China Internet Financing Industry Report, 2014
Internet financing refers to the service pattern in which relevant companies carry out cooperation with financial institutions to provide customers with wealth preservation and appreciation through internet technology and platform. With the development of internet technology and significantly-growing number of netizens, internet financial products and platforms are constantly emerging in China since the second half of 2013.
Leading Chinese e-commerce companies (Alibaba, Suning, Jingdong) and internet companies (Tencent, Baidu, etc.) have launched internet financial products, e.g. Alibaba’s Yu’ebao, Baidu’s Baizhuan, Tencent’s Li Cai Tong have all become the mainstream internet financial products in China.
In China, most of the existing internet financial products are, in essence, monetary funds, like Yu’ebao docked with TianHong Income Box Money Market Fund, and Baizhuan docked with ChinaAMC Cash Income MMF E. Many internet financial products have realized T+0 monetary fund redemption, characterized by low investment threshold (starting at RMB1 in many cases), convenient and efficient purchase and redemption, and high rate of return (generally higher than the bank’s 1-year fixed term deposit), thus attracting a large number of users.
Introduced on June 13, 2013, Alibaba’s Yu’ebao is currently the biggest internet financial product. As of March 31, 2014, its subscription amount totaled RMB541.3 billion, accounting for 37.13% of monetary fund subscription. Since its inception to March 31, 2014, Yu’ebao has realized cumulative earnings of RMB7.5 billion for its customers, as high as RMb5.7 billion in the first quarter of 2014. Since its inception to the end of 2013, Yu’ebao’s average annualized rate of return had stayed at 4.9%, which climbed to 5.2% since its inception to the end of the first quarter of 2014.
With regard to financial platform, major internet companies and third-party fund sales institutions are stepping up the field layout: Taobao, Hexun, Baidu, Tencent, Netease, Sina and Jingdong have successively launched their financial platforms, mainly divided into the following categories:
- E-commerce platform: Taobao and Jingdong mainly provide e-commerce platform for financial institutions, which set up shops at Taobao or Jingdong to sell financial products.
- Display platform: Baidu Caifu (caifu.baidu.com), Tencent’s Financial Supermarket (finance.qq.com/market.htm), etc. which take advantage of gathered users to introduce financial products into financial platform for list gallery by category, and finally guide users to enter third-party financial websites to buy financial products.
- Sales & service platform: Tencent’s Li Cai Hui (money.tenpay.com), fund.eastmoney.com, e.g. Tencent by using third-party payment license and fund sales payment license obtained by its subsidiary – Tenpay establishes the financial platform “Li Cai Hui” to provide users with one-stop online services involving net inquiry, fund screening, fund diagnosis, stock information, market trend, making appointment for account-opening, etc.
Among internet financial platforms, fund.eastmoney.com (under eastmoney.com) boasts large-scale purchase of financial products, with the number of subscription transactions hitting 1,955,738 in the first quarter of 2014, generating fund sales of RMB38.5 billion, a quarter-on-quarter increase of 83.8%. At the same time, fund sales of eastmoney.com by virtue of outstanding revenue has become one of the company’s core businesses.
China Internet Financing Industry Report, 2014 covers the followings:
- Overview of internet finance in China (including internet users, deposits of financial institutions, scale of social financing, business model, investment case, market situation, trends, etc.)
- Internet financial product market (involving definition, classification, policies and institutions, market overview, competition pattern, impact of internet financing on banks)
- Internet financial platform market (embracing overview of Chinese and foreign internet financial platforms, comprehensive financial platforms, fund trading platforms and mobile finance APPs)
- Analysis of main internet financial products (including introduction, profit model, subscription amount, fund flow and earnings of internet financial products introduced by Alibaba, Baidu, Tencent, Suning, Jingdong and fund.eastmoney.com)
- Analysis of main internet financial platforms (including financial platforms of Alibaba, Baidu, Tencent, Jingdong and fund sales platforms like fund.eastmoney.com, fund123.cn, howbuy.com, jjmmw.com, 5ifund.com.