ChinaFintech — Xiaomi Finance

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.

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 consumer lending, consumer credit rating, online banking and insurance brokage.

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.

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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)

(Source)

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

  • Jimu.com, 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 Jimu.com. 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.

ChinaFintech – JD Adds E-lending Solution for Smaller Banks; Ant to Open up its Consumer Lending Products

On top of its own online lending system, JD Finance has developed Beidou Qixing (“The Big Dipper”) for smaller banks. Earlier this month the company launched a cloud services solution for small banks in conjunction with enterprise IT solution developer DCITS.

The Beidou Qixing suite includes solutions in credit assessment and underwriting, big data-based risk management and servicing, identity verification and anti-fraud authentication, and user acquisition and marketing. Partner banks can also use JD’s web-based asset securitization platform.

It has signed up some 30 banks. JD claims its credit risk assessment system, combining data generated from both JD’s e-commerce platform and the bank, can lower the average costs per customer by at least 70% and boost the efficiency of credit approval 1000%.

Beidou Qixing software suite is similar to that of Gamma, rolled out in November 2017 by OneConnect, the finance tech solution developer established by insurer giant Ping An. Gamma has also developed a full-fledged device for physical bank branches. OneConnect had signed up about ten banks at launch.

JD Finance claims Beidou Qixing can reduce the time needed to build a lending system from six months to one month. OneConnected said several months earlier that theirs had cut the time needed to six weeks.

Ant Financial, the fintech arm of Alibaba, will explore possibilities to open the two consumer lending products, Ant Credit Pay (purchase credit) and Ant Cash Now (cash loans), to banks and other third-party financial institutions.

Both JD Finance and OneConnect have also rolled out solutions for other business segments for conventional banking institutions, including mobile banking and robot investing.

JD Finance has reportedly started an RMB 13 billion (US$ 2 bn) round of funding led by China International Capital Corp. and COFCO at a valuation of RMB 165 billion to RMB 190 billion (US$ 26 – 30 bn). New funds raised will be used for obtaining licenses, R&D, and marketing, according to media reports.

ChinaFintech – Tencent’s Mobile Consumer Credit Product Weilidai Exceeds RMB100bn in Loan Balance

The outstanding loans of Weilidai (微粒贷), the short-term cash loan product available on Tencent’s messaging apps, had surpassed RMB100 billion (US$16 billion) as of the end of 2017, according to Tencent Q4 2017 earnings report. The non-performing loan ratio was low, said the company.

Weilidai is operated by WeBank, the direct bank in which Tencent has a 30% stake. Launched in 2015 on Tencent’s two social apps, Mobile QQ and WeChat, it’s available to users who are deemed creditworthy by the company’s own big data-based credit risk scoring engine.

The cumulative originations had surpassed RMB300 billion (US$ 47 billion) and total users exceeded 20 million in the first quarter of 2017, according to Wan Jun, COO of WeBank. Local media estimate that the cumulative volume had reached RMB400 million in 2017. (links in Chinese) An overwhelming majority of the loan capital is from partner banks.

The online consumer credit offerings of Ant Financial, the fintech arm of Alibaba, has surpassed RMB 600 billion (US$95 billion), Bloomberg reported earlier this month.

The major capital source for the two major consumer credit products Ant Financial offers is securitization. The company issued over RMB240 billion (US$ 38 billion) asset-backed securities in 2017.


The revenue growth of Tencent’s payment and financial services business in 2017 was driven by 1) consumer withdrawal fees, 2) fees from commercial transactions, 3) interest income and 4) finance offerings including Weilidai, according to Tencent management. The gross profit margin for this business segment increased in 2017. The company expects to invest aggressively in it in 2018.

Licaitong, Tencent’s online platform for personal investment products, aggregated over RMB300 billion (US$ 47 billion) assets under management as of the end of January 2018.

Offline payment transaction volume more than doubled year-on-year in 2017. The total volume of red envelope gifting, cash gift transfers among accounts on Tencent’s two messaging apps, decreased year-on-year but the overall money transfer volume increased year-on-year.