Ever since Premier Li Keqiang announced China’s “Internet Plus” drive in his annual government work report in March, the country has been making strenuous efforts to integrate the Internet with its traditional industries, which gives rise to the burgeoning growth of Internet finance nationwide.
What does Internet finance refer to? What role can it play in China’s overall economic development? What experience can China learn from other countries to ensure the healthy development of its Internet finance sector?
A group of Chinese and foreign experts gathered in Beijing on July 25 to share their insights on these issues at the first international meeting of building an ecosystem for “Internet Finance Plus”.
Internet finance and “Internet Finance Plus”
Internet finance is a new business model, allowing traditional financial institutions and Internet enterprises to carry out financial activities with the use of Internet technology, according to the guidelines for Internet finance released by China on July 18.
The new notion of “Internet Finance Plus” raised at Saturday’s meeting refers to the integration of Internet finance with other industries, said Lin Yongqing, founder and president of Crowdfund China Society.
Finance takes on the role of serving other industries, and with Internet finance, it is much more convenient for financial enterprises to provide timely help to these industries, Lin explained.
Zhang Xiaochen, co-founder of the society, said the “plus” here is more like a kind of subversion. The “Internet Finance Plus”, just like “Internet Plus” which subverts outdated business models by the means of the Internet to promote the upgrading of traditional sectors, aims to overturn traditional financing models.
Niu Huayong, dean of the International Business School of Beijing Foreign Studies University, also gave his interpretation of the “Internet Finance Plus”. He compared finance as a blood circulation system, other industry entities organs and the “plus” blood vessels, saying it allows everyone to participate in Internet finance.
Boosting mass entrepreneurship and innovation
Mass participation in Internet finance generates mass entrepreneurship and innovation as analyzed by experts attending the meeting.
Lin Yongqing said Internet finance can also be called “mass finance” because it enables individual investors to decide where they want to invest and grants small and medium-sized enterprises with loans that are usually rejected by large banks.
“Internet finance boosts mass entrepreneurship and innovation,” said Wang Huiyao, president of Center for China & Globalization (CCG) and counselor of the State Council. He highlighted the effective role of the Internet in garnering capitals, talents, and technologies to create more jobs and new business models.
He also urged China to grasp the opportunities provided by the development of the Internet industry to expand its market shares via the Internet and enhance the innovation capability of its enterprises.
Wang’s idea was also echoed by Zhang Xiaochen who believed that Internet finance plays a huge role in creating jobs and encouraging innovation. Zhang said Internet finance mainly helps those startups who cannot get access to funds. As a new business model, it can help both underprivileged people and those startups with brilliant ideas.
Learning experience from other countries
This meeting also invited experts from the United States, Australia, Israel, and some European countries to share their experience in Internet finance and provide suggestions for its healthy development in China.
“The most valuable experience should be investor education,” said Jason W. Best, principal of Crowdfund Capital Advisors. He said it is important to help investors become aware of potential risks arising from Internet finance and learn to diversify their overall investment by putting some portions into more stable industries.
Drew Von Glahn put emphasis on data transparency, saying any kind of growth relies on the ability to obtain data, with which investor can make sensible decisions on investment. He also called on startups to execute on their ideas with perseverance instead of just dwelling on big ideas.
Scott McIntyre, executive director of U.S. Crowdfunding Professional Association (CFPA) also gave advice to startups, regarding trust, innovation and communication as crucial elements in gaining investment through Internet finance.
Rules and regulations are also emphasized by experts at the meeting, saying those factors are urgently needed to promote the healthy development of Internet finance and create a sound ecosystem around it.