At the beginning of May, UNCDF hosted a workshop in Beijing to launch the i3 Program, funded by the MetLife Foundation, in China. Organized in partnership with the United Nations Development Programme (UNDP) and the China International Center for Economic and Technical Exchanges (CICETE), the workshop explored China’s experience using digital technologies to advance development and financial inclusion.

After a one-day ceremony filled with discussion on how digital financial services can be leveraged to increase financial inclusion, international guests from Africa, Asia, Europe and the US attended 2 days of field visits in rural areas around Beijing. The fields visits were organized so that guests could learn about China’s experience in digital financial services and the possible applicability of that experience to their own countries’ contexts. This blog sums up the field visits; in a separate blog available here [hyperlink] you can read about the discussion during the workshop

After the workshop a group of delegates, mostly from international organisations such as the World Economic Forum, Duke University, fintech companies based in Africa and Asia, and the MetLife Foundation, made field visits to rural locations and several Chinese companies with the aim of learning about the digital finance landscape in China and how it might be relevant for other markets in Asia, Africa and the Pacific. They visited a number of locations to explore how digital financial services are penetrating rural areas.

Delegates were hosted by Ant Financial on the first day, who took them to a rural Alipay finance centre where people can set up businesses and apply for finance. There they heard about Alipay’s innovative online payments and loan platform, which allows people to apply for business loans in three minutes, get approved in one second, and which involves zero humans in the application process. To illustrate the impact of this platform, a farmer spoke to the group about how it had changed his business. He uses the platform to collect money from his sales, pay for business expenses, and apply for loans – all things he used to have to travel for an hour to the nearest bank to do. After visiting the rural finance centre the group travelled to a local village, famous for producing the most garlic of any village in China (some 40 million kilos of garlic a year) to learn how the village cooperative uses financial services. The cooperative is responsible for teaching members how to use mobile phones and access microcredit services, as well as encouraging them to borrow from formal financial institutions. The group then visited a mushroom farm, where a farmer relayed how purchasing inputs with loans through AliPay has allowed him to expand. He also suggested that the rise of agritech is leading young people to return to their villages as they see agriculture as more of a viable career.

The second day of field visits was hosted by two organizations, JD.com and CD Finance. JD.com is China’s biggest internet company by revenue. On the morning of the 9^th July they conducted a tour of their head offices to show the operation of their logistics network, which covers 99% of China’s population. The tour illustrated the scale of operations required by online retailers in China – by 11am on the morning of the visit JD.com had already made 3.6m deliveries – as well as how advanced their technological solutions were. The company already uses drones to make deliveries and runs shops in which cameras and smart shelves sense which products shoppers take, smart pricing shows shoppers individual prices to encourage purchase, and payment is taken automatically from the JD.com e-wallet.

After lunch the delegates travelled to CD Finance’s head office to hear about how the bank has been servicing rural clients since 2008. The CEO of CD Finance, Mr. Dongwen Liu, spoke to the group about the development of rural finance in China. 40% of China’s population lack a credit score and many people live in remote areas where there is little access to banks and financial institutions. CD Finance have therefore relied on a network of client managers, many of them drawn from the same group of people they are servicing, to find clients, assess their risk, educate them about finance, and collect repayments. They related several client’s stories, and one in particular was striking. After escaping 19 years of forced labor with no documents to prove his identity, one client was given a piece of disused land and some seeds by a local village. This land needed irrigation and fertilization to yield enough to sell. By borrowing 500 yuan (+/- 725USD) from CD Finance, this client managed to produce and start selling a crop, allowing him to set up a business and rebuild his life. Mr. Dongwen Liu spoke about how digitizing their services has allowed them to reach new customers and streamline processes. They launched an app in 2018, and while they still rely on client managers to deliver their services, they are now able to offer loans within ten minutes and assess customers using data such as their payments to their village cooperative.

Looking Forward

UNCDF has just begun their work in China, and in the coming months they will be partnering with a number of institutions including CD Finance and Anhui Xinan Bank to provide technical support to deepen impact at the last mile. Alongside this, UNCDF is partnering with regional and municipal-level government agencies to establish innovation challenges with start-ups and incumbents. In addition, UNCDF will be releasing a number of publications with the intention of sharing China’s experience in using digital financial services to improve financial inclusion. Stay tuned to read more on what UNCDF is learning about digital services in China.