JD.com partners with Rakuten to bring Japanese products to the Chinese market. (Photo : Want China Times)
E-commerce firm JD.com will be doing business with Zestfinance, a U.S.-based financial tech company, to provide consumer credit in China. The launch of the joint venture was announced on Friday.
As China’s leaders are pursuing to encourage consumer spending and make its economy less reliant on industrial exports, the government is allowing private companies like JD.com to launch in the country.
The partnership is called JD-ZestFinance Gaia. It will incorporate JD.com's index of more than 100 million active customers with ZestFinance’s machine learning underwriting technology to arrange credit risk evaluation services to companies in China.
Based on reports, it will initially be used to check credit risk and offer installment loans for purchases on JD.com.
Josh Gartner, senior director for international communications for JD.com, said that Chinese online retailers hope to “greatly improve the efficiency of deciding who should be offered credit or not.”
JD.com, a Chinese e-commerce company competing with Alibaba, has 100 million active customers and generates a yearly revenue of $20 billion.
Similar to Amazon, the corporation buys goods from producers and has a national network of distribution centers and warehouses.
Meanwhile, ZestFinance was founded in 2009 and started making loans itself and underwriting loans made by lending partners in 2010.
“This is a great validation that what we’ve built works,” said Douglas C. Merrill, founder and chief executive of ZestFinance.
As Chinese buyers often have little to no credit history, moneylenders in China miss the data often used in stable markets to dispose creditworthiness.
The 20 percent of Chinese adults who have credit scores are given credit through the People’s Bank of China, the country’s central bank, and through partnerships with big state-owned firms.
Yao Naisheng, vice president of JD Finance, said that this situation is creating a bottleneck for the development of China's consumption loans.
