The online lending market, or peer-to-peer market, in China has been growing incredibly fast over the last decade, with hundreds of platforms entering the sector and many others closing operations due to fraudulent activities or bankruptcy. The local P2P market has reached a new milestone at the end of 2015, with one of the most established platforms going public on New York Stock Exchange, while at the same time another large portal being seized by Chinese police.
The Chinese P2P Market with its estimated 9.4 trillion yuan ($1.5 trillion) total assets is the largest in the world. One of its most popular and biggest portals, Yirendai, founded back in 2012, has recently made history in the sector by becoming the first Chinese P2P lending platform to make an IPO in the US and the second one ever, after Lending Club which went public earlier this year.
Yirendai, a spin-out of Beijing-based financial service firm CreditEase, reported revenues of $138 million and profits of $31 million in the first nine months of 2015 and it is said to have served some 352,000 borrowers and investors and facilitated almost $1.4 billion in loans since its launch in 2012. The company’s shares, which were initially priced at around $10-$11 were trading below the foreseen price on the first day. This could be due to end of the year volatility, but also it could signal cautiousness on the US investors’ side.
In fact, if on the one side, the P2P lending market is achieving new milestones such as Yirendai’s US IPO, on the other side, there are concerns about it and the role of the Chinese Government with its regards. Many online lending platforms have gone bust in the last year, the last of which, Ezubo, was one of the most famous, frequently advertised on public and private TV. Local sources report that Ezubo had collected a total of 74.7 billion yuan ($11.8 billion) in deposits since its founding in 2014.
As it clearly emerges from these figures, despite being incredibly young, these companies are trading huge values, serving those clients and entrepreneurs who have difficulties accessing traditional finance. The speed of the Chinese online lending market is astonishing, but at the same time leaves many unresolved issues and open question marks. Among these, the sector has been prospering in a legal grey area, with the Government intervening to close down some platforms when it deems offerings are too risky, and many savers are not sufficiently financially literate to fully understand the risks involved.
References
Fannin, R. (2015).Chinese Lending Club Goes Public on Wall Street. Forbes.com
Zhang,S. , Shankar,S. (2015).Chinese lending platform Yirendai makes tepid U.S. market debut. Reuters
Chinese online lender seized, depositors demand money back. TimesArgus (2015)
Photo credit to: Roger Walch
Yirendai, a spin-out of Beijing-based financial service firm CreditEase, reported revenues of $138 million and profits of $31 million in the first nine months of 2015 and it is said to have served some 352,000 borrowers and investors and facilitated almost $1.4 billion in loans since its launch in 2012. The company’s shares, which were initially priced at around $10-$11 were trading below the foreseen price on the first day. This could be due to end of the year volatility, but also it could signal cautiousness on the US investors’ side.
In fact, if on the one side, the P2P lending market is achieving new milestones such as Yirendai’s US IPO, on the other side, there are concerns about it and the role of the Chinese Government with its regards. Many online lending platforms have gone bust in the last year, the last of which, Ezubo, was one of the most famous, frequently advertised on public and private TV. Local sources report that Ezubo had collected a total of 74.7 billion yuan ($11.8 billion) in deposits since its founding in 2014.
As it clearly emerges from these figures, despite being incredibly young, these companies are trading huge values, serving those clients and entrepreneurs who have difficulties accessing traditional finance. The speed of the Chinese online lending market is astonishing, but at the same time leaves many unresolved issues and open question marks. Among these, the sector has been prospering in a legal grey area, with the Government intervening to close down some platforms when it deems offerings are too risky, and many savers are not sufficiently financially literate to fully understand the risks involved.
References
Fannin, R. (2015).Chinese Lending Club Goes Public on Wall Street. Forbes.com
Zhang,S. , Shankar,S. (2015).Chinese lending platform Yirendai makes tepid U.S. market debut. Reuters
Chinese online lender seized, depositors demand money back. TimesArgus (2015)
Photo credit to: Roger Walch
 | About the author - Irene Tordera Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives. During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem and she works also for the European Crowdfunding Network. |
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