The emergence of Internet finance in China is providing more funding channels for small and medium-sized enterprises, but that’s not necessarily good news for all lenders in the domain.
Emmanouil Schizas, senior economic analyst of the Association of Chartered Certified Accountants, an international professional organization, said major consolidation might be on the way for China’s vigorous Internet finance sector, which has by his count “tens of thousands” of small companies.
”If you look at China’s peer-to-peer lending sector, there are probably 1,000 firms. But ideally there should be two or three players. The amount of consolidation the sector will have to undergo anyway is enormous. Media reports say that 90 percent of them will fail by the end of the year. But even (100 left) is way too many,” said Schizas.
The way to survive, he said, is real differentiation, which means finding specific niche markets in a vast business population.
”The test for survival is whether they do anything different in terms of the four raw materials of business financing: information, control, collateral and risk appetites,” said Schizas, who is also acting head of the ACCA’s small business policy team based in London.