Xiaomi Head of Consumer Lending has said that over the last few years there has been a number of problems with China’s fintech industry and that regulation is needed.
Speaking on Bloomberg Daybreak: Asia , Shea Chen, head of consumer lending at Xiaomi, a privately owned Chinese electronics company, said:
This [fintech] industry needs regulation to enforce the activities and behaviors and to make the industry develop in a good way.
When asked if it was important to innovate before regulations were put into place that could stifle the innovation, Chen stated that in order for new ideas to be developed there needs to be more space.
However, he added that if companies aren’t self-regulated then the government and authorities need to have regulations in place to ensure that everything is being conducted as it should be.
When it becomes a matter of the biggest risks within the industry Chen states that there are two: risk management and financing. Namely, that some companies find themselves unable to pay back while funds have increased which has squeezed profits.
In 2015, it was reported by the Wall Street Journal that Chinese smartphone maker Xiaomi was the latest technology company to extend its reach into financial services. Such a step indicated Xiaomi’s ambitious of becoming a rival to the likes of the Alibaba Group.
And yet, it has some stiff competition ahead of it.
Alipay, a financial application created by Ant Financial, which is a financial company operated by Alibaba, has become the most used platform for payments in China with more than 900 million accounts and 350 registered and active users. With a market cap value of around $60 billion in January, Alipay looks to have taken over the Chinese fintech industry and is continuing to attract traditional banking customers with its alternative banking services.
However, despite coming into the fintech market behind the likes of Alibaba or WeChat, Chen believes that Xiaomi hasn’t entered it too late and that it just depends on the timing to expand into the space.
We have over 200 million phone users and over 60 million IoT devices connected, so that translates into a lot of customers.
Meanwhile, with such a huge market in China, Chen adds that there is enough space to grow even with market competitors such as Alibaba and WeChat leading the way.
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