionpeopleand99,000vocationaltraininginstitutions.
Asaresult,vocationaltraininghasbecomeamajortargetmarketformosteducationinstallmentpaymentplatforms.
Inaddition,earlyeducationandK12marketarealsoimportantsegmentsofeducationinstallment.
Currentlyinthefieldofeducationinstallment,BaiduFinance'sUmoneyismoreestablishedandhasbuiltitseducationalfinancialserviceecosystem.
TheproducttypesofBaiduUmoneyaremainlyeducationinstallmentpaymentandpaydayloans.
TheoperatorsareChongqingBaiduSmall-LoanCo.
,Ltd.
andShanghaiBaiduSmall-LoanCo.
,Ltd.
underBaiduFinance.
BaiduUmoneyeducationinstallmentservicecoverslanguagetraining,ITskillstraining,vocationaltraining,MBAeducationandotherscenarios.
AccordingtoBaidu2016Q4FinancialReport,BaiduUmoneycontinuedtoleadtheeducationcreditmarketwitha75%share.
Ithasnearly3,000cooperativeinstitutionswithaYOYincreaseofabout80%andthenumberofservedstudentswithaYOYincreaseofabout45%.
ThereasonwhyBaiduUmoneyisabletooccupythevastmajorityofsuchascatteredmarketisthatBaiduSearchisthelargestonlinecustomeracquisitionchannelforvarioustraininginstitutions.
Therefore,itisveryeasyforBaidutoexpandthemarketbycooperatingwithtraininginstitutions.
Meanwhile,withtheexistingdatafromBaidu'ssystem,Baiducanconductmoreaccurateanalysisandriskassessmentforcooperativeeducationinstitutionsandloanapplicants.
Specifically,ononehand,BaiduUmoneyestablishesanearlywarningindicatorsystemforcooperativeeducationinstitutionsanddynamicallymonitorsandadjuststhecooperationstrategywitheducationalinstitutionsbasedonthevariousdimensionssuchasBaiduSearchindex,Baidupublicopinionindex,LBSdata,loanamount,assetqualityandetc.
.
Ontheotherhand,byanalyzingtheborrower'spersonalinformationsuchasuser'ssocialattributes,educationalbackgrounds,ageandsearchportraits,itcanassesstheborrower'sfraudriskandcreditriskmoreaccurately.
29|PageAnotherrepresentativeproductinthefieldofeducationandtrainingis9f'seducationinstallmentproduct"CrayonInstallment".
Atpresent,70-80%ofCrayonInstallment'sbusinessesarefromtuitioninstallmentpaymentforvocationaltraining,withtherestcomingfromearlyeducationandtheK12.
Asof2016,CrayonInstallmenthassetupcooperationwith1,000qualifiededucationalinstitutionswithregisteredusersof354,000andatotaltransactionvolumeofover1billionyuan.
Itscapitalmainlycomesfrom9fGroup;meanwhile,thelendingratesare17%~18%.
Intermsofriskcontrol,CrayonInstallmentconductsadoublecreditreviewoncooperativeeducationalinstitutionsandloanapplicants.
Thereviewofeducationalinstitutionsdoesnotfollowthestandardprocess,andthewholeprocessisabouttwoweeks.
Afterthecreditreviewoneducationalinstitutions,CrayonInstallmentwillgiveacreditscoretotheeducationalinstitution.
Forlower-scoreeducationinstitutions,creditreviewsonindividualusersarerelativelystrict,requiringfurtherinformationverificationandcreditreference.
Fortheborrowersfromhigher-scoreeducationinstitutions,thereviewrequirementsarerelativelylower.
Therefore,wecanseethatBaiduUmoneymakesuseofitsabsoluteadvantageintechnology,resourcesandtraffictoeffectivelyestablishasystematicbusinessdecision-makingsystem.
Itbuildsaclosedloopworkingprocessfromtheperspectivesofdata,model,strategytosystem,sothatitisabletoeffectivelyorganizeeducationinstallmentbusinessandsetuphighercompetitionbarriers.
AlthoughCrayonInstallmentdoesnothavethestrongtechnicaladvantageasBaidu,initstargetsegments,itgoesdeeperintheresponsetomarketdemand.
Withtheaccumulationofcustomersandpartners,itcanalsobuilditsownbusinesscharacteristics.
RuralareaAccordingtoNationalBureauofStatistics,Chinahasnearly700millionruralresidents.
From2010to2016,thepercapitadisposableincomeofruralresidentsrosefrom5,919yuanto12,400yuan.
ThegrowthrateofincomesurpassedtheGDPgrowthrate.
Inaddition,thepercapitaconsumptionexpenditureofruralresidentsin2016hasreached10,130yuan.
Withtheimprovementofruraleconomicdevelopmentandtheincreaseofincomeofruralresidents,theconsumerdemandinruralareasisincreasinglystimulated.
Fromtheperspectiveofconsumerdemand,moreandmoreruralresidents'lifestylesandconsumptionpatternsaremovingclosertourbanresidents,andthegapbetweenurbanandruralareasisconstantlyshrinking.
Fromtheperspectiveofsupply,theofflinecommercialsysteminruralChinaisstilllaggingbehind.
Theruralcommercialsystemisdominatedbyruralgroceries,ruralsupplyandmarketingcooperativesandtownshipshops.
Theproductsofferedarehighinpriceandlessinvariety,makingitdifficulttomeettheneedsofruralresidents.
DuetothepopularizationoftheInternetandtheconvenienceofonlineshopping,ruralconsumptionpatternsarechanging.
RuralonlineconsumptionisbecominganewblueoceaninChina'sconsumptionfield.
Bytheendof2016,thenumberofruralInternetusersreached201million,accountingfor27.
4%ofthetotalInternetusersinChina.
AccordingtoJD,comparedwithcities,ruralareasaremore30|Pagedependentonmobileterminals.
ThefastpopularityofsmartphonesenablesmanyruralresidentstoskipoverPCtobecomemobileInternetusersdirectly.
Ruralconsumerfinanceisalsoreceivingmoreandmoreattention.
Apartfromthetraditionalbanksandvillageandtownbanks,InternetfinancialenterprisessuchasAntFinancial,JDRuralFinance,9fMujinongandShimaFinancialarealsospeedinguptheirinitiativesintheruralmarket.
Thepenetrationrateoftraditionalfinancialinstitutionsinruralareasisverylow,mainlybecausethedispersionofruralareasandthelackofcreditdatahaveledtothedifficultyinsettinguptheruralcreditreferencesystemsandthusthedifficultlyinriskcontrol.
Secondly,thepoorconvenienceofruralfinancialservicesandthelowpopularizationoffinancialliteracyamongruralresidentshavealsoledtothehighcostandlowefficiencytopromoteruralfinancialservices.
Inviewofthis,InternetfinancialenterprisessuchasJDFinanceandAntFinancialhavestartedtotrynewbusinessmodelstosolvethedifficultiesinruralfinance.
Thepracticecanbesummedupastakingadvantageofthecoreadvantagesoftheire-commerceecologyandbringingruralcashflow,informationflowandlogisticsdataintotheonlineplatform.
Inthisway,thepreviouslyverylooseruralvaluechaincanbebroughttogethertoreducerisksandimproveefficiency.
JDRuralFinanceInSeptember2015,JDFinanceissuedaruralfinancialstrategythatwilldevelopruralfinancialmarketsasagroupdevelopmentstrategy.
AccordingtoJDRuralFinancewebsite,asoftheendof2016,JDhasbuilt1,700county-levelservicecenters,serving300,000administrativevillages.
Ononehand,intheagriculturalproductionsector,itmeetsthefinancialneedsoffarmersintheentireindustrychain,frompurchasingagriculturalmaterialstocultivatingagriculturalproductstoprocessingandselling.
Ontheotherhand,focusingonruralconsumptionindailylife,itprovidescompleteproductchainfinancialservicessuchascredit,paymentandfinancialmanagement,crowdfunding,andinsurancetofarmers.
JDhastheadvantageofintegratingitsownbigdata,widedistributionchannelsandInternetfinancialproductsintotheruralscenario.
Focusingontheruraleconomy'sclosedloopwiththecoreof"bringingagriculturalproductstothecities"and"e-commercegoingtothecountryside",itisbuildingaruralfinancialmodelwithJDcharacteristics.
AntFinancialInDecember2016,AntFinanciallaunchedaruralfinancialstrategyandannouncedthatitwouldcooperatewith100leadingenterprisestoprovidefinancialservicestolarge-scalebreedingfarmersinthecomingthreeyears.
Togetherwithitspartners,itwillprovideintegratedfinancialservicesto1,000counties,includingpayment,credit,insurance,etc.
Forallthe"agriculture,farmerandruralarea"users,itwilldrivepartnersandsocialforcestoprovideatotalof1trillionyuanofcredit.
Forriskcontrol,AntFinancialusesmeansofInternettechnologies,cloudcomputing,bigdata,customeridentificationandriskcontrolmeasures,tograduallyestablisharuralcreditsystem.
Itsultimategoalistoachievedifferentiatedandefficientfinancialservicesinurbanandruralareas.
Intermsofbusinessmodel,AntFinancialsegmentstheruralfinancialmarketintothreetypesofdemandwiththepyramidstructure.
Thefirsttypeofdemandisatthebottomlevel.
Thissegmenthasthemarketsizeofabout5-6billionpeople,covering31|Pageruralconsumersandsmallfarmersthroughoutthecountry.
Itmainlymeetstheneedsforconsumercredit,andthepracticeinthissegmentisthatallloansandrepaymentsaremadethroughAlipay.
ThroughthepopularizationofInternetusageandAlipay,ruralresidentscanenjoyservicessuchasAntHuabei,AntJiebeiandSesameCredit.
Thesecondtypeofdemandisatthemiddlelevel,mainlyfromsmall-scaleruraloperators,withamarketsizeofabout30-50millionpersons.
Thecreditdemandismainlyforpurchasingmeansofproduction.
AntFinancialusestheonlineandofflineacquaintancemodel.
Thatis,inthecountiesandruralareaslackinginformationandfinancialservices,AntFinancialworkswithoffline"acquaintances"ofAlibabaVillageTaobaoPartners,andCFPAMicro-finance(asmall-loancompanyestablishedbyChinaFoundationforPovertyAlleviation)toprovideuserswithoperatingloansandotherfinancialservices,coveringthewholenation.
Thethirdtypeisatthetoplevel,includingmainlylarge-scalebreedingfarmers,withamarketsizeofabout2.
6millionpersonsestimatedbytheMinistryofAgriculture.
Forthismarketsegment,AntFinancialmainlyprovidessupplychainfinancialservices.
AccordingtotheruralfinancialdatareleasedbyAntFinancial,asoftheendofFebruary2017,WangnongCreditofAntFinancialhascovered231citiesand557countiesinallprovincesandcitiesinthecountrywithaloanbalanceof546millionyuan,auserpopulationof3.
5million,andanaverageloanamountof15,600yuan.
HouserentalRentalinstallmentpaymentisanewtypeofhouserentalmodethatstartedtoemergeafter2015.
Inthefirst-tiercitiessuchasBeijing,Shanghai,GuangzhouandShenzhen,the20millionmigrantpopulationarethemajortenants.
Inthemarket,thelessorrequiresthepaymentofthree-months'rentplusthecashpledgeequivalenttoonemonth'srent.
Forthetypicalrental-installmentusers,thenewgraduateswithinthreeyearsaftergraduations,suchpaymentmethodwilleasilycausetheirshort-termcapitaldeficit.
Rentalinstallmentmodel,infact,istoturnthetraditionalthree-plus-onemonths'rentintoamonthlypayment.
Thelesseepaysafixedmonthlypaymenttotherentingcompany,includingrentandhandlingfees,andthentherentingcompanypaysthelessorthree-plus-onemonths'rent.
From2015to2017,therentalinstallmentmarketexperienceddifferentstagesfromthepursuitofhotcapitaltocoolingandtotheinfluxofindustrygiants.
EarlyplayerssuchasDingdingRental,Zufangbaohavequietlywithdrawnfromthemarket.
Quzu(abrandofQufenqi)hasshifteditsmainbusinessscenariotopaydayloanmarket.
Houserentalinstallmentstart-upcompaniessuchasHuifenqi,weZebraand58fangdaigotintothismarketquicklywithO2Omode.
Theyprovidetenantswiththefinancialproductofonemonth'srentplusthecashpledgeequivalenttoonemonth'srentwiththeprocessingfeesofgenerally3%-5%ofthemonthlyrent.
Duetothestrongdemandsandlesscompetition,ordersgrowedfastandthismarketsegmentattractedcapitalinvestorsverymuch.
Alipay,JDFinanceandotherInternetgiantsalsoenteredthehouserentalmarket.
OnOctober10,2017,Alipayformallylaunchedacredithouserentalplatform.
Searchingfor"rent"inAlipay,userscanseetherentallistingandintroductioninrelevantcities.
Atpresent,thefirstbatchofeightcitiesis32|PageconnectedinincludingShanghai,Beijing,Shenzhen,Hangzhou,Nanjing,Chengdu,Xi'an,andZhengzhou.
Differentfromthetraditionalrentalagencies,thecreditrentalplatformrealizestheircreditrentingthoughtmeansoffinancialproducts.
Forinstance,thetenantscanpaythemonthlyrentwiththeinstallmentproducts,andthesesameuserswithover650creditpointscanenjoydeposit-freepayment.
HomeimprovementTheinstallmentamountofhomeimprovementisbiggerthanthatofmostoftheotherconsumerfinancescenarios.
Onlythebodieswithsufficientamountoffinancialresourcesareabletoprovidetheinstallmentpaymentservices,resultinginhighentrybarriers.
Theceilinglimitforhomeimprovementinstallmentisfrom200,000yuanto500,000yuan.
Customersofhomeimprovementinstallmentoftenneedtoprovidealotofmaterials,suchasproofofidentity,proofofmarriage,proofofrealestateproperty,bankstatement,etc.
Accordingly,theinterestrateofhomeimprovementconsumerfinanceisbelowaverage.
Forexample,ICBC'sinstallmentpaymentperiodcanbeaslongas3years,andrateforeachmonthisaslowas0.
29%,witha3-yeartotalrateofonly10.
43%.
Currently,thetotalone-yearinstallmentrateforhomeimprovementisalmostthesameasthebenchmarklendingrateofthecentralbank.
Atpresent,thepenetrationrateofinstallmentservicesinthehomeimprovementindustryisnothigh.
13outof52homeimprovementcompanieswesampledprovideinstallmentpaymentservice,accountingfor25%ofthetotal.
Onlyoneofthe13hasself-operatedinstallmentpaymentbusiness,whiletheremaining12haveadoptedtheapproachofcooperationwithathirdparty.
Thehomeimprovementindustryitselfisaheavy-assetindustry,andhomeimprovemententerprisesgenerallyputfundsintotheirmainbusiness,sotheyhavenoexcessliquidityforself-operatedinstallmentpaymentbusiness.
Homeimprovementcompanies,servingasserviceagenciesintheconsumerinstallmentpaymentchain,earnservicefees.
Homeimprovementinstallmentfinancialservicesaremainlyprovidedbybanks,ofwhichChinaConstructionBankhasthehighestmarketshare,followedbyBankofChinaandChinaMerchantsBank.
Thesecondlargestgroupofmarketplayersarelicensedconsumerfinancecompanies,includingHaierConsumerFinance,MUCFCandBOCConsumerFinance.
ThethirdgroupisInternetgiants.
AmongBATJ,BaiduwasthefirsttoenterthemarketandworkedwithandJia.
com,Ikongjian,andElvdoutoprovideconsumerfinancialservicesforhomeimprovement.
Otherconsumerfinancecompanieshaveararepresencebecausetheirfinancingcostsaremuchhigherthanthatoftheabove.
CollegestudentsConsumerfinanceforstudents,mainlythecollegestudents,isoneofthemostimportantsegmentsofconsumerfinancemarket.
Studentshavedifferentdemandsincludingthesegmentslike:studenteducationloans,installmentpurchaseof3Candotherconsumerdurablegoods,paydayloanforlivingexpenseshortages,etc.
Inforeigncountries,studenteducationloansareoneofthemostimportantfundamentalassetclassesforABS.
33|PageDuringthebrutalgrowthofInternetfinanceandconsumerfinancebetween2014and2015,manymarketchaostookplace,including:(1)Studentsaregiventhedesireandneedforadvancespendingtooearlyandtoomuch,andtheyaretoooptimisticabouttheirownfuturerepaymentability.
(2)Unfairbusinessesmakefalsemarketingandchargeunreasonablefees;especiallytheydeductservicefeesdirectlyfromtheprincipalandchargeoutrageousoverduepenalty.
(3)Whenstudentscannotrepaytheloanorwhentheyarebeingpursuedforhighprincipalandinterest,undertheguidanceofunethicalcampusagents,theyrepayolddebtswithnewdebts,andthusthedebtsnowballgetsbiggerandbigger.
Eventuallythestudentsbringaheavyburdenonfamiliesandfriendsandtheyalsosuffertremendousmentaltorment.
(4)Evensomeviciousphenomenatookplacesuchasextremefraud,violentcollection,etc.
,causingseriousadversesocialconsequences.
Therefore,since2016,MinistryofEducationandCBRCfrequentlyissuedpoliciestoshowtheirdeterminationtosuperviseandregulatethecampussegmentindepth.
OnMay27,2017,CBRC,MinistryofEducation,MinistryofHumanResourcesandSocialSecurityjointlyissuedtheCircularonFurtherStrengtheningtheManagementofCampusLoans(CBRC[2017]No.
26),urgingallinstitutionallendersexceptbanksandlicensedconsumerfinancecompaniestowithdrawfromthestudentmarket,universitiesandcollegestomakeproperimplementationstoeducatethestudents,MinistryofHumanResourcesandSocialServicestoinvestigateinandrectifyblackintermediaries.
Atthispoint,thecampussegmententeredaperiodwithhighentrybarriersandstrictregulation.
Largecommercialbankscooperatewithuniversitiestoprovidestudentconsumerfinancialservicesundersupervision.
Since2017,manylargebankshavereleasedcampusfinancialproductssuccessively,includingICBC's"UniversityFinanceLending",BankofChina's"BOCE-LendingCampusLoan",ChinaConstructionBank's"GoldenBeeCampusExpressCredit",ChinaMerchantsBank"CollegeStudentsLightningLoan",etc.
Thestart-upcompaniesthathadgoodperformanceinthestudentmarket,basedontheiraccumulatedexperienceinthestudentmarketandcapitalsupport,havesuccessfullytransformedthemselvesintoemergingconsumerfinancebrandstargeting"youngpeople"suchasFenqile,andQudian(formerlyQuInstallment).
Themainadvantagesoftheirsuccessfultransformationinclude:(1)Theygotintothecampusmarketintheearlystageandhavedeeperstudyandaccumulationaboutthepost-95(peoplebornafter1995)behavioralpreferencesandtheeffectivenessoftheriskcontrolmodels.
(2)TheyreceivedthestrategicinvestmentfromInternetgiantstoformstrategiccooperation,whichcanhelpthemincustomeracquisitionandriskcontrol.
(3)Someoftheirearly-stageclientsgraduatedandhaveasteadyincome,becominghigh-qualitycustomerswithhighcreditlevelandhighinterestcontribution.
(4)Theorganizationalstructureoftechnologyenterpriseswiththelightassetmodelismoreaccommodatedtorapiddevelopmentandinnovation.
However,asmentionedintheprospectusofQudiansubmittedtotheSecuritiesandExchangeCommission(SEC),China'slegalnormsinthefieldofconsumerfinanceandInternetconsumerfinanceinparticulararestillatanascentstage.
Theformulationofnewpoliciesandtheexplanationsonexistingpolicies,aswellasthechangesinregulatoryintensity,canposesignificantriskstoexistingbusinessmodels.
34|PageBlue-collarworkersBlue-collarworkersrefertomanualworkersengagedinnon-agriculturalwork,includingbothindustrialworkerssuchasfactoryworkersandconstructionworkers,butalsoserviceworkerssuchasrestaurantworkers,securityguards,beauticians,hairdressers,couriers,etc.
Blue-collarworkersarecharacterizedbyfrequentmobilityandlackofcreditandsocialsecurityrecords.
Traditionalfinancialinstitutionssuchasbanksseldomcoversuchgroups.
However,blue-collarworkershaveverystrongconsumptiondemands.
AccordingtoiResearch,theblue-collarpopulationismainlyconcentratedinthe26-35agebracketsanddistributedintier2andtier3cities.
Theirmonthlyincomeis2000to5000,withmorethanhalfnothavingsavings.
Mostofthemhavenotusedconsumerloanbutareinterestedinit.
Thus,theblue-collarpopulationisanimportantpotentialconsumerfinancemarket.
iResearchforecaststhattheblue-collarconsumerfinancemarketsizewillincreaseto1.
7trillionyuanin2019.
Atpresent,therearenotmanyenterprisesthatprovideconsumerfinancialservicesforblue-collarworkersonthemarket,mainlyincludingHomeCredit,BillionsFinance,PayMax,GiveUCredit,etc.
Atthesametime,therearestillsomeenterpriseswhohavealsoseenthedevelopmentpotentialofthismarketandhavesuccessivelyenteredthissegment,withPaiInstallmentasarepresentative.
SectionIVConsumerFinanceInvestmentInstitutionsTherapiddevelopmentofconsumerfinanceresultsfromnotonlytheoutbreakofmarketdemand,butalsothecapitalinjectionfromtheinvestmentfinancialinstitutions.
Wecountedatotalof356financingcasesamong52consumerfinancecompanies.
Accordingtothestatistics,MatrixPartnersChina,SequoiaCapital,BluerunVentures,SourceCodeCapitalandShunweiCapitalarethemostactiveones.
Theyallhavemorethan10investmentincidentsandparticipatedinmanyconsumerfinancemarketsegments.
Forexample,MatrixPartnersChinahasparticipatedinautomobile,medicalcosmetology,houserental,homeimprovementandcollegestudentmarket.
Whenchoosingsegments,theseactiveinvestmentinstitutionsoftenchooseoneortwopotentialenterprisestoinvestinformultipleroundsandfocussupport.
Forexample,BluerunVenturesparticipatedin5roundsoffinancinginHaifenqiand4roundsoffinancinginQufenqi.
Fromthetimeseriespointofview,thenumberoffinancingcaseswaslessthan10before2013,48in2014and115in2015.
Therefore,itisclearlyseenthat2015isthefirstyearoftheblowoutdevelopment.
Financingcasesin2016and2017havebeendecliningyearbyyear,buttheyarestillabove50atpresent.
Itcanbepredictedthatthenumberoffinancingactivitieswillresumetonormalastheindustryleadersinvarioussegmentsgraduallyemergeinthefuture.
Fromtheperspectiveofconsumptionscenarios,theautoindustryhasthelargestnumberoffinancingevents(89cases),followedbytravel(47cases).
Beforethepolicytightening,thecollegestudentssegmentwasthehotfieldforthecapitalmarket,butitdisappearedinthepasttwoyears.
Ruralarea,medicalcosmetology,education,andhouserentalhaveasimilarnumberofcases,withallmorethan30cases.
Homeimprovementandblue-collarconsumershavelessnumberofconsumerfinancecompaniesandfinancingcases.
35|PageTable6:RepresentativeenterprisesandinvestmentinstitutionsinconsumerfinanceconsumptionscenariosinChinaConsump-tionscenariosAutomobileTravelMedicalcosmetologyEducationRuralareaHouserentalHomeimprovementCollegestudentsBlue-collarworkersRepresenta-tiveenterprisesGuaziusedcarsouche.
comrenrenche.
comYixindaikuandycd.
commljr.
comweidai.
comtouna.
cnlaiyongche.
comhuashenghaoche.
comShangchengConsumerFinancefliggy.
comShoufuChufaYishengFinancialServiceFenqiyouShanbaitiaoshoufuyou.
comhuchill.
comMoreBaitiaoMemeWalletstarproject.
cnSoYoungBaitiaoYeMayBaiduUmoneyStarProgramBaiduUmoneyHaifenqiCrayonInstallmentCalfPlankezhanwang.
cnWangnongCreditJDRuralFinanceMujinongShenmaInstallmentlingxianlicai.
comNongfenqieloancn.
com58fangdai.
comHuifenqiweZebraZufangbaodyrs.
com.
cntubatu.
comelvdou.
cnuubpay.
comQufenqifenqile.
comaiyoumi.
com99fenqiYoufenqiHomeCreditBillionsFinancePayMaxGiveUCreditPaiInstallmentActiveinvestmentinstitutionsMorningsideMatrixPartnersTencentShunweiSequoiaJDRedpointBertelsmannAsiaBlueRunCeyuanAlibabaOrientalAssetGXCapitalHikeCapitalCreditEaseYoujinCapitalFerryVentureCapitalCMBInternationalWarburgCapitalGobiVentureCapitalHNACapitalDCMCapitalSequoiaK2VCWillHuntingCapitalHCapitalTemasekDingshengTianpingRisingInvestmentHighlandCapitalCapitalAirlinesMatrixPartnersTencentShunweiSequoiaCeyuanVentureAllyCapitalPandaVCFundBlueRunIDGSourceCodeShunweiFreesFundFutureCapSourceCodeChinaGrowthCapital9ccapitalLenovoHoldingsYonghuaCapital9FbankWillHuntingCapital9ccapitalblackholecapMatrixPartnersSequoiaBlueRunSourceCodeKunlunWanweiMatrixPartnersK2VCSequoiaJDChinaRenaissanceCeyuanVenturesRenrenChapterIVPredictionofChina'sConsumerFinanceMarketSectionIMacroEnvironmentIndustrydevelopmentChina'sconsumerfinanceindustryisstillinaperiodofrapidgrowthwithgreatpotentialinthefutureFromtheperspectiveoftheoveralltrend,China'sconsumerfinanceindustryisstillintheearlystagesofdevelopment,andthehigh-growthtrendwillnotchangeintheshortterm.
Moreandmoreconsumptionscenariosappear.
Therearemanyconsumerfinancecompaniesofdifferentsizesindifferentstages.
Variousfinancialproductskeeppoppingup.
AccordingtoiResearch,in2008China'sconsumercreditaccountedforonly3.
6%ofthetotalconsumerspending,buttheproportionofconsumercreditroselinearlytoaccountforabout18%in2016.
IntheUnitedStateswhereconsumercreditindustryismoremature,theexpenditureratioofconsumercredithasbeenstableatabout26%since2008.
ItcanbeseenthatiftheUnitedStatesistakenasthebenchmark,thereisstillmuchroomforthedevelopmentofconsumerfinanceinChina.
Inthefuture,withthetransformationandupgradingofconsumption,thechangeinpeople'sconsumptionconcept,thefull36|PagedevelopmentofInternetfinancetechnology,andthegradualstandardizationandsocializationofcreditinformation,thefuturedevelopmentpotentialofChina'sconsumerfinanceindustrywillbehuge.
CreditsystemChinawillformauniquepersonalcreditreferencesystemwithChinesecharacteristicsComparedwiththehistoryofthecreditindustryintheUnitedStatesformorethan100years,thecredithistoryofChinastartedfromthe1990s.
Its30-yeardevelopmenthasbeenrelativelyslowandithasnotgainedthedueattentionforalongtime.
Atpresent,thelawsandregulationsoncreditinformationinourcountryarestillinthe"vacuum"zone.
Thereisnotyetasinglelaworregulationthatprovidesdirectguidanceforcreditreferenceactivities,includinginformationcollection,processing,handlinganddisclosure.
Inaddition,theeffectivecoverageofcreditreferenceisfarlessthanhalfofthepopulation.
TheexistingcreditsysteminChinaisgovernment-led,mainlytheCreditReferenceCenterofPBC,whichgraspsthecreditdataofindividualsandenterprisesfromcommercialbanks.
However,thePBCcreditreferencereportcontainsonlythecreditdataoffinancialinstitutionsandcannotcomprehensivelyreflecttheindividual'screditconditionsfrommultipledimensions.
Third-partycreditreferencecompanies,suchasSesameCreditandPengyuanCreditService,providemorepersonalnon-financialcreditdata,whichisanindispensablepartofthecreditreferenceindustry.
TheMeasuresfortheAdministrationofCreditReferenceInstitutionspromulgatedin2014openeduptheestablishmentofpersonalcreditreferenceagencies.
InJanuary2015,thecentralbankonceaskedeightmarketagenciestoprepareforthelicensedpersonalcreditbusiness.
However,personalcreditreferencelicenseswerenotissuedyetmainlyduetothefactthattheeightpilotagencieshadproblemsinindependenceandobjectivitytovaryingdegrees.
Inthefuture,China'screditreferencesystemmayformadouble-layerstructurewithChinesecharacteristics:thetoplayeristhePBCCreditReferenceCenterandthegovernment-ledsocialcreditunion.
PBCCreditReferenceCenterismainlyresponsibleforfinancialcreditdatawhilecreditunionisresponsibleforrelatednon-financialpersonalcreditdata.
Themainpurposeforestablishingcreditreferenceunionistoincorporatethenon-financialcreditdataofindividualcustomersthatarenotcoveredbyPBCCreditReferenceCentertobuildanational-levelbasicdatabaseandshareinformationintheindustrysoastoeffectivelylowertheindustryrisk.
TheestablishmentofcreditreferenceunionmaybesimilartothatofNetworkAllianceClearingLimited,anditconsistsofthejointparticipationofmajorthird-partycreditreferencecompaniesandfinancialinstitutions.
Thesecondlayerisahandfuloflicensedthird-partycreditreferencecompaniesthatprovidespecificdataproductsandservicestothewholesociety.
RiskcontrolTheindustryriskcontrolisincreasinglystrengthened,andthecalculationruleofthedefaultrateneedstobeunifiedurgently37|PageWiththerapiddevelopmentofconsumerfinanceinourcountry,riskcontrolwillinevitablybecomethefocusoftheentireindustry.
Asofnow,aunifiedmethodofcalculatingthedefaultratehasnotbeenformedintheindustry,andregulatorshavenotyetmaderulesforthecalculationofdefaultrateofconsumerfinancecompanies,sotheindustryisfullofavarietyofstatisticalmethods,bringingmisunderstandingsandconfusiontoconsumers,investorsandregulators.
Currently,commercialbanksgenerallyadoptthefive-tierclassificationofloanspromulgatedbyPBCin2002.
Itdeterminesthelossriskofloansbasedontheborrower'srepaymentability,thatis,theactualabilitytorepaytheloanprincipalandinterest.
Basedonthattheloanqualityisdividedintofivecategories:normal,concerned,secondary,suspiciousandloss.
Thelatterthreecategoriesaredefinedasnon-performingloans(NPL).
Thenon-performingloanratioisatimepointindicator.
Thenon-performingloanratioattheendoftheperiodiscalculatedasthenon-performingloanbalance/loanbalanceattheendoftheperiod.
Ifthiscalculationmethodisappliedtoconsumerfinancecompanies,thereareseveralproblems:(1)five-levelclassificationmethodissubjectiveandsusceptibletohumancontrol.
(2)Thenon-performingloanratioisatimepointindicatorandthedenominatoristhebalanceoftheloanattheendoftheperiod,whichisgreatlyaffectedbythelargeamountpaymentandcollectionattheendoftheperiod.
(3)ThedurationoftheNPLisnotconsidered.
Inparticular,atpresent,theconsumerfinanceindustryinChinaisinaperiodofrapiddevelopment,andthedevelopmentofthecompaniesintheconsumerfinanceindustryisalsopolarized.
Theindustry'sleadingcompaniesgrowexponentiallywhilethecompaniesfailingtoseizethemarkethaveseentheirbusinessvolumefallsteeply.
Therefore,theyear-endbalanceintheconsumerfinanceindustrymaybegreatlydifferentbetweentheyears.
Asaresult,theyear-enddefaultratecalculatedbyusingthedenominatorwillshowagreatervolatility.
Inaddition,whencalculatingthenumeratorofthedefaultrate(defaultamount),mostofthecurrentalgorithmsdonotconsiderthedurationofoverdueloans.
Infact,thelengthofanoverdueloanwillaffecttheprobabilityofcollectingtheoverdueloan,anditwillalsoaffectthecompany'sprovisions,takeupthecompany'seconomiccapital,andhaveasubstantialandlastingimpactonthecompanyoperation.
InviewofthecurrentsituationofChina'sconsumerfinanceindustry,weproposethefollowingmethodforcalculatingthedefaultrate:(A)CalculationprinciplesFirst,comparability.
Thecalculationprocessneedsacleardefinitionofelementsandtheobjectivecriteria,sothatthehumanmanipulationmustbeavoidedduringtheoperationofdifferententerprises.
Second,rationality.
Whenmeasuringtheoveralldefaultrateofaconsumerfinancecompany,weoftenconsidertheoverallsituationofacompleteyear.
Thusthechoiceofsamplepoolneedstobeconsideredrationally.
Third,prudence.
Ifonerepaymenthasaloandefault,alltheloanbalanceisincludedinthenumerator.
Fourth,operability.
Onlytheprincipalistakenintoconsiderationwhencalculatingtheloanamount,andinterestisnotincluded.
Thisisalsoconsistentwiththecalculationofthebank'sNPLratio.
(B)Sampleselection38|PageTherearetwosampleoptionsfordefaultratecalculation.
Thefirstoptioncanbecalledastaticsamplepool.
Theloansissuedwithinacertainperiodoftimearetakenasafixedsample.
Allthesubjectsarelockedin-advanceandthedefaultrateiscalculatedafteralltheborrowingsaredue.
Thesecondoptioncanbecalledadynamicsamplepool.
Alltheexistingoutstandingloanswithinacertainperiodoftimearetakenasasample,andthedefaultrateiscalculatedafteracertainperiodoftime.
Inthismethod,theremaybevarioussituationssuchasnewissuance,overduepayment,andearlyrepayment.
Therefore,duringthecalculationperiod,thecompositionofloansinthesamplepoolcannotbedeterminedandthusitiscalledadynamicsamplepool.
Accordingtotheprincipleofrationality,theproposedcalculationmethodistouseadynamicsamplepooltomonitortheoverduesituationofallsamplesinaperiodoftime.
Forexample,tocalculatethe2016defaultratio,thesampleincludesalltheongoingcontractsatthebeginningof2016andallthenewloancontractsissuedin2016.
(C)CalculationformulaDefaultrate=[∑(principalbalanceofdefaultloansatthebeginningoftheperiod*thecurrentperiod'sduration)+∑(principalbalanceofnewly-addeddefaultloansintheperiod*thecurrentperiod'sduration)]/[∑(principalbalanceoftheloansatthebeginningoftheperiod*thecurrentperiod'sduration)+∑(principalofthenewlyissuedloansduringtheperiod*thecurrentperiod'sduration)]Thefirstpartofthenumeratoristheprincipalbalanceofthedefaultloansatthebeginningoftheperiodmultipliedbyitsdurationinthecalculationperiod.
Ifthedefaultedloanisreturnedwithintheperiod,thedurationistheperiodfromthebeginningoftheperiod(nottheoverduedateorthedateofissuance)tothedateofreturn.
Ifadefaultedloanatthebeginningoftheyearisrepaidintheexactmiddleoftheyear,thecurrentyear'sdurationis6months.
Ifthatdefaultedloanisstillnotpaidattheendoftheperiod,thedurationistheentirecalculationperiod.
Thesecondpartofthenumeratoristheprincipalbalanceofnewdefaultloansintheyearmultipliedbythecurrentperiod'sduration,whichlastsfromthedateofoverduetotheendofthecalculationperiod.
Similarly,thedenominatoristheprincipalbalanceoftheloansatthebeginningoftheperiod,andtheprincipalofthenewlyissuedloansduringtheperiodmultipliedbythecorrespondingdurationinthecurrentperiodrespectively.
Accordingtothedefaultperiodsofdifferentdefaultloans,webreakdownthedefaultratesinto:Overdue1M:Theloanratiowithoverdueof1-30(inclusive)days;Overdue3M:Theloanratiowithoverdueof31-90(inclusive)days;Baddebtratio:Theloanratiowithoverdueofover90days.
Therecommendedcalculationmethodhasthefollowingadvantages:Clearincriteria,objective,comparable.
Longitudinally,thedefaultratesofconsumerfinancecompaniesarecomparableovertheyears,whichisameaningfulreferencefortheoperationanddevelopmentofconsumerfinancecompanies.
Horizontally,thedefaultratesatthesametimepointofvariousoperatingentitiesintheconsumerfinanceindustryarecomparable.
Fortheconsumerfinancialsectorinvestors,itcanalsobeusedasausefulreference.
39|PageTheimpactofthesignificantchangesintheendingbalancedecreased.
Inordertoreducethedefaultrate,consumerfinancecompanieshavethemotivationtoraiseloansattheendoftheperiodbypushinguptheendingbalance.
Ourrecommendedcalculationmethodcanstabilizetheoverduefluctuationscausedbylarge-amountissuanceandcollectionattheendoftheperiod.
Theclassificationofdefaultratesfacilitatestoanalyzethecompositionofdefaultloansofconsumerfinancecompanies.
Theshortertheoverdue,thegreaterthepossibilityofprincipalcollection.
Infact,theoverdueloancanbringprocessingfees,servicefeesandotherbenefits,soitcannotbesimplyclassifiedasanegativeindicator.
Defaultrateclassificationcanhelptoanalyzetheoverdueratesfordifferentlevelsofoverduetime.
Thentheconsumerfinancecompaniescanmakemorescientificandreasonablepoliciesfordefaultingfeerateandgainhigherreturns.
Italsohelpsinvestorstojudgetheriskcontrolabilityoftheconsumerfinancecompanies.
SectionIIConsumerFinanceCompaniesBanksNationalbanksdigupthedemandforconsumerloansoftheirexistingcustomers,whilelocalbanksactivelyseekcross-regionalconsumercreditlicenses.
Currently,amongthemajornationalbanks,onlyBankofChina,ChinaMerchantsBankandChinaPostalSavingsBankhavesetupconsumerfinancecompanies.
Amongthem,BankofChinaandChinaMerchantsBankareleadingonesinpersonalfinanceandcreditcardbusinessestraditionally.
Theiroriginalintentionforinvestinginconsumerfinancecompaniesmaybetorespondtothepoliticalneedforapilotprogram.
Fromasalesperspective,banksandtheirparticipatingconsumerfinancecompaniescoverdifferentcustomers,andtheylackcross-sellingandoperatingsynergies.
Ontheotherhand,thenationalbanksthemselvesalreadyhavethelicenseofallthebusinessareasoflicensedconsumerfinancecompanies,andtheycanexpandtheirconsumerfinancebusinessesdirectlythroughthereorganizationandconsolidationofinstitutionsanddepartmentsrelatedtointernalpersonalfinance.
Majorbanksdeveloptheirconsumerfinancebusinessprimarilybysellinginnovativeconsumerfinancialproductstotheirregularcustomers.
Inadditiontopromotingthecreditcardstatementinstallment,theyalsodevelopedpureonline"easyloan"and"quickloan"products,whicharenodifferentwithcashcreditsinnature.
Theiramountisabouttensofthousandstohundredsofthousandsyuan,andtheymainlytargettheexistingcreditcardcustomers.
Localbankshavegeographicallimitationsintheirbusinessesandarethereforemoremotivatedtoseeknationalconsumercreditlicenses.
Inaddition,oneoftheimportantfocusesoflocalbanksistocooperatewithstrategicpartnerstoestablishconsumerfinancecompaniesandtoexpandtheconsumerfinancebusinesstothewholecountry.
40|PageLicensedconsumerfinancecompaniesTheadvantagesoflicensedconsumerfinancecompaniesarebecomingevidentgradually,andtheiroverallmarketshareoftheindustryisincreasingWiththecontinuousdevelopmentandstandardizationofthewholeindustry,theadvantagesoflicensedconsumerfinancecompanieswillbegraduallyreleasedsuchasclearbusinesspositioning,professionaloperatingspecifications,reasonablecapitalcost,clearpolicyapplicationandstrongprofitsustainability.
Duetotherestrictionofthetraditionalriskcontrolofretailbanks,thecustomerbaseoftheirconsumerfinancialservicesismainlycreditcardcardholdersanddepositorsaswellaswealthmanagementcustomers.
Thispartofthepopulationhashighercreditlevel.
However,exceptforthelarge-amountlow-frequencyandlowinterestmortgageloansandautoloans,retailbanksdonothavemuchdemandforconsumerloans,andtheycanhardlyobtaininterestincomefromcurrentcustomers.
Non-licensedconsumerfinancecompaniesdonothaveaunifiedriskcontrolstandards,andtheirpotentialuserscancoverallgroupsofpeople.
Withdifferentiatedpricingcoveringdifferentcreditrisks,interestrates(togetherwithfeerates)designedforborrowerswithhighcreditriskarehigh.
Interestrates(togetherwithfeerates)rangefromaround20%toabove100%.
Forbusinesseswithinterestratesbelow20%,non-licensedinstitutionshavenoadvantageintermsofcapitalcostsandcannotachievebetterprofitperformance.
Forbusinesseswithhigherinterestrates,theyhavegoodprofitsintheshortterm.
However,withintensifiedcompetitionintheindustryandincreasingpopularizationofcustomerfinancialknowledge,thesustainabilityofprofitabilityisuncertain.
Accordingtotheriskcontrolrequirementsoflicensedconsumerfinancecompanies,theirtargetcustomerbaseisthepopulationthathasrealconsumercreditneedsandrelativelyhighcreditlevel,andcancontinuouslyacceptinterestrates(togetherwithfeerates)of10%~20%andmakesustainedcontributionsofinterestincome.
Inthelongrun,licensedconsumerfinancecompaniescanbeassuredofqualityandcapabilityofprofitabilityaslongastheykeepattractingandretainingcustomersthroughspecializedandpersonalizedservice.
Currently,theindustryisstillintheinitialstageofdevelopment.
Non-licensedcompaniesreceivelesssupervisionandhavediversifiedbusinessmodels.
Intheshortterm,theirgrowthrateisfasterthanthatoflicensedconsumerfinancecompanies.
However,thetighteningofpolicieshasbecomeaninevitabletrendandtheirfuturegrowthisfacinggreateruncertainty.
Yetlicensedconsumerfinancecompanieshavealreadybeenoperatingunderregulatorycontrol,andtheirapprovedbusinessscopealsoclearlyincludesinstallmentpurchaseloansandgeneral-purposeloans,whichcanbepolishedintheclearregulatoryframeworktoobtainalong-termcompetitiveadvantage.
Fromtheendof2013,thegovernmentremovedmanybusinessrestrictionsonlicensedcompanies.
Mostofthelicensedcompanieswereapproved(exceptthefirstfour)bytheendof2014andturnedprofitablein2016.
Inthefirsthalfof2017,theindustryleadersinlicensedcompaniesrecordedarapidincreaseinprofitscomparedwiththefirsthalfof2016.
Amongthem,BOCConsumerFinancerealizedanetprofitof645million41|PageyuanandMUCFCanetprofitof541million,allexceedingtheannualresultsof2016.
MSXFConsumerFinancepostedanetprofitof134millioninthefirsthalfof2017,whileitsprofitwasjustrealizedbytheendof2016.
Suning'sconsumerfinancecompanyalsoturnedlossesintogainsin2017.
Thisshowsthatlicensedconsumerfinancecompanieshavejustenteredaperiodofrapiddevelopment.
Currentlythemarketshareoflicensedcompaniesaccountsforlessthan5%ofthetotalconsumerfinancemarket.
However,thelicenseadvantagesoflicensedconsumerfinancialcompanieswillgraduallyemergeandtheoverallshareintheindustrywillsubstantiallyincrease.
Internetgiants(BATJ)FocusonthetechnicalempowermentandbusinesscooperationBATJandotherInternetgiantshaveinfiltratedintoallfieldsofsociety,buttheyareunwillingandunabletotakeoverthevarioussub-sectorsthroughacquisitions.
Therefore,inacooperativemanner,theycanextendtheirnewtechniquestoavarietyofdifferentdomainstopromotethegrowthofinnovativecompaniesandevenhelpthetransformationandupgradingoftraditionalentities.
Predictably,BATJandotherInternetgiantswillgraduallyprovideallkindsofInternetservicesandfinancialelementstoallwalksoflifethroughcapitalandtechnicalempowerment.
P2PP2PcompanieswillmakebreakthroughtransformationbyfocusingoncapitalcostandcustomeracquisitionTheP2Pindustryhasenteredaperiodofadjustment,withthenumberofplatformssubstantiallyreducingandthelargerP2Pplatformsseekingtoobtainfinancialorquasi-financiallicenses.
Withthefeatureofnogeographicrestrictions,onlinemicro-loanbusinessisagooddirectionforthefutureofP2Pplatforms.
Therecentpricerisingoftheonlinemicro-loanlicensejustreflectsthistrend.
Throughholdingoflicenses,thoseP2Pplatformsareexpectedtocooperatewithcommercialbanksinassetsandcapitalandtocarryoutassetsecuritizationsoastofurtherreducethecostofcapital.
Inaddition,thelicensedP2Pplatformscanconnectwiththecentralbank'screditreferencesystemtoeffectivelyreducethebaddebtratiointermsofriskcontrol.
Moreover,P2Pplatformswillincreaseconsumptionscenariostobridgecreditloanbusiness,andcollaboratingwithonlineshoppingplatformsandofflineretailstoreswillbethemainmodeltoachievethisgoal.
E-commerceConsumerinstallmentpaymentwillbecomeamust-to-havefore-commerceproviders,butitwillbemainlyprovidedbythirdpartiesAtpresent,mostofthee-commerceprovidersarestillfocusedontheirmainbusinessesandareunabletooperatetheconsumerfinancebusiness.
Apartfromafewe-commerceproviderswithstrongcapitalpower(suchasvip.
comoffersitsowninstallmentpaymentservice),theremaininge-commerceprovidersrelyon42|Pagethirdpartiestoprovideinstallmentpaymentservices,suchasbankcreditcards,AntHuabei.
Atpresent,AntHuabeihascomeoutofTaobao,andgotaccesstomorethan40e-commerceproviders.
Takingintoaccountofthepaymenthabitsofe-commerceconsumers,itisexpectedthatthecoverageofinstallmentpaymentwillcontinuetoexpand.
Thespeedofmarketexpansionofotherthird-partypaymentwilldeterminewhetherthefuturee-commerceinstallmentpaymentmarketwillshowanoligopolypattern.
SectionIIIConsumptionScenariosAutomobileUsedcarsarebecomingthenexthotspotinautomotiveconsumerfinanceInMarch2016,intheGovernmentWorkReport,thePremieroftheStateCouncilmentionedthat"usedcarindustryshouldbeactive.
"InApril,theStateCouncilreleasedeightopinionsonthepromotionoftransactionsofusedcars.
AccordingtoiResearch,itisexpectedthatthepenetrationrateofnewandusedcartransactionswillbealmostthesameby2020.
Assumingthattheaveragepriceofusedcarsis60,000yuanavehicle,thetotalamountoftransactionsin2020willreach2.
34trillionyuan.
AccordingtotheforecastofChinaAssociationofAutomobileDealers,thetradingvolumeofsecond-handcarsin2017willbe12millionunitsnationwide,withthegrowthrateof20%.
Fromtheviewofautomotiveindustry,thesalesofsecond-handcarsintheUnitedStates,Germany,Switzerland,JapanandTaiwan,arecurrently3times,2times,2times,1.
4timesand2timesofthesalesofnewcarsrespectively,whilethenumberinChinaisonly0.
4times,muchlowerthanothercountries.
ThishugegrowthpotentialhasattractedCarKingUsedCarSupermall,Guazi.
com,renrenche.
com,xin.
comandothere-commerceplatformstoenterthemarket.
Theyprovidesecond-handcarloans,automortgageloans,carrental,carinsurance,carownercreditcardandotherproductsandservices,gainingexperienceforexploringtheinnovativebusinessmodelforusedcars.
TravelTravelconsumptioninstallmenthashighentrybarrier,andthelicensedconsumerfinancecompanieswithindustrialbackgroundmaybecomeleadersChinahasahugetourismmarketandahighdegreeofonlinescenarioconcentration.
Meanwhile,itsconsumerfinancehasalowpenetrationrateandthusahugespaceforfuturedevelopment.
Withtheindustrialbackgroundandthelicenseforcompliantoperation,theadvantagesofthelicensedconsumerfinancecompaniesinthetravelindustryareemerging.
Theycannotonlyexpandthebusinessrapidly,butalsoextendthebreadthofservicesfrombuildingtheclosedloopoffinancialservicestoconstructingtheclosedloopoftheecosystem-basedentireindustrialchain.
Forexample,OTAgiantssuchasCtrip'sShangchengConsumerFinanceandHNA'sYishengFinancialServicehavethesupportsfromthegroupsinhugeuserbaseandtransactiondata,andtheyalsohavethelicenseandbusinesspermissionforconsumerfinancebusiness.
They43|Pageareabletoexpandtheirconsumerfinancebusinesswithlowcostwhileusinginstallmentproductstopromotetravelconsumption.
Theintegrationofindustryandfinanceisjustaroundthecorner.
Inaddition,theofflinelocaltravelcompaniesarelargeinnumberbutscattered,andthesecompanieswanttooffertheircustomerswithtravelconsumerfinancialservicesbutdonothavetheappropriatebusinesscapabilities.
ThisprovidesgoodmarketopportunitiesforserviceproviderswiththeadvantagesinbigdatatechnologysuchasShanbaitiao,AntHuabei,andJDBaiTiao.
Throughcooperationwithofflinetravelcompanies,theycanobtaintheentrancetotravelconsumptionscenarioandgetmarketshare.
MedicalcosmetologyThepotentialofthemedicalcosmetologyinstallmentmarketishugewiththeundeterminedpattern.
ThecomprehensiveoperationanddatatechnologycapabilitiesarethecoreofthecompetitiveadvantageMedicalcosmetologyindustryisstillinitsearlystageofdevelopment.
Withtheincreasinglypopularmedicalcosmetologyconsumptionscenarios,medicalcosmetologyconsumerfinancialserviceswillsurelydevelopasanadjunctproducttothemedicalcosmetologyindustry.
Theconsumerfinancesectorhasthecharacteristicsoflowpenetrationandlowcustomerrisk.
Therefore,marketplayershavealreadybeenengagedinit,suchasBAT,9fYimeijian,MemeCredit,BaiduUmoney,SoYoungBaitiao,Yemay,etc.
However,duetoitsrelativelyearlymarketdevelopment,thesizeisnotyetbig.
Basedonthecurrentstageofthemedicalcosmetologyindustry,theinstallmentpaymentplatformswithcustomeracquisitionandtrafficdirectioncapabilitieshaveashort-termcompetitiveadvantage.
Ononehand,theseplatformscaneffectivelyconnectend-usersandprovideconsumerfinancialserviceswithlowercustomeracquisitioncosts.
Ontheotherhand,throughcontinuousaccumulatingandexpandingdatasources,theseenterpriseshavetheopportunitytocontinuallycultivateandimprovetheriskcontrolmodetargetingtheconsumptioncharacteristicsofthemedicalcosmetologyindustry.
Inthelongrun,comprehensiveoperationcapabilityandriskcontrolcapabilityarethekeys.
Whiletheconsumerfinanceuserbasekeepsexpanding,onlytheenterpriseswithcontrollablebaddebtslevelcanhavethechancetowin.
Withthedevelopmentofthemedicalcosmetologyindustry,therewillinevitablyemergeindustrialgiantsinthemedicalcosmetologyconsumerfinanceindustrywhohavehigh-qualitydatasourcesandaccurateuserportraitsinsight,aswellastheabilitytoprovideprofessionalintegratedsolutions.
EducationTheeducationmarketishugebutfragmented,andtheeducationinstallmentserviceswillmainlybeprovidedbythird-partyconsumerfinancecompaniesTheeducationmarkethashugemarketspacebutistoofragmented.
Therefore,itislesslikelyforthoseenterprisestorelyontheirowntoexpandtheconsumerfinancialservices.
Asaresult,theconsumerfinanceservicesinthisindustryaremainlyprovidedbythird-partyconsumerfinancialserviceagenciesandaleaderhasalreadyshownup,BaiduUmoney.
BaiduUmoneyisgoodatintegratingthescatteredofflinescenariosto44|Pageachievelarge-scaleexpansion:italreadyhasacomprehensiveservicesystemintermsofserviceaccuracy,operationalefficiency,pricingpowerandriskcontrol.
Byintegratingthesolutionintothetargetmarket,itisabletoachievearapidincreaseinpenetrationoftheinstallmentpaymentmarket.
Thisisamanifestationofitscomprehensivebusinessstrength,andothercompetitorscannotbeonaparwithitnow.
Inthefuture,theeducationinstallmentmarketstillhasgreatpotential.
Forexample,consumerfinancefornon-vocationaleducationandtrainingisstillinitsinfancy;therearestillmanynicheareassuchasK12,earlyeducation,driving,andMBAwhichareallincrementalmarkets.
Meanwhile,diplomaeducationconsumptionisanevenlargermarkettobeexploited.
Therefore,byrelyingontheirownadvantages,thenewentrantstotheindustrystillhavetheopportunitiestoenterthemarketwithdifferentpositioningandgetamarketshare.
RuralareaRuralinstallmentpaymentmarket,asthelargestanddeepestinclusivefinancialmarket,isablueoceanforreclamationUpgradingofruralconsumptionandnarrowingofthegapbetweenurbanandruralareaswillleadtotheoutbreakofruralconsumption.
Fromaconsumerperspective,thedemandfordurableconsumergoodsinruralareasisenormous,includinghouseholdappliances,transportationtoolsandfarmequipment.
Therefore,theconsumerfinancialserviceprovidersthathavetheabilitytolowertheirchannelstotheruralareasareactivelyexploringtheruralcreditmarket.
Theyprovideconsumerfinancesolutionstothefarmerwithasteadyincomeandtoboostruralconsumption.
ThisisanattractiveblueoceanmarketwhereAlibabaandJDaresparingnoefforttocultivatetheruralretailecologywiththeruralconsumerfinanceasanintegralpart.
Inaddition,theregionalcitycommercialbanksarealsoactiveinsettingupconsumerfinancecompanies.
Withregionalcitycommercialbanksasthemainsponsorsandlocalretailersaspartners,theycutintoofflineconsumptionscenariosandeffectivelycoverthedemandforruralconsumerfinance.
Leadingplayerscanalsotakeadvantageofthenationallicensesforconsumerfinancetoextendtheirregionalserviceexperiencenationwide.
Asthelargestanddeepestinclusivefinancialmarket,theruralmarketisalsoexpectedtocontinuetoreceivepolicysupportandpromotion.
Ofcourse,therearestillmanydifficultiestobeovercomeindevelopingruralconsumerfinance.
Forexample,thelackofcreditinformation,thedifferenceinmindsetandthesocialconnectionsinruralareashaveincreasedthecomplexityandoperabilityofthebusiness.
Therefore,itisforeseeablethatonlytheenterpriseswithexcellentcomprehensiveserviceabilitiesandcapabilitiesinmanagingcomplexbusinessescanhandletheruralconsumerfinancewell.
HouserentalHouserentalagencieswillcontinuetoplayakeyroleintheindustrychainofhouserentalinstallmentpayment45|PageThebusinessmodelforhouserentalisatypicalpureofflineorO2Omode,whichisdifficulttobefullyonline.
Indifferentregions,avarietyofintermediarycompaniesdominatemostofthelistinginformationonthemarket.
Ifhouserentalinstallmentcompaniesrelysolelyoncustomer-sidepushandsubsidiestoobtaincustomers,customeracquisitionwillhavehighcostandlowefficiency,andtherewillberisksinusercredit.
Therefore,theverticalhouserentalinstallmentpaymentcompaniesshouldworkwithonlineandofflinerentalintermediarycompaniesonthebusiness-side,andjointlyeducateuserstograduallyaccepttheinstallmentpayment,anewconceptofhouserental.
WiththeparticipationofAlipayandotherthird-partypaymentagencies,thedeposit-freeordiscounteddepositsbecomeanewconsumerscenariowherepersonalcreditisplayinganincreasinglyimportantrole.
Traditionalrentalagenciesbenefitfromtheconvenienceofcreditreviewbroughtbytheentryofthird-partypaymentintotherentalmarket.
Theyrapidlyexpandtheirshareoftherentalmarketbyrelyingontheirstrongofflinelistingsandteams.
HomeimprovementHomeimprovementinstallmentmarketwillstillbedominatedbybanksandlicensedconsumerfinancecompaniesHomeimprovementindustryisadownstreamsectorofrealestateindustry.
Thematerialsneededforhomeimprovementinstallmentpaymentincludepropertyownershipcertificateandrenovationcontract.
Propertyownersareregardedashigh-qualitybankcustomers,andthemarketcompetitionbetweenbankshasbeenmoreintense.
Also,thehomeimprovementinstallmentbusinesshasthelargeamountandlongduration(upto5years),andwiththebank'sparticipation,theinterestrateisquitelow,resultinginthereducedprofits.
Therefore,otherconsumerfinancecompanieshavelowenthusiasmforparticipationduetothefinancingcosts.
Inthefuture,thecompetitioninthehomeimprovementindustrywillbemainlybetweentraditionalbanksandlicensedconsumerfinancecompanies.
Underthebackgroundoflowinterestratesinthehomeimprovementindustry,banksandlicensedcompanieswillcompetefortheserelativelyhigh-qualitycustomersandposebarriersforothernewentrants.
CollegestudentsCollegestudentinstallmentpaymentmarketwillcontinuetohavehighentrybarrierswherebanksandlicensedconsumerfinancecompaniesaremainmarketplayersTheNoticeonFurtherStrengtheningtheRegulationofCampusLoansissuedinMay2017callsforacompletesuspensionofissuingcampusloansbynon-licensedlenders,includingInternetloansandnon-Internetloans.
Itsoundsaspecialwarningtotheloansforthejobapplication,trainingandbusinessstart-upwhileurgingcommercialbanksandpolicybankstodevelopcampusfinancialproducts.
ForexistingInternetloans,theNoticecallsforaclearexitscheduleandanorderlyreturnofoutstandingbalances.
TheNoticealsorequiresallcollegesanduniversitiestoissuethenotificationlettertoeachstudentfortheirsignature46|Pageconfirmation,tooffercompulsoryeducation,andtoencouragereportingofcluesforbadcampusloans.
Asaresult,non-licensedlendershavetotallynochanceinthe(on-campus)studentmarket.
Inaddition,sincecollegestudents'lackofsocialexperienceandinsufficientrationaldecision-makingcapacitywillcontinuetoexistforalongtime,theconsumerloansforcollegestudentsareexpectedtoremainaregulatedmarketwithstrictpoliciesforalongtime.
Itisnecessarytosupporttheirnormalfinancialneedsinsuchfieldsasstudentaidsandentrepreneurship,toguideandalleviatetheunnecessaryadvanceconsumptiondemand,andtomaintainhighmarketentrybarriersinthelongrun.
Ingeneral,studentshavestrongdemandforloans.
Inforeigncountries,studenteducationloansareoneoftheimportantassetclassesforABS.
Therefore,thesizeandpotentialofthestudentmarketcannotbeignored.
Inaddition,collegestudentsarealsothereserveforceforfuturequalitycustomers.
However,atthemoment,banksandlicensedconsumerfinancecompaniesarenotfamiliarwithstudents'behavioralpreferences,productpreferences,andriskmodels.
Theymerelyextendtheirretailproductlinestocampuswhilethecampusmarketisnotservedwithefficientandin-depthservices.
Theyareverylikelytolosestudentcustomersaftertheygraduate.
Inthefuture,banksandlicensedconsumerfinancecompanieswillneedtomakemorein-depthendeavorsonthecampusmarket,includingprovidingtargetedandevenpersonalizedproducts,collaboratingwiththird-partybigdatacompaniestointelligentlyupdatestudentusers'preferences,needsandcharacteristics,andcontinuouslyimprovinguserexperienceandprovidingservicesprecisely.
Blue-collarworkersBlue-collarmarketsegmentwillreturntothespecificconsumerscenariosinthelongrunAtpresent,themainbusinessofconsumerfinancecompaniestargetingtheblue-collarworkersistoprovidecustomerswithfinancialinstallmentservicemainlyfor3Cproductsinofflinestores.
However,withthemutualpenetrationofonlineandofflinemarketsandtheconstantimprovementintheentiresocialcreditsystem,thedevelopmentspaceofsuchconsumerfinancecompanieswillbesuppressed.
Inaddition,unlikestudents,blue-collarconsumersdonothaveobviousagefeatureandregionalconstraints.
Inastrictsense,itisverydifficulttodistinguishblue-collarconsumersfromordinaryconsumers.
Variousconsumerbehaviorshavebeencoveredbyvariousspecificconsumptionscenarios,sointhefuturetheconceptofthismarketsegmentmayslowlyfadeoutandrelevantconsumerfinancecompanieswillalsobeclassifiedintospecificconsumptionscenarios.
47|PageAboutCFAChinaShanghaiCFAChinaShanghaiwasfoundedinOctober2008withthefoundingmembersofCFAprofessionalsdedicatedtointegratingfinancetechnologywithassetmanagement.
Theirgoalistopromotethehighestmoralstandardsandprofessionalethicsinthefinancialindustry,andtoimprovetheprofessionalismandresearchmethodsinfinancialinvestmentandanalysis,soastoleadtheglobalinvestmentcommunityinbuildingShanghaiintoaninternationalfinancialcenter.
CFAChinaShanghaihasavolunteerteamofmorethan100people.
WithMr.
GuoTaoasthechiefrepresentativeand10otherrepresentativesofseniormembersfromsecurities,funds,exchangesandregulatorsasthecoreandassistedbyanumberofprofessionalgroups,itprovidesqualityservicesfornearly2,000membersinShanghai,includingcontinuededucationseminars,socialnetworkingplatforms,promotingethicsandprofessionalstandardsandpromotingtheapplicationoffinancialtechnologyininvestment.
TheaimistocreatethecloseconnectionbetweenfinancialprofessionalsandinvestorsinShanghaiandtomakecontributionstobuildingtalentenvironmentforShanghaiinternationalfinancialcenter.
CFAChinaShanghaiwillsparenoefforttobuildShanghaiFinancialAnalystAssociationwithinternationalinfluence,topromotethetrainingandrecruitmentoffinancialtalentsinShanghaiandtoenhancethestandardization,specializationandinternationalizationofShanghai'sfinancialindustry,withthehopetomakecontributionstobuildingShanghaiasaninternationalfinancialcenterandaworldcitywithChinesecharacteristics.
AboutCrowdResearchProjectofCFAChinaShanghaiTheCrowdResearchprojectofCFAChinaShanghaiisanon-profitresearchprojectinitiatedbytheContinuedEducationGroupofCFAChinaShanghaiandintendedtopromotein-depthindustryresearch,providesuggestionsfortheindustrydevelopmentandhelpinvestorstojudgeinvestmenttrends.
MembersoftheresearchteamarerecruitedfrommembersofCFAChinaShanghai.
Allmembersdonotreceiveanyremunerationandcontributetheirtimeandenergytocompletethisresearchproject.
ThefirstresearchtopicistheChineseconsumerfinancemarketinsight,andthewholeresearchlastedfor6months.
TheresearchteamleaderisZhangShuguang,CFA,andtheresearchworkinggroupmembersinclude:ChenYan,CFA,GuYuan,CFA,LiChen,CFA,WangYingren,CFA,YingYi,CFA,andZhaoYang,CFA.
IfyouhaveanyquestionsorsuggestionsonthisreportortheCrowdResearchprojectofCFAChinaShanghai,pleasefeelfreetocontactce-sh@cfa-china.
org.
cnAcknowledgmentsDuringthewritingofthisreport,weinterviewedandexchangedideaswithexpertsandscholarsintheindustry.
Hereby,wethanktheprofessionalswhogaveusprofessionalguidance,includingGuoTao,CFA,XuDongjiang,CFA,andCaoShi,CFA.
Inaddition,LinZheqingandGaoYanyingalsomadeanimportantcontributiontothesuccessfulpublicationofthisreport.
Wewouldliketoexpressoursincereregardstoallthosewhocontributedtheirvaluabletimeandexperiencetothisreport!
48|PageWelcometoJoinCFAChinaShanghaiTelephone+862151167150/51167250Emailinfo-sh@cfa-china.
org.
cnCFAChinaOfficialWebsitewww.
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org/chinaCFAOfficialWebsitewww.
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orgWechat:ShanghaiCFAmembers