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China logs on to Internet+ finance

Equity crowdfunding receives new backing
03.05.2016

Internet financing is one of the pillars of the Chinese government’s Internet+ policy, as ratified in their 13th Five-year plan. The Internet+ policy calls for ‘the integration of the Internet with economic and social sectors, making new industrial modes a main driving force of growth by 2018’. Besides finance, other sectors included in the Internet+ initiative are ‘manufacturing, agriculture, energy, public services, logistics, e-commerce, traffic, biology and artificial intelligence.’

The aim of the Internet+ finance strand of this policy is to support ‘mass entrepreneurship’ and enable businesses and start-ups to access new sources of funding. The idea is to cultivate conditions that support the government’s move away from a manufacturing-dependant economy, into an innovation economy.

As a consequence of this policy, 84 equity crowdfunding platforms launched in 2015. There are now more than 141 platforms active in China (compared to 31 in the UK). Amongst these 84 platforms are tech giant Allibaba, which launched its own equity crowdfunding platform as part of Ant Financial, as well as Jingdong (JD); one of the largest online retail platforms who also launch an equity crowdfunding offer as part of JD.com.

According to a recent report published by Zero2IPO Research, by the end of 2015, 2,338 projects had successfully raised funds through an equity crowdfunding platform in China, raising nearly RMB 10 billion (over £1 billion GBP) in total. In comparison, in 2015 there was a total of 332 million GBP raised in the UK.

As a relatively nascent form of investment and means of raising finance, the recent explosion of equity crowdfunding shows an appetite for alternative finance in China. Coupled with mass adoption of mobile payments and bitcoin usage (Chinese Bitcoin exchanges now account for over 90 percent of global Bitcoin trading activity), China has proved itself as a place where alternative finance can prosper. This exists in the context of an improving regulatory environment, as the government continues to crack
down on illegal fundraising with regulations that provide more security for users of P2P lending platforms.

Our work with the equity crowdfunding solutions provider, ShareIn looks at how UK business can develop China UK cross-border campaigns. It is our hope that this will enable UK businesses and creatives tap into the opportunity that alternative finance provides in China. If this is something that interests you please get in contact.

- Conor Roche, Associate Director