Online finance firms face scrutiny
Ambitions of mainland e-commerce companies lead to calls for more regulatory oversight
Mainland e-commerce firms' rising ambitions in wealth management and lending have sparked risk concerns, with analysts calling for joint efforts by the financial authorities to strengthen regulation.
Zhao Xijun, a finance professor at Renmin University in Beijing, said the major concern was the fluctuation in returns offered by the investment products, which are launched by e-commerce companies that team up with financial institutions such as fund-management firms and insurers.
"The returns will depend on the investment performance of those financial institutions, and can fall short of investors' expectations," he said.
The mainland's leading internet company, Tencent, which runs popular mobile chat application WeChat, last month launched a new asset management platform, Licaitong, operated by its third-party payment unit Tenpay. By using the Licaitong platform, WeChat users can put money directly in a fund managed by four fund management companies that Tencent is co-operating with. The seven-day annualised yield was set at more than 7 per cent when Licaitong was launched,
Similar products hit the market in June when another e-commerce giant, Alibaba, launched Yu E Bao, which is managed by its online-payment affiliate Alipay in co-operation with Tianhong Asset Management. The fund's seven-day annualised return on Tuesday was 6.263 per cent, according to Alipay's website.
Zhao said internet-based financing was complicated because e-commerce firms could co-operate with different financial institutions which were regulated by different authorities.