China’s P2P lending industry is the next big thing. It fills a critical need that the existing state-owned banking industry cannot and will not be able to fill. P2P also benefits from other important Chinese socio-economic trends, such as the growth of Internet commerce, the need for grassroots savings and investment alternatives, and the public’s desire for transparency. At the same time, coming government regulation, credit risk management issues, variances among different platforms, and lack of profits continue to be major question marks. Furthermore, foreign venture capital (VC) investors will undoubtedly face increasing risks and regulations, while domestic VC investors, although currently fewer in number and with less capital, will become increasingly more prevalent and drive market innovation. Nonetheless, Chinese P2P is too promising to ignore and will continue to be a growth industry for some time.
This white paper entitled Peer-to-Peer Lending in China: Investment Environment prepared by The Strontium Group explores the various factors contributing to the rise of China’s growing P2P industry.