The country’s e-commerce giants such as Jingdong Mall and Alibaba Group have joined the student loan business, expanding the market coverage and user volume using similar business models, the China Entrepreneur Magazine reported.
According to the report, Fenqile, Jingdong's installment loan division, had already made its second round of financing using nearly $200 million in capital for future operations.
The Want China Times quoted an industry insider as saying that although college student installment loans have a low cost-performance ratio and a long business chain, many companies are still trying to take control of the consumption portals for young people. The insider said that Alipay was only used by penniless students more than 10 years ago, but now has grown tremendously.
The report said that Alibaba and Jingdong Mall knew the importance of the market and offered related products as they wait for the right time to expand their investments and acquire new assets.
Tencent and Baidu, on the other hand, have not announced whether they are joining the installment loan market or not, the report added.
Jingdong Mall has made a strategic investment in Fenqile, a leader in the nascent market, and is expected to play an important role in the company.
Qufenqi.com, the leader in installment plan-based e-commerce platforms, targets university students. According to Luo Min, Qufenqi founder, they have completed their fourth round of financing and are intent on becoming the Alibaba of the installment loan market.
The report said that with Qufenqi's rapid expansion, it has already covered the nation's 3,000 universities in just a few months.
The report, however, said that consumers are worried that their rapid expansion could lead to bad debt.
The foundation for such a financial platform is risk control. Expanding too fast could worry consumers about the risk of bad debt, said the report.