Internet financing refers to the
service pattern in which relevant companies carry out cooperation with
financial institutions to provide customers with wealth preservation and
appreciation through internet technology and platform. With the development of
internet technology and significantly-growing number of netizens, internet
financial products and platforms are constantly emerging in China since the
second half of 2013.
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Leading Chinese e-commerce
companies (Alibaba, Suning, Jingdong) and internet companies (Tencent, Baidu,
etc.) have launched internet financial products, e.g. Alibaba’s Yu’ebao,
Baidu’s Baizhuan, Tencent’s Li Cai Tong have all become the mainstream
internet financial products in China.
In China, most of the existing
internet financial products are, in essence, monetary funds, like Yu’ebao
docked with TianHong Income Box Money Market Fund, and Baizhuan docked with
ChinaAMC Cash Income MMF E. Many internet financial products have realized T+0
monetary fund redemption, characterized by low investment threshold (starting
at RMB1 in many cases), convenient and efficient purchase and redemption, and
high rate of return (generally higher than the bank’s 1-year fixed term
deposit), thus attracting a large number of users.
Introduced on June 13, 2013,
Alibaba’s Yu’ebao is currently the biggest internet financial product. As of
March 31, 2014, its subscription amount totaled RMB541.3 billion, accounting
for 37.13% of monetary fund subscription. Since its inception to March 31,
2014, Yu’ebao has realized cumulative earnings of RMB7.5 billion for its
customers, as high as RMb5.7 billion in the first quarter of 2014. Since its
inception to the end of 2013, Yu’ebao’s average annualized rate of return had
stayed at 4.9%, which climbed to 5.2% since its inception to the end of the
first quarter of 2014.
With regard to financial platform,
major internet companies and third-party fund sales institutions are stepping
up the field layout: Taobao, Hexun, Baidu, Tencent, Netease, Sina and Jingdong
have successively launched their financial platforms, mainly divided into the
following categories:
E-commerce platform: Taobao and
Jingdong mainly provide e-commerce platform for financial institutions, which
set up shops at Taobao or Jingdong to sell financial products.
Display platform: Baidu Caifu
(caifu.baidu.com), Tencent’s Financial Supermarket (finance.qq.com/market.htm),
etc. which take advantage of gathered users to introduce financial products
into financial platform for list gallery by category, and finally guide users
to enter third-party financial websites to buy financial products.
Sales & service platform:
Tencent’s Li Cai Hui (money.tenpay.com), fund.eastmoney.com, e.g. Tencent by
using third-party payment license and fund sales payment license obtained by
its subsidiary – Tenpay establishes the financial platform “Li Cai Hui” to
provide users with one-stop online services involving net inquiry, fund
screening, fund diagnosis, stock information, market trend, making appointment
for account-opening, etc..
Among internet financial platforms,
fund.eastmoney.com (under eastmoney.com) boasts large-scale purchase of
financial products, with the number of subscription transactions hitting
1,955,738 in the first quarter of 2014, generating fund sales of RMB38.5
billion, a quarter-on-quarter increase of 83.8%. At the same time, fund sales
of eastmoney.com by virtue of outstanding revenue has become one of the
company’s core businesses.
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