On the frontline of China's spending revolution: small loans, big data

Tue Feb 14, 2017 6:10pm EST
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By Matthew Miller

TIANJIN, China (Reuters) - In a mobile phone shop in Tianjin, northeast China, Jiao Zhiwen sells about 220,000 yuan ($32,000) in small loans each month, one of hundreds of thousands of loans agents helping to fund the country's unprecedented consumer spending spree.

Though seven in 10 customers have never financed a purchase before, most loans are processed in 25 minutes, with a basic ID check and proof of a bank account.

Jiao's store on a busy commercial road, among furniture and enamel factories, is on the frontline of a consumer finance revolution in a country with a fast-growing borrowing culture, a government keen to boost spending, but still no provision for personal bankruptcy.

"They are factory workers, construction laborers and shop assistants," Jiao says of her clients.

"They need to feel they should only dig a little money out of their pockets each month and not too much at one time."

Jiao works for Home Credit China, among the handful of small-loans firms to receive national licenses over the last three years to offer modest, mostly high-interest, loans to bring China's roughly 300 million under-banked adults into its $3.9 trillion consumer finance market.

Beijing wants its high-saving population to have greater access to credit, so personal consumption can take over from industry and infrastructure spending as the key driver of growth.

Zhang Xiao, 22, a student at Shanghai University, embodies the change in attitudes, taking a 500 yuan loan to buy clothes over the Lunar New Year holiday.   Continued...

Jiao Zhiwen, a sales agent, displays the platform of Home Credit Consumer Finance with an electronic device at a store in Tianjin, China, January 20, 2017. REUTERS/Matthew Miller