How the Internet financial affect small loans

this is a good credit net ming-shun li co-founder and chief executive officer on October 17, 2013, one thousand people in the Internet financial sharing IFC1000 breakfast meeting, the following is the specific content of the conversation:

I chat with you today, the topic is how to influence of the Internet finance small micro loans and small cultural characteristics and development of micro loan.

today’s topic is mainly divided into four parts, first I columns, respectively, including: first, what is the small loans? Why do you need to small micro loans, even small micro loans? Rather than small and medium-sized enterprise loan? Second, small loans previously solved by what channel? Why small micro loan with close ties to family and kinship? Why do you want to borrow against relatives and friends? Third, what is the mainstream of small loans? Main characteristic is what? Small loans and “usury” what kind of relationship is it? Fourth, small micro loan why need the Internet? Internet thinking exactly what problem solved the small loans? And the development of small loan what far-reaching consequences?

welcome everyone in this process, analyzed all kinds of discussion and guidance at any time.

first, what is the small loans? about this problem, I do net before and after the loan is two concepts completely, before I do this industry, is actually hear more lending to small businesses, and then enter the industry really heard small micro loan after this concept. It is said that small micro loan concept is nearly two years. In previous work more than ten years, I’ve been hearing all kinds of channels are called “smes” loan support, help them get financial support. I always thought, I understand that the small and medium-sized enterprise, is in my impression, in the side of the “small” enterprises that can be seen everywhere. The financial industry, in fact, when I really get into the Internet, after half a step into the financial industry, truly realized that the industry defined by the small and medium-sized enterprise the “small” is less than 500 million yuan annual income scale originally belong to “small business”, and “in the” enterprise is the annual income in 5-5 billion yuan annual income scale. As a result, I was completely confused, originally I past understanding of the small and medium-sized enterprises and the government, the financial industry to the definition of real, how days lang.

I see a lot of small Banks do, for example, minsheng bank to do small, I see they made approximately more than 100, the average is about 1.6 million or so; I see China construction bank also said that to do small, found that made more than 60000, actually each loan is more than 10 million. I’m totally confused.

I later see peace to do small, they each hundreds, even thousands, I just think, this and I understand that the small micro lending is relatively close to. So, what is a small loans, is the first very interesting subject.

I don’t know how you understand it. I later I define a “micro” small loans, the concept of income is that the size of 500 w within the enterprise, this is now the vast majority of the status of the enterprise, the Kentucky, this is Mr Secretary said the blue ocean, is the most need us to solve.

I defined these small, namely the small micro enterprise loan is very difficult, basically be today’s most traditional financial institutions and Banks abandoned, insulation.

I think these small micro enterprise difficult, on the one hand is because this batch of businesses can’t there is accredited by the bank, the mortgaged property, on the other hand, is a lot because they can’t learn the most comprehensive loan products on the market, there is information asymmetry. These the following income scale 5 million small business owners, no professional financing of CFO or chief financial officer, even no full-time accounting. A lot of people don’t know what are the agencies can fundamentally loans for them, and not enough chose to relatives and friends to borrow and some regular folk lending, led to the occurrence of all kinds of social problems, this is what I would tell the credit culture.

yes, this part of the enterprise is one of the fresh family behind, behind every small micro enterprise is self-reliance family, they don’t have much social relations, mainly by work hard to earn money, and most of their money is clean, but also is the social vitality of the cells.

now, unfortunately, due to the statistical caliber is not completely now, for a long time, I really want to do one thing, exactly as I say the real small loans, the countries all kinds of formal lending institutions exactly how much each year?

I couldn’t really find the number of the market and lending, it is very difficult. I think, the occurrence of the loan every year at least in the trillions, 4-5 trillion.

now talk about the second question, it is because these small micro enterprises unable to get loans from Banks and other traditional channels, and, according to most of us experience, if you are a little, you want to go to some traditional mainstream bank loans, you have no but can’t loan of success, even may be some dirty look. in this case, the small micro lending channels, most not by normal social financial institutions, but friends borrowing and lending.

in China, there are lots of places, at least today still take the “loan” as a derogatory term, so, if you are with you people think you are have a loan or loan, it may well be thought “strength is not enough. Also because of this, a lot of people are reluctant to lend, or disclose their lending or borrowing. So, they reason that, of course, with close people borrowing, always feel is more suitable and convenience, but often this with related members of the family, sorry to refuse. So, most of the small loan occurs with the blood relationship between family.

in the statistical caliber, the definition of the bank is very abnormal condition, for the small loans, they are in order to meet the above requirements to do this, so, a lot of digital far-fetched.

hope someone to real small micro lending this definition to investigate the market, and research institutions have to do it.

although lending to friends and relatives look good, the efficiency is very high, is the milk of human kindness, what don’t need a mortgage, but in fact, I see most of the broken family relationship, each the contradiction between relatives, many closest friend the break point, and lending and money have a close relationship. Joking words, “do you want to destroy a friend, you give him to borrow money”, in fact, it was so.

now small micro loan, loan accounts for a very large proportion of the relatives and friends. Why I’m against it? Because there is no mortgage lending to friends and relatives look, in fact, collateral blood trust, mortgage of that kind of feeling after see confusing things. Let no longer so pure between family love and friendship. Me to see a lot of such examples, because borrowing problem, make the contradiction between the two relatives, don’t know whether you have feelings?

before I accept the education is that westerners do not speak, then 18 years old the child, no matter, especially financially independent, rarely like to borrow money between friends. I now think of, the somebody else this feeling is really about, because the relationship is more simple, not complicated economic problems. Let the economic problems and relationship problems completely separate, is the rational choice. So, I hope very much admired and promote new borrowing, lending to the society, rather than lending to relatives and friends. Let the affection between the Chinese more pure. I see, now the folk family culture is very snobbish and many families inside, not on the reproductive and prestige to respect each other, but to see who is more rich shall have the right to define a person in the family and the family status. This is a very abnormal condition of social relations.

I feel really should advocate culture is, or is really wants to see scene, between people, especially the family members of the family together, not to mention money, everybody happy talk about feelings, that is how good. So I am opposed to household borrowing lending to relatives and friends, against all sorts of feelings ripped money into it. So, I hope more lending relationship between individual and society, make borrowing real public social.

because the borrowing between the family and the family, no stable contract, generally not so clear the definition of what time is money, also embarrassed to talk about the interest of what, this will cause a lot of inertia, especially the young, if under the inert, in social lending will give up the contract responsibility, a kind of constraint. Will make him less motivated, is easy to find the money to, what you don’t need. So, I found that the big cities of Shanghai, Beijing is now in decline, the phenomenon and a lot of second – and third-tier cities and rural areas, more common lending to relatives and friends. So, to summarize, the poor family and relatives and friends to borrow more common now, if you want to get rich change poor appearance, one place is really developing small loans, developing social normal small loans.

a abnormal social lending relationship, not only can destroy some harmonious family relations, also can destroy some young people’s morale, will destroy the economic development of a place more progress, so will ruin our future, to paraphrase is popular now, will destroy our Chinese dream.

now, I am opposed to the small micro lending culture, I’m going to talk about the third question, what is now the mainstream of small loans? Main characteristic is what? Small loans and “usury” what kind of relationship?

I think small is the mainstream of the micro loan characteristics, popular is “money”, that is to say, you get the more money is to make money, rather than consumption, to play. Most of families and individuals like to rely on the capital to support themselves, give his family a better life and development, change the fate.

I see a lot of small companies to small shops open bosses are very hard, with a little bit of money roll slowly, want how to do a small business, let his family live better, for the next generation is not like yourself so hard, every thought of these, and these people talk, I have a feeling of want to cry, because I will think of my parents… TMD, more say more acid.

since no bank loans to these people, these people can’t, will be a variety of sources to borrow, have to accept the so-called private loans, as well as the so-called “loan shark”, what am I doing this line before, view of usury is a very negative, now, I to the word, even in a neutral word, what is high and what is low, not to look at it with a certain number of, I think to be able to view the business in return, if I borrow 100000 pieces of replenish onr’s stock, 2 months later I can sell the goods, make double finally sold for 200000, this time, I have 2 months, I will give a 10000 pieces of interest is not expensive, 10000 yuan for 100000 how much is the interest? The equivalent of a month 5 points, you said this calculating do not calculate usury? I think not, if you can’t borrow the money, I can’t make another 90000.

I think, the consumer also has a small loans, but it is less, the general is to solve the credit card, because these people are often white collar, is there a bank normal water, credit card is straightforward. But business people, often running water is not stable or not in bank withdrawal, but reflected in cash. Now, I think the second – and third-tier cities in general people, haven’t really built on loan at the time of consumption habit, if not business can make money, just spending, they’re definitely not loans.

so the current mainstream is small loans, rather than consumption. At least I think in a fairly long period of time, everyone is for the sake of money, rather than to borrow money to happy, to the consumer. But, we see that some people consumer loans to decorate to study abroad to get married, etc., these to tell the truth I think is the equivalent of a long-term investment. Of course, these loans, they assume the level of interest is more conservative.

the construction of these small micro loan of wool stoma, requires a developed financial system, and the financial system is sustainable in the business point of view, is profitable, the traditional banking system now think high risk in doing this and unprofitable, so do very little.

because of the current banking system, or to the economic characteristics of the era of planned economy and set, it is the real market economy, most of the banking institutions set up or to solve large and medium-sized enterprises and the financing of local government as the main characteristics, even do some small business, is also aimed at individual consumption, little business for small target. And internal processes and the KPI system cannot be guaranteed.

so before I go on the fourth topic, why small loans to the Internet, the Internet thinking what problem can be solved exactly small loans? And the development of small loan what far-reaching consequences?

the Internet was born to be the best way to solve the problem of the long tail.

I had 13 years, the Internet and in different types of Internet companies are done, including big companies such as netease, tencent, etc, also including the entrepreneurship has always been.

I am very familiar with the Internet, the financial industry, just contact to me, if I compare, I think the Internet is very efficient, transparent and flat, a lot of things want to simplification, the financial industry, and a lot of things are deliberately made more complex, such as bank of a principal and interest waiting for the forehead and equal principal, fool would bring a lot of people, such as the former, if you have 1 million loan from the bank, also in 20 years, even if the last month, you are also the bank interest is 100 Wan Benjin interest, for the people is very deficient, will is more than the standard of a lot of interest, also don’t know many people think that it is convenient, is a digital money every month, in fact, the financial industry of various algorithms have deluded. The Internet is becoming more and more simple in pursuit of culture, I found that the financial industry is still in play word games.

so, today’s financial for many people, is not an easy to understand, not so close. Internet today has been deeply influence in all aspects of our lives, our food and clothing live line because of the existence of the Internet is becoming more and more good, needs to solve a simpler, experience more comfortable, accordingly, the Internet also can make close to the financial sector, better to make the loan relationships more simple?

the construction of the wool stoma, the Internet is actually a many-to-many system without rules, it is not a linear, also is not a tree type, actually it is stereo without rules, similar to cell movement. I see now each p2p is a bit kind of all sorts of cells are moving.

Internet reconstruction finance, first to build trust. Trust not by force, not by licence, not by money, but by choice and by experience, by satisfaction. I have been like for example, you go to dinner now, do you use to travel, you go to buy a ticket, go to ctrip, home inns of what do you live in a hotel to seven days, it is the request of the ministry of health, the ministry of communications? Because they have a licence? Are they more money? nullnullnullnullnullnullnullnullnullnullnull