Chinese student micro-credit site Fenqile recently announced an undisclosed amount of investment from e-commerce giant JD.com. The startup has previously received angel investment from China Renaissance K2 Ventures and an A round from Matrix Partners China in early 2014. The new funding follows a massive US$100 million Series B led by DST, followed by Bertlesmann Asia Investments and existing investors.

Founded in 2013, Fenqile allows buyers (mostly college students and young white collar workers) to borrow small sums of money to buy consumer electronics in monthly instalments. Customers can choose items from e-commerce sites like JD and Tmall, and then pay for them via Fenqile by selecting a down payment and the number of months they will pay off the remainder. Interest rates vary accordingly.

It is a logical move for JD to invest in Fenqile despite the fact that the e-commerce giant has already developed its own consumer credit services, both for general users and college students. JD has long teamed up with Fenqile to sell their products, with the latter now one of JD’s largest distribution partners.

Fenqile provides service to college students from over 3,000 universities in around 260 cities nationwide, and has more than 6,000 offline marketing staff to run buyer credit assessments by checking student IDs and basic information. These data help JD to better target user demand.

Most Chinese instalment plan e-commerce sites similar to Fenqile are highly reliant on funding from P2P lending sites due to the lack of their own capital. The high fundraising and operation costs are then taken on by borrowers.

In order to lower their rates of interest, micro-credit sites are trying to cut capital costs by diversifying their funding sources. Fenqile has rolled out a P2P lending site Juzilicai, while its arch rival Qufenqi has also developed a similar service, Jindanlicai. On the other hand, cooperation with JD can also lower operating costs by beefing up traffic. 

Driven by the growing market, China’s student micro-credit sites experienced a whirlwind year in 2014, with multiple players in the battlefield receiving financing support.

Image credit: Fenqile

Editing by Mike Cormack (@bucketoftongues)

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 lixin@sixthtone.com or Twitter.

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