The service will be jointly established with consumer financing service provider United Asia Finance Ltd., a subsidiary of Sun Hung Kai & Co. Ltd., Hong Kong’s leading financial institution.
As China’s leading local listing service, 58.com introduced the Alipay escrow payment solution to enable direct transactions within the site. That Alibaba Group created the Alipay solution, which withholds payments till customers confirm receipt of goods, was in order to ease concerns over online shopping of Chinese consumers, most of whom didn’t own credit card and were hesitant to trust online sellers.
Alipay would become Alibaba’s financial arm, aka Alifinance, and began offering small loans to online retailers on Alibaba marketplaces, such as Taobao and Tmall. Whether a store owner can get a loan or how much he or she can get is based on the performance of sales and customer service.
The combination of Alibaba marketplaces has become a powerful empire that Alibaba makes revenues from advertising , transaction fees or loan interest from sellers.
It’s unknown whether they were encouraged by the success of Alibaba model, many Chinese companies who used to offer services connecting buyers and sellers, such as travel search Qunar and 58.com, would enable direct transactions and more. JD.com, Alibaba’s competitor in e-commerce, followed Alibaba that built a financial arm in 2012. VIPShop, China’s leading online discount retailer, obtained a licence for small loans recently.
It’s safe to say 58.com is trying to build a Taobao for local merchants and consumers. But unlike Alibaba that provides loans by itself, 58.com said they’d build a peer-to-peer lending platform to have individuals finance merchants.
Listed on the NYSE in late 2013, 58.com recently introduced investment from Tencent. It is expected its local listing service will be integrated into Tencent’s social products, especially WeChat, helping the Chinese Internet giant get a stronghold in online-to-offline market — Tencent built its own online-to-offline services that so far are not successful.