Although Chinese P2P industry is still on the rise, the public is becoming increasingly cautious in investing on P2P platforms as more and more users fell victims to scams. Soul Htite, co-founder of Lending Club and its Shanghai-based counterpart Dianrong, shared with us his insights on the differences between the U.S. and Chinese P2P lending industry, risk control measures and prospects of the sector in China in a backstage interview during TechCrunch Beijing last week.

TechNode: What’re the differences between Lending Club and Dianrong, as well as the U.S. and Chinese P2P industry?

The two platforms are similar in business model, but are different in a lot of other aspects. In terms of targeted clients, firstly, the U.S. users tend spend borrowed money in consumption, like attending parties, while Chinese users will invest borrowed money in education. After years of development, the U.S. investors are very conscious about the investment risks. On the other hand, Chinese users may be more concerned about the yields rather than the risks at the beginning of their investment. “We will train Chinese investors by warning them about investment risks.”

Secondly, the difference is in loan life. The life of loans is around three to five years in the U.S., but only few months in China. Thirdly, it is very difficult to loan from banks without mortgage in China.

TechNode: What about the yields of Dianrong?

The average yield of Dianrong is around 14.07%. Different the operations of traditional banks, Dianrong allows the deals to be liquidated and settled on a daily basis. Borrowers who refund their loans every day can reduce their loan interests and investors who receive yields every day can take new investments to make the best use of their funds.

To accelerate the investment cycle, we also teamed up with partners like traditional banks, Century 21 China and Sina Weicaifu to include more projects.

TechNode: Please talk a bit about the risk control measures of Dianrong?

The bad debt rate of Dianrong is controlled at 1.27%. We have an excellent risk control team with 700 employees, most of whom come from banks. Dianrong cooperates with big companies to obtain background information of their employees, like their salaries, family members, and health conditions. The platform will be able to access the payment abilities of these employees as individual borrowers more accurate.

Dianrong classifies investors into different groups of green hands, experts and VIPs according to their acceptance degree of P2P lending model, and rolls out products with different investment amount and annualized yields to different investors.

TechNode: What’s the prospects of P2P and P2B lending in China?

In addition to risk control, we need a more transparent operation model. A lot of Chinese P2P and P2B platforms act as capital pools, but Dianrong is operated as platform. We do not manage funds. I think Chinese P2P industry will become more regulated in three to four years.

Originally from:

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via or Twitter.

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