Chinese borrowers and investors are benefiting from the growing Chinese P2P industry
Peer-to-Peer lending, also known as marketplace lending, has captured the attention of consumers and investors around the world. As consumers grow disenchanted with banks, or find themselves disqualified from bank financing due to rigid requirements and diminishing capital, alternative lending platforms, such as peer-to-peer have stepped in to provide a viable mechanism for consumer lending. In developing countries, there is an additional factor feeding the P2P success story—social and political upheaval means that many citizens are cut off from accessing traditional banks and financial institutions.
China’s P2P market is hot
One of the greatest international P2P success stories can be found in China. Peer-to-peer lending opened its doors in 2007 and as of today, close to the end of 2015, there are 3,000 alternative lending platforms. The greatest surge in China’s P2P industry came last year.
P2P is a major player in China’s economic future
China’s 13th Five Year Plan shifts much of the focus away from industrial development to entrepreneurship, domestic consumption, and sustainable long-term growth. Economists see P2P lending as an important player in China’s long term plans for economic sustainability, new business development and enhanced consumerism. And, in a country with more than 680 million internet users, an online lending platform, such as P2P is a natural fit for a digital-savvy population.
Huge investment going to Chinese P2P platforms
All this success is not loss on investors. In 2011 there were approximately 10,000 investors involved in peer-to-peer lending platforms. As of October, 2015, this number had surged to around 2.7 million investors. And not only investors with lots of cash. In fact, according to the “2015 White Paper on China’s P2P Lending Services Industry,” which was released last month, 73 percent of P2P investors earn roughly $15,600 per year. Among investors, the largest segment are women. Researchers say this represents an improvement in Chinese women’s disposable income and increased control over the family’s investment decisions.
The White Paper focused on Shanghai, but China’s P2P market is strong throughout the country, especially in Beijing and Guangdong. Xing Bo, Vice President of Neusoft and director of Shanghai Financial Information Industry Association said, “P2P lending has promoted the sound development of the financial industry, and better met the financial needs of small enterprises and individuals.”
One of the largest IPO deals in Hong Kong is expected to take place next spring as China’s peer-to-peer giant, Lufax, valued at more than $10 billion goes public. Lufax already raised almost half a million dollars from investors last March. Marketplace lenders in China are not confining themselves to borders either. Yirendai, a Chinese P2P lender filed with the US Securities and Exchange Commission to conduct a public offering on the NY Stock Exchange next year, hoping to raise $100 million, the first Chinese marketplace lender ever to seek listing on a US exchange.
Other Chinese P2P platforms have similar plans for the coming year, indicating that financial analysts and investors expect nothing but continued growth of China’s robust peer-to-peer lending industry.