More Foreign Micro Credit Firms in China

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It has been five years since the official setoff of the Guiding Advices for Micro Credit Companies in 2008. In the five years of fast development， micro credit companies made a boom in China. As the latest report shows， there have been 7，839 micro credit companies in China by the end of last year with the lent loans totaling 819.127 billion yuan.

The year of 2013 was when the micro credit firms in China saw a fast increase. Last year， all data concerning this sector had a 20%-40% increase. The number of micro credit firms increased by 1，759， or 28.93% in 2013. The loan balance amounted to 227.024 billion yuan， up 38.34% from a year before. The paid-up capital totaled 713.339 billion yuan， 198.642 billion， or 38.49%， more than the figure in 2012. The number of employees increased from 70，343 in 2012 to 95，136 in 2013.

As for the stats in different provinces， Jiangsu was still a remarkable force in the development of micro credit firms. In 2013， this province was the champion in the number of firms， amount of paid-up capital and loan balance. It had 573 small firms with the paid-up capital amounting to 89.482 billion yuan and loan balance totaling 114.29 billion. What’s more notable is that Jiangsu was the only province with the loan balance of micro credit firms exceeding 100 billion yuan.

The development of micro credit firms in different provinces of China is a direct result of the economic development of them. For example， Tibet only has one micro credit company in 2012 and five more established in 2013. Along with this is the loan balance which increased from 65 million yuan to 225 million yuan. In the four municipalities of China， Chongqing had 207 small firms， the largest of the four. The loan balance reached 50.81 billion yuan， also the largest in the four municipalities. In comparison， Beijing only had 64 micro credit firms， but the number increased 56.09% compared with a year before.

A special force in that field cannot be ignored. They are the foreign micro credit firms， which are drawing increasing attention and recognition. Hong Kong-based United Asia Finance， Singapore-based Temasek Group， Francebased Micro Credit Group， Hong Kong Aktis Group and Japan-based Aeon Group have set up micro credit companies in china.

The Faster Distribution of Foreign Companies

The increasing presence of foreign micro credit firms in China is due to the more open micro financial industry of China. The more regulated market allowed foreign small firms， whose parent companies have unmatched capital strength and matured internal operating system， to quickly get into this market and gain a firm foothold in the domestic market. this is why the foreign micro credit firms are having a faster development pace in China.

Temasek Group developed in China in the form of Fullerton Credit， a subsidiary company wholly-owned by Fullerton Financial Holdings. It immediately got a lot of attention upon getting into the Chinese market. After five years’ development， Fullerton Credit set up 24 branches in Sichuan， Hubei and Chongqing.

Sumitomo Mitsui Financial Group， which is the third largest financial institution in China， is having its whollyowned subsidiary company SMBC Consumer Finance Company deploy the service in China actively. In 1992 it set up Promise Japan Financial Service（Hong Kong） Co.， Ltd， whose main target is to set up micro credit firms in Taiwan and Hong Kong. After the opening-up of mainland China， it quickly took actions. In 2013， it set up four branches for once. Now it is running six Promise Micro Credit Companies in Wuhan， Chongqing， Beijing， Shenzhen， Tianjin and Shenyang.

UA Finance Micro Credit Co.， Ltd， a subsidiary company under United Asia Finance from Hong Kong， is one of the fastest developing foreign micro credit companies in China. Since its debut in Shenzhen in 2007， UA Finance Micro Credit Co.， Ltd has already set up 12 branches in 12 provinces or municipalities in China. Xiao Zhiqing， general manager of its Beijing branch， confirmed that the company was going to expand to the cities of West China like Nanning and Guiyang， as well coastal cities like Qingdao and Jinan.

In addition， Micro Credit China， a company funded by International Financial Corp.， Germany-based KFW Bankengruppe， Belgium-based AXA Belgium and DWM， has also established two micro credit firms in Sichuan.

The Advantages in Capital and Management

The fast development of foreign micro credit companies is also a result of their unparalleled advantages. One of these advantages is their abundance in the capital. For example， the two micro credit firms set up by Micro Credit China in Sichuan have the registered capital amount to 200 million yuan. Promise micro credit firms in Chongqing and Wuhan respectively have the registered capital of 300 million yuan and 200 million yuan.

Hou Haini， director of the business development of Fullerton Micro Credit China， said： “Fullerton has already got the registered capital of 1.5 billion yuan in China by now.” Xiao Zhiqiang with UA Finance Micro Credit Beijing， said the average registered capital of micro credit firms in Beijing was around 100 million yuan and foreign firms usually had the figure above the average.

Compared with Chinese local micro credit firms， foreign companies are also blessed with the developed internal management system and strong risk control ability. Therefore， the products of foreign micro credit firms are easier to get for small enterprises and personal consumers.

Some foreign companies are only involved in the lending of loans and thus they have higher requirements over the risk control. “We consider every one applying for loans to be trustworthy and willing to repay in time. But we need to see the applicant’s documents. We usually compare the documents to what we see. Usually the amount of loans we lent to him/her is within his/her scope of repayment. The entire process of lending loans follows a series of standardized procedures， as the market is separated from the approval. That means， the standards apply to every applicant， no matter they are in Beijing， Wuhan or Shenzhen，” said Xiao Zhiqiang. “The bad loan ratio of us is usually kept at below 5%.”