The peer to peer lending market in China was at one time similar to the ridiculous ICO market. Full of big promises that ended up being empty commitments. Allegations of fraud in the P2P sector in China has been far larger than the ICO sector ever experienced. As the once unregulated industry became regulated, firms collapsed, exited or decided to do something else.
A report in SCMP published in February says Chinese authorities had investigated over 380 different peer to peer lenders. Billions of assets have been frozen as companies have vaporized.
At one point in time, there were around 3800 Chinese P2P lenders. In January that number stood at just over 1000. A more recent report puts that number closer to 900.
Expectations are that a few platforms will remain once the dust settles but the process has been painful. Jobs have been lost, money squandered and savings evaporated. But some Chinese P2P lenders may be looking for greener pastures by seeking out friendlier jurisdictions in SouthEast Asia.
LearnBonds says the surviving online lenders in China want to “cut their losses and exit the mainland instead of complying with the strict oversight of the government. Their next stop could be the Southeast Asian market and neighboring countries like India.”
The report quotes Johan Uddman, a Fintech consultant based in Shanghai who “said that it is wise for P2P lending platforms to look at foreign markets.” In brief, Chinese P2P platforms can use their experience and tech to launch elsewhere.
The same report states that the Southeast Asian P2P lending market looks similar to China in 2011. Let’s hope it’s not going to end up with a similar outcome.