January 28, 2015 5:14 pm
Democratising finance: China’s P2P industry attracts scammers
Gabriel Wildau in Shanghai
When Chinese peer-to-peer lending platform Hengjin Dai launched last June, it used a three-day promotion to lure investors. Just 12 hours later its website went dark. In a similar case the 22-year-old founder of Boliya, another P2P platform, whom state TV had featured as a model young entrepreneur, suddenly vanished. Police in Chengdu, the capital city of western Sichuan province, told the Financial Times they were investigating the case but declined to provide further details. Local media quoted a company employee saying they owed investors substantial sums.
Even as P2P lending has grown dramatically in China over the past year, and venture investors have flocked in, analysts say that the industry has become a breeding ground for fly-by-night operators who once inhabited the world of informal lending.More than 136,000 people per day on average were involved in China’s P2P industry — as lenders or borrowers — in December last year according to figures from P2P001.com, a website that tracks the industry. That was more than triple the 39,000 in January. Loans outstanding reached Rmb139bn ($22bn) by year-end.
But Chinese media is rife with tales of mismanagement, hacker attacks and allegations of fraud.
Read more: http://www.ft.com/intl/cms/s/0/8e2165d4-a08a-11e4-9aee-00144feab7de.html#axzz3QB0A4rHe