The Chinese government has been very tight in controlling credit bureaus in the past, but has decided to admit foreign companies into the sensitive sector as it continues to open up financial sector.
Credit reporting agencies use data analysis to help lenders manage risks and borrowers get credit. It is a much smaller aspect of China’s financial sector than banking, insurance or securities, but is a powerful tool in consumer finance.
International credit reporting giant Experian, who serves over 200 million customers in the US, gained the permission recently from China’s central bank to operate its corporate credit business in China.
That permission also signified a step in China’s financial opening-up. And domestic players, such as China Chengxin, welcome international giants entering Chinese market, regarding it as a fuel to boost China’s credit reporting sector developing.
“That’s a good thing to help Chinese business partners, even competitors to learn from each other and to collaborate with each other, because the current financial system, not only domestic but international, has become an ecosystem,” China Chengxin’s chairman & CEO Zhang Bin told CGTN.
Chinese central bank governor Yi Gang at this year’s Boao Forum for Asia reiterated the central bank’s 2016 decision to offer national treatment for overseas credit reporting agencies. Industry investors think credit reporting is far from reaching market demand in China.
“We know a lot of US credit industry players like Experian, TransUnion and FICO Scores. In China, the credit score market is not that big yet. But it has great potential to have great development,” said Selina Xu, Partner for Danhua Capital.
China has opened the corporate credit reporting sector to foreign companies, but not personal credit reporting. However, Zhang says that even the personal credit reporting market is open and it’s ready for the competition.
“We have a strong and deep understanding of customer behavior. We are very confident that during the long-term competition, we will know our customers better, a better KYC (Know Your Customer),” Zhang added.