China

Beijing is trying to make finance accessible to those traditionally denied it, including SMEs, with mixed results.

The local government of Shenzhen has announced on May 4, Monday, the launching of the first online bank exclusively serving women, following the establishment of mulans.com, a pioneer in female O2O (online to offline) financial platform in Sept. 2014.

According to the investment company, the Mulan Bank, the first online bank of its kind in China, would provide its services only for women, especially female entrepreneurs.

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Recognising that small businesses find it hard to get affordable funding, the Chinese government is encouraging the formation of new banks to focus on lending to this sector. Early this month, the first trial loan was advanced by one of these banks, and five other new banks have been granted licences, including an affiliate of e-commerce giant Alibaba.

The People’s Republic of China (PRC) has adopted a more market-oriented approach by promoting rural microfinance, pursuing bottom-up innovations such as group lending, various forms of guarantees, new financial products based on purchase orders and insurance policies, and better incentives for agriculture funding from financial institutions. In 2009, the PRC sought the assistance of the Asian Development Bank to study how to optimize policy choices in rural finance using both top-down and bottom-up approaches.

Rising failures in China’s peer-to-peer lending industry may pressure authorities to regulate a segment of Internet finance that almost quadrupled in size last year. The number of platforms that went bankrupt or had difficulty repaying money climbed to 275 in 2014 from 76 a year earlier, according to Yingcan Group, which tracks China’s more than 1,500 online lending sites. 

China's Mintai Institute of Finance and Banking has just released an English Summary Translation of its latest 2014 Annual Report on MSME Finance. The original Chinese version published in August 2014 has over 400 pages of good analysis on the developments and challenges of financing MSMEs in China, with rich information and statistics. Two highlights from this summary translation are of particular note.

This report is based on research among women entrepreneurs and bankers in China. Its writers found that the bankers’ negative attitudes toward lending to women were driven by informal attitudes about women’s reproductive roles rather than formal criteria for credit. The women avoided even applying for loans–not for lack of training or confidence, but out of quite realistic expectations about what would happen if they did.

Alibaba, working with Bank of China, China Merchants Bank, China Construction Bank and other banks, is offering big data-based unsecured credit loans of up to 10 million yuan for small and medium enterprises (SMEs) using Alibaba Onetouch's basic export services. This is the first time ever that banks provide unsecured loans for SME based on Alibaba's big data and credit system.

Alibaba has a new challenger, and it’s backed by China’s three wealthiest men. China’s Dalian Wanda Group, led by the country’s richest billionaire Wang Jianlin, plans to launch a $813 million (5 billion yuan) e-commerce platform with Baidu and Tencent, according to multiple media reports that cited sources familiar with the matter. The deal will mark the most high-profile challenge by far to Alibaba’s dominance in the country’s fast-growing e-commerce market.