When it comes to digital lending in China, Lufax is the name to beat. They are backed by Ping An Insurance Group, which is now one of the most innovative financial conglomerates in China. Since they have expanded beyond insurance, they’re now in banking, healthcare, and housing. Their team relentlessly pursues growth, mainly higher up the value stream. In an interview with their Deputy CEO she gave some insight into this approach. When asked about how the company decides how to expand their ecosystem:
“We looked at what sectors were most important, not only to the economy in general but to the consumer—such as autos, housing, and health. We then identified the key areas in each of these ecosystems where we could add value. In the health arena, for example, as an insurer, we’re usually at the end of the customer experience, so we wanted to move further upstream to capture the customers as they start their journey. One of our health platforms that just went public, Good Doctor, now fields more than 500,000 online consultations a day from customers who are looking for health-related advice.”
Similarly, Lufax started out in P2P lending. They’ve branched out to sell over 4,000 financial products, including a wealth management platform. They’ve raised over 4.5 billion USD, and they’re expanding globally. Yesterday I wrote that I think African startups are more likely to move East than Chinese companies will move into Africa. That’s becoming a harder view to hold as I dig deeper into the Chinese financial industry. The depth of talent in China is far deeper and their balance sheets far stronger.
I think these Chinese companies have done a phenomenal job moving higher up the value stream. For the most part, they’ve succeeded without expensive mergers or acquisitions. They’ve built these conglomerates from the ground up, drawing parallels to the early American conglomerates. Because western tools didn’t work for the Chinese environment, the tools they use are mostly built in-house. That allows them the agility to adapt quickly to different environments. The question I’m asking now, is why hasn’t Africa seen these companies launch here yet?