At the beginning of 2017, Lufax started pivoting away from P2P lending to focus instead on Chinas booming retail investment market. On August 1, the Beijing convenience store chain Linlijia informed its suppliers that the company was to cease all its activities that very same night. Local media discovered that Shanlin Financial P2P services were Linlijia’s main source of financing. Although these three examples of companies facing financial difficulties look unrelated, they have a common element: P2P lending.
It will affect venture capital the most.”.
Not only that, Linlijia is unable to get in touch with its financial backer. And they are not the only ones. Another company in trouble is a Beijing-based travel agency called Shangpin International (北京尚品国际旅行社). An example of this is Lufax, the world’s largest P2P lending platform and the supreme market leader within P2P lending in China in 2018 with a market share of 22%. Describing the current situation, Niu Wenwen, the founder of business support solutions provider, Dark Horse Venture said, “The P2P crisis has reached the entrepreneurship field. With the current situation of funding shortage and the collapse of P2P platforms, the companies or projects that depend heavily on this source of funding are likely to face hardships in the short term. On June 26, iCaifu made a public statement in which the company declared it would stop its investments.
In April this year, the China government unleashed a tighter set of regulations for the country’s P2P lending firms to curb the growing number of financial scams in the sector. Linlijia was regarded as the Chinese convenience store that was most similar to 7-11. The previously mentioned report by the Travel Business Observatory described how a Mister Ma, the assistant vice president of the human resources department of Shangpin International, confessed to an employee earlier this year that Chunxiao Capital’s funding was not guaranteed anymore. Its employees at the 168 stores who were working as usual only a few days ago, now face an uncertain future. Linlijia has basically declared bankruptcy. Hiwifi’s story is similar. The company belongs to BTG International Travel &Tours, which belongs to Chunxiao Capital Group.
The company is facing a life-or-death crisis, to the extent that every expense, including the salaries for July, must now be covered by the income generated by sales.
By Nikkei Asian Review . With a strong financial backup, the company was able to control half of the domestic router market. A. Alfaro is a Beijing-based freelance reporter. This agency, financially backed by Chunxiao Capital, started to cut staff last April when it faced financial hardships. Now everybody is afraid: who will be next? Because Linlijia still is in its early stage of development and is unable to make ends meet yet, the company cannot continue to operate on his own. As a result, the company’s sale channels had been blocked and the whole company was facing a major crisis. According to the data provided by Itjuzi.com, in 2013 and 2014 Hiwifi secured financing from investment firms such as GGV Capital. This Beijing convenience store chain already employs more than 1,000 people. The very same night, Wang Chuyun, founder of the router manufacturer Hiwifi, issued an open letter in which he explained that the company’s cash flow had been interrupted. This collapse of the P2P sector has become one of the main headaches of Chinese investors. Collapse of China’s disgraced P2P sector offers important lessons Online platforms forced banks to improve offerings but model wasn’t sustainable.
China’s peer-to-peer (P2P) lending industry is in turmoil. As a result, all his bank accounts had been frozen. In the open letter, Wang Chuyun describes how his own house is a collateral for the company’s debt that already mounts to millions of dollars. In April this year, the China government unleashed a tighter set of regulations for the country’s P2P lending firms to curb the growing number of financial scams in the sector.
P2P Collapse in China To Be Felt Across Different Industries Aug 3, 2018 by A. Alfaro . Other P2P platforms that received investment from Chunxiao Capital such as Niubanjin, Jucaimao and others have either defaulted payments or been investigated by the police. Feb 11. The company has told workers that due to “hardships faced by the company’s investors”, Shangpin International has terminated its labor contracts with them. The collapse of peer-to-peer lenders in China has prompted public protests.
But everything changed overnight. Investors are losing confidence at their stakes and pulling their funds, diminishing operators’ liquidity; many of them are facing insolvency. The According to the Financial Times, five platforms closed each day during the first three weeks of July. 'Misrepresentation and criminality' Sites like Tourongjia, known as … Its suppliers have Linlijia’s suppliers have already prepared a lawsuit against the convenience store chain.
They were accused of misappropriation of funds.
Cryptocurrencies? Suppliers are trying to collect their debts, bills keep mounting and partners are suspending their cooperation. The company started having financial difficulties when iCaifu, its business partner and one of its main investors, was being investigated for misappropriation of funds. It can only be fixed by the market, the government will not be able to rescue everyone.
Some companies have just disappeared overnight and its owners fled. But the bigger anxiety is that the crisis now threatens to spread send shockwaves beyond these platforms’ immediate circle of investors and threaten to jeopardize businesses in different sectors. In an official letter, the company explained that its only financial backer was being investigated by the Shanghai police.
If that also explodes, how far will it spread? This is a small scale financial crisis that affects P2P platforms, listed companies, venture capital firms and startups. But now everything has changed.
According to Wang Chuyun, the shareholders are unable provide funds to solve these problems. He can be reached at email@example.com. The move came as a thunderclap for several players of the USD 190 billion sector and more than 200 P2P lending platforms have closed down in the last two months while thousands of others expect the worst. According to the new rules, companies have to comply with stricter capital requirements and cannot lend more than USD 30,000 to individual lenders.
0. shares. facebook twitter linkedin whatsapp. facebook twitter linkedin whatsapp. In recent months, authorities have ramped up regulatory oversight of the world’s largest P2P lending industry. At that time, it was reported by local media that Xiang Jianan, the person supervising Linlijia’s operation, had also very close links to Zhou Bayun.
Shangpin International’s difficult situation is also rooted in a loser of the P2P battlefield. The P2P lending crisis started on April 4, when the Shanghai Police arrested Zhou Bayun, the legal representative of Shanlin Financial along with seven others.
0. shares. The executive explained how two of the seven Chunxiao Capital’s P2P projects had already collapsed and the Shangpin International was doomed. Some of its senior executives actually left 7-11 to found Linlijia.