Analysis | Supply chain finance tipped to become US$2.27tr market for Chinese internet firms by 2020
Sector is filling the yawning funding gap, as larger commercial lenders remain belligerently reluctant to grant small loans to businesses and individuals, who present anything like a risk
China’s supply chain finance sector is now being tipped to be worth a whopping 15 trillion yuan (US$2.27 trillion) by 2020, and the mainland’s booming internet-based businesses are lining up to grab their own share of it.
The term refers to credit given to small- and medium-sized enterprises (SMEs) that act as suppliers to large blue-chip buyers.
And despite the reverberations from the recent peer-to-peer (P2P) lending crisis, a marriage between information technology and financial services is continuing to play a vital role in transforming Chinese business.
“As lots of internet companies, particularly small ones find it difficult to make a profit, they are turning to financial services to help improve their bottom lines,” said Hao Zhiwei, chief executive of consultancy Haowenhaokan, which advises a portfolio of Web-based firms on how best to win more finance-related business.
“Supply chain financing is increasingly viewed as a money spinner to help shore up profits.”
On the mainland, supply chain finance not only serves suppliers but is extending its tentacles into thousands of SMEs which run their businesses via huge e-commerce or logistics platforms.