ChinaFintech – China’s First Licensed Consumer Credit Reporting Agency Opens for Business

Baihang Zhengxin Limited (百行征信有限公司), the state-backed consumer credit reporting agency officially opened for business on May 23rd. It is the first to obtain a license to operate a personal credit reporting business in China.

It will be mainly targeted at alternative lenders, particularly online lenders. Previously only China’s central bank maintained a credit information database, the Credit Reference Center, that has mainly been serving established traditional financial institutions while most of the online lenders don’t have access to.

The National Internet Finance Association of China (NIFA), a state-backed industry trade group, holds a 36% stake in Baihang. The eight companies that were approved by the central bank in 2015 to develop their own consumer credit scoring services, including tech giants such as Tencent and Alibaba’s fintech arm, each holds an 8% stake in it.

The eight member companies will reportedly share their data, technologies and other resources with Baihang.

Four of the eight backed by tech companies, Zhima Credit Management Ltd.Tencent Credit Ltd., Qian Hai Zheng Xin, and Kaola Zhengxin, had previously developed their own consumer credit scoring services based on to different extents alternative data generated from their own online services. It’s unknown to what extent they’d share their own data with Baihang.

The products and services provided by Baihang will include consumer credit reports, credit scores, and anti-fraud services.


Used Car Sales Platform Uxin Files for US IPO

Used car sales platform Uxin (优信) has filed wih the SEC to raise up to US$500 million in a NASDAQ IPO.

Established in 2011, Uxin connects car buyers to individual sellers and dealers and provides financing options to both car buyers and dealers by working with third-party financial services providers.

Uxin’s major revenue sources are fees from used car sales and auto loans, with a minority from sales of salvage cars and new cars, and short-term dealer inventory financing. The company plans to discontinue its new car sales business after selling their remaining new car inventory. It hadn’t turned a profit as of March 2018.

The revenue from auto loans as a percentage of the total revenue increased to 48% in 2017, up from 38% in 2016.

Source: Uxin

In 2017 the total number of used car loan transactions and the total amount of used car loans facilitated increased 113.6% and 110.7%, respectively, from the previous year. The total outstanding principal balance of loans for new cars accounted for 8.4% of the total outstanding principal balance of auto loans as of March 2018.

The company claims its used car sales platforms for individual car owners and dealers have 41% and 42% market shares, respectively, citing research reports from iResearch. Its major local competitors include

In 2017, 45% of the total transactions and 60% of the GMV were generated between individuals.

It had established more than 670 physical service centers in more than 270 Chinese cities as of March 2018.

ChinaFintech — Xiaomi Finance[Updated]

Xiaomi Finance, the online finance arm of smart device maker Xiaomi, accounted for 0.7% of Xiaomi’s total revenue, or RMB802 million, and 0.2% of its pre-tax net loss, or RMB83.6 million in 2017, respectively, according to its IPO filing. The total assets of Xiaomi Finance accounted for 14.1% of Xiaomi’s total in 2017.

Update: Xiaomi Finance accounted for 0.9% and 0.22% of Xiaomi’s revenue and pre-tax profits, respectively, but 13.55% of its total assets as of March 31st, 2018, according to its prospectus filed withThe China Securities Regulatory Commission (CSRC).

Xiaomi is restructuring its finance business that its stake in Xiaomi Finance will decrease to 40% after it completes.

Since 2015 Xiaomi Finance has added products and services in supply chain financing, consumer lending, payments, distribution of retail investment products and insurance.

Xiaomi provides consumer loans through mobile apps including Xiaomi Loans, Xiaomi Finance and Xiaomi Wallet. The loan receivables were RMB101 million, RMB1.6 billion, RMB8.1 billion as of the end of 2015, 2016 and 2017, respectively.

The consumer loan offerings include installment payment plans for the purchases of Xiaomi hardware products. Xiaomi Finance paid RMB 400,000, RMB 200,000 and RMB3.3 million to Xiaomi for hardware products sold through it in 2015, 2016 and 2017, respectively.

Leveraging the user data collected mainly from Xiaomi devices, Xiaomi Finance has developed proprietary consumer credit assessment and risk management systems. MIUI, the custom Android system pre-loaded in all Xiaomi connected devices, had 190 million monthly active users as of March 2018, according to Xiaomi’s filing. Xiaomi and Xiaomi Finance will continue to share their data with each other after restructuring.

Beijing Xiaomi Electronic Software, an affiliate of Xiaomi, has a minor stake in XWbank, a direct bank established in late 2016.

For the online payment and settlement services provided by Xiaomi Finance, Xiaomi pays fees to it. The amount was RMB40.3 million, RMB43.9 million and RMB49.9 million in 2015, 2016 and 2017, respectively.

Xiaomi Finance pays Xiaomi for online marketing services and other support services. It paid RMB9.7 million, RMB1.8 million and RMB70.8 million in 2015, 2016 and 2017, respectively, for online marketing services to Xiaomi.

Smart Device Maker Xiaomi Files for Hong Kong IPO

Xiaomi Corp., a leading smart device and internet services provider, has filed today with the Hong Kong Stock Exchange.

Source: Company

Founded in April 2010, Xiaomi launched its first Android-based smartphone in 2011 and now also sells a wide variety of connected devices either developed in-house or by affiliated companies, ranging from healthcare wearables to smart speaker.

The gross margin for Xiaomi’s hardware products only increased to 8.7% in 2017 from 4.4% in 2016. MIUI, the custom Android system pre-loaded in all Xiaomi smart devices, enjoyed gross margins higher than 60% in the last three years.

The company plans to maintain its low-cost strategy for its hardware business, promising the net profit margin for the hardware sales would not exceed 5% in the future.

The average selling price of Xiaomi smartphones was 807 yuan, 880 yuan and 881 yuan (US$138) in 2015, 2016 and 2017, respectively.

Source: Company

Xiaomi has invested in more than 90 connected devices and accessory makers, including Huami which got listed on the NYSE earlier this year. The company let many of these startups use Xiaomi’s Mi brand.

The company claims that more than 100 million devices had been connected to its internet-of-things platform as of March 2018. Some 1.4 million Xiaomi users own more than five Xiaomi hardware products.

While totally dependent on online sales channels in the early years, the company has been establishing a network of physical stores, called Mi Home, since 2015.

The top five distributors for the company accounted for 30%, 27% and 32% of the company’s total revenue in 2015, 2016 and 2017, respectively.

Xiaomi products are now available in more than 70 countries and regions, with India being one of its most important foreign markets.

Source: Company

The MIUI operating system is an important revenue source for the company.

The default apps on MIUI are all customized versions such as Mi App Store, Mi Browser, Mi Music and Mi Video. MIUI generates revenues through a wide range of marketing offerings, such as search marketing on the Mi App Store and push notifications, and consumer-facing paid content or services, mainly third-party games.

The average revenue per user (ARPU) of MIUI was 29 yuan, 48.5 yuan and 58 yuan (US$9) in 2015, 2016 and 2017, respectively.

Source: Company

Launched in August 2010, MIUI had 190 million monthly active users (MAU) as of March 2018. Xiaomi users spent an average of 4.5 hours daily in March 2018. 38 apps on MIUI had over 10 million MAUs, with 18 having over 50 million MAUs.

Source: Company

Xiaomi Finance, which provides consumer loans and investment services to Xiaomi users, accounted for 0.7% of the total revenue and 0.2% of pre-tax net loss in 2017. Xiaomi is restructuring its finance business that its stake in Xiaomi Finance will decrease to 40% after it completes.

ChinaFintech — Baidu’s FinTech Business Raises US$1.9bn

Baidu’s financial services business has secured US$1.9 billion in Series A round of funding led by TPG and The Carlyle Group and joined by investors including Taikang Group and ABC International Holdings. Baidu’s stake in it will be reduced to 42%. The business has been rebranded as Du Xiaoman (度小满).

Established in December 2015, Baidu’s finance arm offers installment payment options to consumers and online investment services to investors. Gross interest income and interest costs in 2017 were RMB3.5 billion (US$543 million) and RMB1.9 billion (US$288 million), respectively. The total assets and total liabilities were RMB 47.0 billion ($7.5 billion) and RMB 41.2 billion ($6.6 billion) as of March 31, 2018, respectively.

Baidu’s online consumer loan business is operated through two companies, Chongqing Baidu Small Loans Co., Ltd.(not official translation), established in October 2015, and Shanghai Baidu Small Loans Co., Ltd.(not official translation), with the bulk of the total loan volume originated by the former.

 (as of June 2017)


Chinese Fintech Startups Flock to Hong Kong for a Listing

JIMU Group Ltd. and  Dafy Holdings Ltd., have recently got listed in Hong Kong through a reverse merger.

VCredit Holdings Ltd., 51 Credit Card Inc., VTeam Financial Service Group and Huifu Payment Ltd., have filed with the Hong Kong Stock Exchange.

JIMU Group businesses include

  •, an online peer-to-peer lending platform established in 2013. The cumulative loan volume reached RMB 40 billion in November 2017, according to the company.
  • Jimu Xiaodai, which provides balance sheet loans to consumers and small businesses.
  • Jimu Times, a small business lender with loan capital currently mainly from Its customers are primarily acquired through Jimu Group’s physical stores.
  • 76Hui, a big data-based corporate credit rating service.

The company generated HKD 241 million (US$31mn) and HKD 237 million (US$30mn) in revenue in 2016 and 2017, respectively, and hadn’t turned a profit as of 2017.

VCredit provides a variety of consumer finance options, including personal loans for credit card debt consolidation, purchase credit and unsecured personal loans.

Its capital sources include the small loan subsidies of the company and licensed financial institutions.

The company is one of the few online finance companies that have access to the consumer credit information database operated by China’s central bank which is mainly accessible to the established banking institutions. The risk management system the company has developed have used both the credit data from the central bank and alternative data.

It also operates a network of physical stores to conduct in-person interviews for large loans or with borrowers that its system deems high risk.

The company generates revenues primarily from interest income from consumer credit options and the rest from loan facilitation service fees, guarantee service fees and overdue charges. It turned profitable in 2017.

ChinaFintech – 51 Credit Card Inc. files for HK IPO

51 Credit Card Inc. has recently filed for IPO in Hong Kong.

The company provides personal financial tracking and credit management apps, generating revenues from consumer loans and credit cards issued to app users by the company or third-party financial institutions.

Consumer loans surpassed the credit card segment in revenue in 2015 and accounted for about 80% of the total revenue in the next two years. The company began turning operating profits in 2016.

Cumulative registered users of 51 Credit Card Manager, its flagship app released in 2012, reached 62 million in 2017, up from 27.5 million in 2015.

Source: Company (*Other revenues include interest income from loans extended by its small loan company and trust funding, and overdue charges.)

Consumer Lending

A majority of their individual investors and borrowers are users of the company’s financial tracking apps. Non-credit-card holders as a percentage of the total borrowers have increased from zero in 2015 to 35.5% in 2017.

The company charges borrowers a “credit facilitation and service fee”, which has become the primary revenue source for the company, and third-party loan offerings “loan referral service fees” based on the size of loans referred by 51 Credit Card, the number of applications or clicks.

Before the incorporation of a small loan company in early 2017, the vast majority of the consumer loan capital was from investors of the peer-to-peer lending platform 51 Renpin, and the rest from institutional investors. In 2017, 77%, 20.3% and 2.7% of the loan capital was from 51 Renpin platform, institutional investors and its own small loan company, respectively.

Its lending platform uses the in-house developed systems for credit scoring and pricing, and fraud detection. The consumer loan originations was RMB 815 million, RMB 10.3 billion and RMB 33.9 billion in 2015, 2016 and 2017, respectively.

Credit Card Issuance

Users can compare and apply for credit cards on 51 Credit Card platform where some 500,000, 1.2 million and 2.1 million credit cards were issued in 2015, 2016 and 2017, respectively. The company charges banks a “credit card technology service fee”.

It began issuing co-branded credit cards with banks in April 2017 and would issue more than 100,000 in the rest of the year.

51 Credit Card is expected to enter the insurance market soon as it acquired 95% of insurance broker Shenzhen Zhongrong in November 2017.