China’s economy has experienced tremendous growth in recent years, with a booming micro, small, and medium enterprise (MSME) market. There are over 50 million MSMEs in China that collectively account for over 60% of China’s GDP and over 50% of the government’s tax income. These businesses create 80% of total employment in China’s urban areas.
Despite China’s overall economic growth, the need to foster full financial inclusion is still imperative. In 2010, 38 million MSMEs lacked access to formal financial services, forcing them to borrow informally from friends, family, and moneylenders.
We recognized the need for financial inclusion in China and opened the first wholly-owned foreign Micro Credit Company (MCC) in Inner Mongolia – and only the second wholly foreign owned MCC in China – in 2009, with the launch of Accion Microcredit China (AMC) in Chifeng, Inner Mongolia. AMC established three operating areas in Yuanbaoshan, Hongshan, and Songshan.
Since then, we have transitioned ownership of AMC to Grassland Finance Ltd. (GFL), a Hong Kong holding company incorporated in 2011 with a focus on founding or investing in financial services institutions in China that provide loans, credit, and other financial services to China’s vast number of MSMEs through efficient offline and innovative mobile and online delivery channels. We are an investor in GFL along with Sagamore and DEG, and serve as the operating partner for the company.
In late 2013, GFL launched a second MCC in Wanzhou, Chongqing, and seeks to expand to other high-growth areas in the country. Our work in China remains focused on building GFL into a leading provider of financial services to the many underserved MSMEs in the country.
We currently work in a variety of areas in China:
We are an investor and operating partner of Grassland Finance.
We are an early stage investor in DemystData, a New York based company with operations in Hong Kong that helps financial institutions use online, social, and internal data to make better customer decisions, ultimately helping to bring financial services to typically underserved populations. New ‘FinTech’ companies like this provide better, faster, and more convenient products and services to China’s financially excluded.
Our work in China also prioritizes building the microfinance industry’s technical and managerial capacity through focused training. We leverage our expertise and broad network in China to bring training and capacity-building services to China to disseminate knowledge around best practices and innovations, and drastically expand financial inclusion. For example, with the support of the MetLife Foundation and in partnership with the Chinese Association of Microfinance (CAM), we recently launched an International Microfinance Management and Leadership Program. The new program aims to develop management and leadership capacity in microfinance in China. More information about this program is available in the press release.
We have also worked collaboratively with one of China’s largest MFIs, the Chinese Foundation for Poverty Alleviation (CFPA) to develop and build training capacity for this institution.
Client education is also a critical component of financial inclusion, and we have partnered with the China Women’s Development Foundation (CWDF), a nationwide, non-profit, social welfare organization, to bring business skills training to women microentrepreneurs in China by using our award-winning Dialogue on Business curriculum.