Have phone will borrow: Here’s the latest tech play on China’s spendthrift youth
Mainland Chinese youth are willing to borrow money for the latest ‘must have’ consumer items, but are underserved by traditional banks
An online lender targeting spendthrift 24 to 36 year olds is the latest fintech firm from China to bet on the willingness of Chinese youth to go into debt for the newest smartphone – and on the willingness of US investors to bid up its shares.
Shenzhen-based Lexin Fintech Holdings, which operates an online e-commerce platform offering instalment shopping, is following in the footsteps of Chinese microcredit providers Qudian and Hexindai which raised US$900 million and US$50 million in their US IPOs in October and November, respectively.
What they all have in common is a customer base of millions of young, educated mainland Chinese adults who, unlike their parents and grandparents, are willing to borrow money to buy the latest “must have” consumer items. This demographic is also generally under served by traditional banks in China due to their lack of credit information, according to Lexin.
They were also out in force for the recent Singles’ Day shopping festival, which saw sales on Alibaba’s e-commerce platforms reach 168 billion yuan (US$25.3 billion). During the first hour of the 24 hour shopping spree the number and value of orders on the Fenqile platform rose three and six times respectively compared with the same period last year. Apple’s latest and most expensive handset, the iPhone X, was the top choice among consumers using the Fenqile platform. The 256GB iPhone X was available for 36 monthly instalments of 360.5 yuan per month, with no down payment required.
Baitiao, JD.com’s credit loan product that allows deferred payment on purchases made on its own e-commerce platform, reportedly saw transactions surge 450 per cent year-on-year during the first hour of sales on November 11.
On Monday, Lexin Fintech officially filed an application with the US Securities and Exchange Commission with the aim of raising US$500 million through an initial public offering on Nasdaq under the stock code “LX”.
Lexin’s founder and CEO Xiao Wenjie, 34, who worked for Tenpay for 10 years, holds a 36.6 per cent share of the company, according to the prospectus. Tenpay is the mainland Chinese online payment platform owned by Shenzhen-based technology giant Tencent.