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Consumer Finance

Consumer Finance

New appetite for credit

propels rapid growth

Category reflects economy’s shift to consumption

Consumer finance was among the fastest rising categories in BrandZTM China Top 100, increasing 80 percent, based on rapid growth in consumer lending and the performance of Lufax, the one consumer finance brand of sufficient brand value to qualify for the China Top 100.

Funded by Ping An Insurance Group Co. of China Ltd., China’s financial services giant, Lufax began with a focus on a peer-to-peer lending. It shifted away from that business to broaden its consumer finance operation and clear the regulatory hurdles necessary to pursue an IPO. The number of Lufax registered users increased 20 percent in one year.

Other brands in the competitive consumer finance category include Du Xiaoman Financial, a fintech spinoff of Baidu Inc., the online ecosystem and search giant. It focuses on wealth management but also offers education loans and other consumer financing products. The search capabilities of Baidu potentially enable Du Xiaoman Financial to deeply understand consumer financial needs.

Among other fintech lenders emerging from non-financial corporate entities are Alibaba Group Holding Ltd.’s Ant Financial, and D Digital Technology (earlier JD Finance). Robust category growth is expected to continue because young Chinese are more open to spending with credit compared with their parents’ generation, which was more inclined to save.

Despite a decline in consumer confidence during the COVID-19 lockdown period, 60 percent of consumers expressed willingness to take on short-term debt compared with 43 percent a year earlier, according to Kantar Consulting China MONITOR 2020. Postponed purchasing is expected to resume in a variety of categories, including computers and home electronics, and cars, according to Kantar COVID-19 Barometer China Report.

Among people who had planned on purchasing a banking product, 22 percent said they intended to purchase now, online. And another 15 percent of consumers who had not planned to purchase a banking product said they would now consider it.