Chinese electronic commerce (e-commerce) companies 360buy and Suning Appliance reportedly are preparing to enter the lending sector to compete with Alibaba, another Chinese e-commerce corporation that operates a financing company to facilitate its customers’ purchases.
Suning Appliance recently obtained an official license to offer business financing and reportedly will launch its services with registered capital of CNY 300 million (USD 47.6 million). 360buy and Bank of China, a state-owned financial institution, jointly launched an e-payment service provider, Chinabank Payment, in October 2012. This platform will provide consumption loans to individuals and supply-chain financial services to businesses. 360buy CEO Liu Qiangdong reportedly said that the company plans to establish a separate finance company in 2014.
Alibaba established a finance company in June 2010 that has served approximately 130,000 clients as of September 2012. Alibaba reportedly gave out 1.7 million loans in the first half of 2012, with an average value of approximately CNY 7,000 (USD 1,110) per loan. The company has a credit pool of CNY 26 billion (USD 4.1 billion) and a non-performing loan ratio of 0.72 percent, compared with a 0.95-percent average reported in the country’s banking industry.
By Nicole Boyd, Research Associate
About Bank of China (BOC)
In 1994, the Bank of China became wholly state-owned after having operated as a international trade and foreign-exchange bank since 1949. It began a demutualization process in 2003 and Bank of China Limited was established in August 2004. BOC provides a range of financial services in China and 31 other countries. As of October 2012, the institution reported total assets of CNY 12.7 trillion (USD 2 trillion), return on equity of 18.7 percent and return on assets of 1.21 percent.
Sources and Additional Resources:
Morning Whistle. “E-commerce giants competing in microfinance market,” http://www.morningwhistle.com/html/2013/commerce_0122/216789.html
Global Times. “Suning Launches Finance Firm,” http://www.globaltimes.cn/content/748729.shtml
MicroCapital. January 16, 2013, “MICROCAPITAL BRIEF: Microcredit Loans in China Increase 5% to $96b in 2012,” https://www.microcapital.org/microcapital-brief-microcredit-loans-in-china-increase-52-to-96b-in-2012/
MicroCapital. November 16, 2012, “MICROCAPITAL BRIEF: China Records Increase in Number of Microcredit Institutions,” https://www.microcapital.org/microcapital-brief-china-records-increase-in-number-of-microcredit-institutions/
MicroCapital Universe Profile: Bank of China (BOC) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+China+%28BOC%29
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