The Impact Of Ezubao On China’s P2P Lending Industry: Q&A With The Co-Founder of Dianrong.com

2 min read

2016 has not been a good year for China’s peer-to-peer lending industry. The year began with the collapse of Ezubao (e租宝), a P2P lending site that swindled 50 billion RMB (about $7.5 billion USD) from almost a million investors. Since then, the scandals haven’t stopped.

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Part of it has to do with how fast China’s P2P lending landscape has developed over the past few years. According to data provider Wangdaizhijia, between 2012 and 2014, the number of P2P lending platforms in China jumped from 200 to 1,575. Today, there are more than 4,000.

In a country where the majority of citizens have never borrowed money from a bank, it’s not surprising that companies have jumped in to fill the gap for consumers and small businesses who need loans. Last December, regulators put out a draft of policies for P2P lending companies, such as prohibiting platforms from directly handling or managing funds (link in Chinese).

Founded in 2012, Dianrong.com (点融网) is one of the earlier players in China’s P2P lending industry, in addition to Renrendai (人人贷) and Yirendai (宜人贷). The company was started by Kevin Guo and Soul Htite, the former CTO and co-founder of Lending Club, a P2P lending company in the U.S that went public in 2014. According to Dianrong.com, the platform has processed over 13.5 billion RMB in loans since launching.

TechNode sat down with Kevin Guo to discuss the current state and future of China’s tumultuous P2P lending industry.

1. How have scandals like Ezubao affected P2P lending companies in China?

Honestly, in the long run, this is good for startups, especially companies that follow the standards. Now there’s 4,000 to 5,000 [Chinese regulators] have made a lot of restrictions. They’re not allowing us to do advertisements anymore. But I think at their core, they’re still trying to encourage this industry.

2. What impact has the Ezubao scandal had on the latest draft of P2P lending regulations in China?

Under normal circumstances, [a new draft of policies] would have been released this year, but Ezubao disrupted the whole process and changed everything. […] From what I’ve heard, there will probably be a deep review of the draft in the first quarter of next year. Some of the rules will probably see some big changes.

3. In an industry with thousands of competitors, what kind of room is there for business development?

I think there’s still a lot of room for development in this industry. […] There are all kinds of opportunities that can be dug out of different verticals. P2P lending is just one small piece. […]Blockchain, robo-advisors, data mining, machine learning, online insurance – there’s a lot of room for imagination.

Image credit: Shutterstock

Correction (7/21/2016 10:56): This story has been updated to correct the statistic about Dianrong.com’s total loans. 

Correction (7/21/2016 12:38): This story has been updated to correct Kevin Guo’s title from co-founder to founder and Co-CEO.