It is not a good sign for any economy when debt collectors are booming and in China right now, the industry is on a hiring spree.
Whole Scene Asset Management, a debt recovery firm based in Hunan Province, plans to double staff numbers to 400 people this year as it expands into new cities.
“Debt collection firms have been mushrooming,” company founder Zhang Haiyan said. “With bad loans growing this year, everyone is adding new hands.”
Bricsman, its rival, is also hiring — hoping to boost its headcount of about 1,000 employees by 400 to 500 this year after landing a deal to collect delinquent consumer loans for China Minsheng Banking Corp (中國民生銀行), people with knowledge of the matter said, declining to identified as they were not authorized to talk to media.
Bricsman, which is based in Jiangsu Province and counts other large banks among its clients, did not respond to a request for comment.
As more consumers struggle with lost income in an economy battered by COVID-19 and US-China tensions, a burgeoning wave of nonperforming loans is sparking concern among lenders — both at specialist consumer financing firms and traditional banks — and even among debt collectors.
China is in the middle of “an unfolding debt crisis,” said Joe Zhang, a business consultant and until last month vice chairman at the country’s largest debt collector YX Asset Recovery.
The delinquency rate for consumer debt is climbing and collecting on those loans has become much harder, he added, estimating that at some weaker non-bank consumer lenders, soured loans might account for 30 to 50 percent of their portfolios.
That bodes ill not only for Beijing’s efforts to spur domestic demand, but also for the financial health of consumer lending firms, which help provide credit seen as vital for shoring up the virus-hit economy.
The China Banking and Insurance Regulatory Commission said that delinquency rates were under control when it noted a 0.13 percentage point rise in the nonperforming loan ratio for first-quarter consumer debt compared with the start of this year.
However, that data only captures bank loans and not those extended by the country’s vast numbers of specialist consumer finance firms, including micro lenders.
Even at banks, which generally have stricter loan criteria, concern is building.
An internal review by Bank of Shanghai Co Ltd (上海銀行) saw its nonperforming loan ratio for consumer debt soar in the first quarter, a company source familiar with the matter said.
“We’ve already started to reduce our exposure in consumer finance by cutting our co-lending business with smaller platforms,” said the source, on condition of anonymity.
Chinese consumer debt has ballooned over the past five years, fueled in part as banks scrambled to issue credit cards, with outstanding debt for bank-issued cards doubling to 17.6 trillion yuan (US$2.5 trillion).
Internet-based consumer financing, which is only lightly regulated, has also grown — by a dizzying 400 times to nearly 8 trillion yuan since 2014, the Guanghua School of Management said.
Household debt, including mortgages and unsecured consumer loans, has risen to nearly 60 percent of GDP, up from 18 percent in 2008, during the global financial crisis.
China Merchants Bank (招商銀行), which derives about 55 percent of its business from individual clients, is reviewing an earlier plan to increase that portion of its business to 60 percent, president Tian Huiyu (田慧玉) said in April after its first-quarter earnings.
Shanghai ShangCheng Consumer Finance (上海尚誠消費金融) has lifted its thresholds for new borrowings, while intensifying debt recovery efforts, a company manager said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day