HC: A business-to-business "financial" sample

A few weeks of internal discussion were inconclusive, but the Guo (now Ninghuicong CEO) had to make a decision because most of the management, including him, knew very well what it meant to do without change.

This is really not an easy thing. That was 2011 November, when HC seemed to be getting better, and a couple of good fiscal quarters had made its shares rise several times (at the start of 2009, at a low low of HK $0.3), while core figures such as the number of paid subscribers and profitability showed signs of growth. This was validated a few months later: in March 2012, its number of paid subscribers was finally over 100,000, the second of a business-to-business E-commerce company to reach such a magnitude, except Alibaba.

But the so-called "business-to-business Doomsday" has never stopped, Alibaba's paid users began to lose, and a lot of rising consumer websites are "intercepting" VC pockets of money, no one is willing to touch business-to-business such a time-consuming and laborious business model.

This is not what Guo really worry about. More "Frightening" is the fact that Alibaba's previous attempts at financial operations have had an effect, "and we did see some different signs." "HC Network Financial Division general Manager Shun Chunming told our correspondent.

It is the placement of finance that has made Alibaba's business model sound, and it looks no longer an information trafficker, but a platform that truly enhances the value of the industrial chain through a variety of services. This is exactly two dimensions of the logic of wisdom, and it is no exaggeration to say that the end of this war is only a matter of time.

Do, must do! But no one knows what to do. "There is no conceptual model, no timetable, and we begin." "Guo gave Shun Chunming this task, but there is no clear instructions, which for the site operation of his origin, the pressure is naturally very large."

And more than a year later in January 2013, Minsheng Bank (600016, shares bar) credit Card center President Younger and Guo together for the "New e credit card" Jie, Hui Cong finally have the financial gene.

Complement

At that time, the business model surrounding the combination of E-commerce and finance was gradually becoming clearer, and the industrial chain was showing an astonishing enthusiasm for finance. The number of small micro-enterprises in China has reached tens, and most of them cannot reach the credit qualifications established by traditional financial institutions. Because credit histories are "bad", banks are unwilling to lend them money or to hedge their risk by high interest rates.

Business-to-business development is now more than just a matter of dealing with order flow and logistics, and in its assigned responsibilities, there is a growing number of data and financial elements that are even more needed by small micro-enterprises. They are desperate for a cash flow that is no longer fragile, and someone tells it where to put the money.

Clearly, this is beyond the reach of traditional business-to-business models. "Membership fee + bidding ranking + all kinds of credit certification + offline exhibitions, promotions and other special services" is becoming less efficient, which makes business-to-business is no longer a good business.

Thus, the implantation of financial genes can cause a qualitative change. This is not to say, of course, that business-to-business companies, like banks, use the proceeds from financial products as the main business model, but through the financial solution of the partner's most pressing cash flow problem.

But for Guo and Shun Chunming, the difficulty of the matter is that there is no template to draw on. On the one hand, the United States does not have a business-to-business Web site, there is no so-called "financial", on the other hand, even Alibaba, HC can not completely copy its model, because at that time two companies are very different. And more crucially, any micro-innovation in this business model is a challenge to the country's laws and policies, so all tactical details are tricky.

One of the mishap of business-to-business is that it does not involve the payment process, and the sales information is circulated online, but the entire negotiation and delivery process is done online. Alibaba has just released data shows that last year domestic E-commerce total turnover reached 9.6 trillion, of which business-to-business accounted for almost 8.4 trillion, and Alibaba income of only 7 billion yuan a year. "I envy the real estate agents and the information business, but they can charge a commission by offering a guarantee." Guo jokingly said. The most essential difference between "commission" and "membership fee" is that the former can put itself in cash flow, as Alipay is now beginning to show in Alibaba, and more and more business-to-business transactions are done through Alipay.

But many of the key issues remain. "The most common issue of invoices can not be solved, online transactions how to develop tickets, the national tax and land taxes, how to divide, and what laws and regulations should be followed?" "Guo said," 80% of the business-to-business transaction is the production link, rather than the circulation of the wholesale, an order requires more than 10 enterprises to support, offline transactions will naturally more convenient. ”

And these grassroots business owners do not understand the internet marketing, they more value offline trading, even if it is business-to-business paid users, but also simple information release, far less than Taobao sellers intentions. This is actually very realistic, the credibility of both parties who will be certified, bulk product transactions who to guarantee, the specifications of the trading products who will check, there are problems who will pay ... If there are no reasonable answers to these questions, business owners will have to confirm these issues on the ground, and what is the value of online trading?

But must be online trading platform, Guo very clear this point. With the business model in mind, this is the most important thing banks are willing to work with you. "Only in this way will we be more accurate with the data, but it is hard for banks to do that." "What banks want most is all the real information about their customers ' credit and cash flow, which is why every bank requires a loan client to open an account here." Zenggang, director of the Banking Research Institute of the Academy of Finance, said.

But the reality is at the end of the E-commerce chain of the banks are "marginalized." Third-party payment tools like Alipay cut off consumers and banks, who were banks ' own cardholder, but the banks had no idea of their shopping details, only to know how much they had spent. In the case of Alipay's annual turnover, the fee will be lowered as it increases the ability to bid for the bank, which will erode the bank's income in some way.

Banks have also seen the value of microfinance, and with the catalyst of Internet technology, the trading model has the potential to fall to the ground. Several banks, including CCB (601939, shares), Bank of Communications (601328, shares) and Minsheng Bank, have been involved in microfinance in different degrees and in different ways. "On both sides of the complement, in fact, the root cause is not a perfect credit system, abroad more than 10 years ago completed the payment tool and bank card binding, and we were completed 6 years ago." "ebay is just ' mending ' a PayPal, and we need to make up too many things," Shun Chunming said. ”

Path

As soon as the project was launched, Shun Chunming began to keep in touch with various types of financial institutions. "There are also banks, but more are collateral and mortgage companies. "But the cooperation with these" quasi financial institutions "is always not smooth, there are a variety of problems. "Overall they are not so mature development, risk monitoring and other links do not solid, we will occasionally see some peer-to-peer (Peer to Peer, everyone loans) the company suddenly disappeared." ”

At that time, the study of Alibaba's financial evolution path is an important task. But Guo in many occasions the message is: "Hui Cong will not do finance, the choice of finance is entirely directional, will not become a specific product." ”

Guo General (refers to Guo) said very clearly, Hui Cong only focus on the business-to-business domain, not like Alibaba, spread so wide. "Shun Chunming said.

But Alibaba in 2010 and 2011, respectively, in Zhejiang and Chongqing set up two microfinance companies, for Alibaba business, Taobao, cat three platform for businesses to provide order loans and credit loans. The order loan is to give the credit limit to the seller who has delivered the goods, the buyer has not confirmed the kind of transaction, and the loan is completely unsecured and unsecured.

In fact, Alibaba has been testing water for three years. May 2007, it teamed up with CCB to launch the "E credit", Alibaba members can rely on their website on the transaction credit records to apply for loans. In the same year October, it and ICBC (601398, shares bar) launched a similar product-"easy to finance." From 2007 to 2010, the two products helped small businesses get 12.8 billion of dollars in loans, according to the data disclosed by Alibaba.

Both of these collaborations ended in the end, although the two sides did not disclose specific reasons, but it is clear that the two sides of the understanding of financial products are quite different. According to some media reports, Alibaba insiders revealed that the most of the orders submitted to the bank, the majority were rejected, small micro-enterprises in Alibaba and Taobao accumulated credit can not be recognized by the bank, still need to guarantee, mortgage or UNPROFOR, and really can pass the threshold of bank audit is very few.

HC's situation is basically similar, "We tried to submit more than 40 orders, and finally only a few." "This makes Shun Chunming very difficult, and the cooperation with the quasi financial institutions is not sustainable, the scale is too small, but the bank is not fully positioned, the threshold of cooperation is too high."

This has lasted for 2012 years, perhaps because banks have seen the effects of Alibaba's finances, and they have become more proactive in communicating with large e-commerce companies. According to a wide range of information on the Internet, Alibaba received a microcredit licence from April 2010 to the end of June 2012, Alibaba Finance has provided more than 129,000 small micro-enterprises loans, the total amount of loans over 26 billion yuan. A very scary data is that Ali Finance has achieved a one-day interest of more than 1 million yuan.

Some banks have lobbied for a customized financial service, and after the first stage of water testing, Guo has a certain idea of the financial services needed by HC. "We chose to use credit cards to do, on the one hand, this is unlimited responsibility, we are to the cards to business owners, so there is no problem of enterprise failure." On the other hand, credit cards can easily realize the benefit of the day. ”

But initially, the Guo preset way is to give the buyer hairpin, so that HC access to the transaction. In August 2012, Minsheng advised them to be bolder.

Guo is interested in some of the details of the Minsheng Bank's proposal, and the negotiations between the two sides have entered the fast lane. Less than six months, they have designed the first product: for the Hui-Cong member individual issued credit cards, the amount of under 200,000, with the HC network of paid member Goodwill records can apply. If there are real estate, car production and water and other certification (not mortgage), can be additional credit limit to 500,000 yuan. According to younger revealed that the 2013 goal is to give 100,000 Hui Cong member of the credit amounted to 20 billion yuan. This mode of cooperation differs from that of Alibaba and Suning's own microfinance company, and the cooperation between Jingdong Mall and Bank of China (601988, share bar) is also different.

But it's a good start, and Alibaba has started to upgrade its eco-chain around financial services. Last September, Alibaba's account was completed with Taobao, the cat and a Amoy account to get through, which is seen as a few platform seamless docking of the most obvious signal.

Peng, Alibaba's China president, said in an interview with the media that Alibaba was moving from an information platform to a service platform in order to meet the needs of business-to-business buyers and sellers, in addition to the information interaction. and other platforms to get through, not only at the technical and data level, but also in the entire process level. In fact, last year's "Double 11" promotional, the cat and Alibaba conducted a "combat exercise", 13,000 business-to-business vendors involved in the supply, the total number of goods exceeded 10 million.

And HC will be online this year to launch their own trading platform, they certainly want to have their own ecological chain. Shun Chunming's team is reaching out to banks on a large scale, "keep trying to see what their products are for our members." ”

Mr Ma said in 2008: "If the bank does not change Ali, Ali will change the bank." "The internet is using its usual posture to subvert the traditional financial sector, at least for now, it looks aggressive." While Guo does not agree with the word "subversion", it is undeniable that the business-to-business "financial boom" has changed more than just their own genes, and it may even change the manufacturing and financial sector across China, which is clear.