Last week we talked about Facebook and how its been expanding into the P2P and Crowdfunding market. This week: similar topic, different country altogether. If you look at the alternative finance industry on a global scale, it’s easy to say that, while the USA and England have largely been the innovation hotspots of the world, China has one of if not the largest market in several of the branches that make up “altfin”. Now, if you look at some of the trends going on in the Chinese business place at the moment, you will notice how several Chinese P2P platforms are now beginning to offer a wide variety of “wealth management options”. It’s as organizations are suddenly trying to be less niche and more omnipresent.
Author Spencer Li of Crowdfund Insider offered reasons given as to why this may be the case as well as his counter reasoning:
“Chinese media has suggested that it is becoming increasingly difficult for platforms to originate loans as market conditions have created an asset drought, driving platforms to explore other products they can offer to yield-hungry investors. I don’t quite buy this argument because I believe, in the slowing Chinese economy, there is an even greater need for capital from borrowers as alternative lending sources dry up. China does not lack in loan assets, China lacks platforms that are capable of lending to the multitude of underserved borrowers and managing that risk effectively. Therefore the result is the same: platforms that are unable to generate origination volume must now collaborate with third-party asset managers to sell other investment products.”
Additionally, some of these platforms have such a large market share that, in addition to the slowing Chinese economy, what incentive is there to NOT diversify their assets, essentially?
For more on this topic, see China’s Biggest Peer Lender Plans Push Into New Finance Services, by Shai Oster, The Washington Post 12/3/15.
