Q&A: Dianrong's Soul Htite

Q: How would you describe the P2P lending opportunity in China at the moment?

A: China is the world’s largest market for P2P or marketplace lending. Even so, there remains an enormous unmet demand for lending, especially for micro and small businesses. Today, China has about $7 trillion of investable wealth, yet only about 15% of SMEs [small and medium-sized enterprises] have adequate access to credit. The situation is equally or more difficult for micro businesses. We believe marketplace lending offers more accessible, affordable and adaptable financing solutions for micro and small businesses. One important macro trend shaping China P2P has been the accelerated adoption of mobile-enabled commerce. We believe this trend will continue and help to further drive adoption and growth of China P2P in the future.

Q: Some P2P lending platforms have modified their business models to focus more on consumer loans, including cash loans. How attractive is this opportunity to Dianrong?

A: Dianrong is focused on the opportunities created by micro and small business financing, and we do not offer payday loans. Micro and small businesses play a critical role in driving China’s economic development. SMEs accounted for 94% of the total number of firms in China and 60% of the GDP in 2014, according to government statistics. But the financing needs of micro and small businesses are frequently underserved. Dianrong is putting fintech to work to better address those needs. 

Q: Can you explain the significance of the latest funding round for Dianrong’s near-term development?

A: Dianrong is fortunate to be extremely well capitalized and we will use this new capital for a variety of business purposes, including enhancing fintech solutions and infrastructure, and accelerating our R&D pipeline. Both Orix and CLSA are extraordinary companies with global reach and commitment to driving innovation and we look forward to working with them as we continue to strengthen our overall growth strategy. From the very start, Dianrong has benefited from investors who understand fintech and support our growth strategy. Our investors share our vision of putting fintech and marketplace lending to work for more Chinese borrowers and lenders.

Q: How would you contrast your experiences developing businesses in the US and China financial services markets?

A: China’s bank-driven financing model has traditionally centered around large organizations and SOEs [state-owned enterprises], and most small businesses and retail customers have been unserved, whereas the penetration of MSME [micro, small and medium-sized] financing is much higher in the US. Another big difference between the development of P2P in the two markets relates to financial infrastructure. When P2P started in the US, there was already a credit infrastructure to support the process of marketplace lending. In China, however, we’ve had to build that infrastructure ourselves. While a challenge, this has also advanced our risk management capabilities using fintech. The key factors to effectively adapting online marketplace lending to emerging markets are a mobile-enabled economy coupled with widespread internet access and a rational regulatory framework. China offered us all three, which is why it remains such an attractive P2P market.

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• Topics
• Greater China
• Financials
• Technology
• China
• ORIX Capital
• CITIC Securities
• TMT
• Financial Services
• Growth capital