An increasing number of companies in China are looking to obtain approval for consumer finance operations in anticipation of further roaring growth in the sector.
The “2018 – 2023 China Consumer Finance Industry Market Outlook and Investment Strategy Research Report” (2018-2023年中国消费金融行业市场前景及投资战略研究报告) produced by the Zhongshang Industry Research Institute (中商产业研究院) indicates that rapid growth in the consumer finance sector is on track to further accelerate in future.
According to the report China’s consumer finance loan balance minus housing loans maintained growth of over 20% during the period from 2013 to 2017, with average annual compound growth of 24.7%.
In 2017 the consumer loan balance hit 9.6 trillion yuan for a YoY rise of 62.2%, while the consumer loan balance in 2018 is expected to reach 13.19 trillion yuan, for a YoY increase of 37.4%.
The prospect of huge growth in China’s consumer finance market is drawing an unprecedented number of players into the sector.
Securities Daily reports that 24 consumer finance companies in China have currently obtained approval for operation, while regulators are still reviewing 12 other applications, including one from Beijing-based Huaxia Bank.
Two companies obtained licenses in September of this year – Citic Consumer Finance (中信消费金融公司), jointly established by Citic Group, Citic Trust and Kingdee China (金蝶中国), and Xiamen Jinmeixin Consumer Finance Company (厦门金美信消费金融公司), whose establishment was led by Gome Holdings and China Citic Bank.
On 10 October news emerged that e-commerce giant Vipshop would team up with Taiwan’s Fubon Bank to establish a consumer finance company, with the latter contributing 125 million yuan to obtain a 25% equity stake.
Financial institutions and companies with a foothold in China’s consumer finance sector are also looking to expand their scope of operations.
China Unicom announced on 4 December that its subsidiary Liantong Yunying (联通运营公司) planned to join China Merchants Bank in providing a capital injection for their joint-venture consumer finance company Zhaolian Xiaofei Jinrong Co., Ltd. (招联消费金融有限公司).
Both companies will increase Zhaolian’s capital by 1 billion yuan, leaving their respective equity stakes of 50% each unchanged.
In April the two companies increased the registered capital of Zhaolian to 2.859 billion yuan from 2 billion yuan.