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Q&A: Haier’s P2P lending platform to move into consumer finance

Just one year ago at the 2015 Global Mobile Internet Conference (GMIC) in Beijing, Chinese  consumer electronics and home appliances giant Haier unveiled its affiliate peer to peer (P2P) lending platform, Hairongyi.

At GMIC Beijing this year, we got the chance to speak with Wang Wei, CEO of Hairongyi, to hear her thoughts about Hairongyi and the Chinese P2P lending market.


What’s the difference between Hairongyi and other P2P lending platforms?

Compared with other P2P lending platforms, we pay more attention to the area of supply chain finance. To be specific, we take advantage of Haier’s supply and marketing ecosystem to provide loans for Haier’s offline retailers. Retailers often encounter situations where they reach a shortage of capital before they receive payment for their goods. In cases like this, applying for loans from banks is a very tedious process that often fails in the end. However, with the goods used as collateral, retailers can get loans in two to seven days through Hairongyi, which greatly accelerates the transfer of capital and guarantees that the business operations of the retailers can continue.

How can Hairongyi provide clients with a safe credit environment?

The core of finance lies in the control of risk; risk is proportional to returns. In the field of internet banking, as a P2P platform, Hairongyi is committed to providing our users with steady returns rather than high returns. At present, we have a complete risk control system. Originally, we just had traditional risk control means: for example, we could obtain the user’s credit record from the bank. This would give us an important resource in the process of credition investigation.

Aside from that, we now possess a capability for big data analytics. We can utilize this to obtain users’ real-time data, and when their transaction behaviors seem abnormal, we can terminate the transaction right away.

Lastly, we have an industrial risk control method, which is the highlight of our risk control system. Based on Haier’s ERP database, we can analyze the industry development patterns of different regions and seasons to judge whether the loans are reasonable or not. Thanks to our complete risk control system, the annualized rate of return has been kept between 7% and 10%, and the bad debt rate is zero so far.

What’s the size of Hairongyi?

Our cumulative transactions exceeded RMB 9.8 billion (USD 150 million) last week, with more than 2 million registered users. Relatively speaking, we are much smaller than what we might call the “pioneers” or “giants” in the P2P lending sector. Nevertheless, we were just established one year ago, and backed by Haier, our growth has been extremely fast. Combined with our great advantages in risk control, we believe that in the long run we will catch up with the front runners.

What kind of development stage is the P2P lending industry in?

With the strengthening of supervision, the establishment of industry associations, as well as the improvement of practitioners’ management ability, the Chinese P2P lending industry has begun to die out since the end of last year. This is an inevitable phase for all internet market segments such as e-commerce platforms, group-buying websites, and online-to-offline (O2O) platforms. We believe that only the platforms who find a balance between risks and returns can survive in the end.

What suggestions do you have for financial managers?

On the one hand, financial managers should have a clear understanding of internet banking, including the risk control ability of the platform operator, and of where the money goes, as well as the wisdom to avoid any irrational pursuit of high returns. Keep in mind that by definition, high returns must be accompanied by big risks. On the other hand, it is advisable to diversify your investments, particularly if you don’t have a high tolerance for risk.

What are the future plans for Hairongyi?

Internet finance is an emerging industry. We are interested in dabbling in different areas aside from P2P lending, but this does not mean that we will cover all areas of internet finance. In the future, we will expand our business to market segments which can utilize our resource advantages. This year, we have launched our pilot consumer finance product, hoping to provide instalment payment services for customers who buy home appliances in Haier’s over 30,000 offline stores.

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