China’s big banks are getting into e-commerce, using their massive financial resources to offer loans to businesses and consumers buying on their online shopping portals.
Leading the way is Industrial and Commercial Bank of China, the largest bank in the world in terms of assets. ICBC has operated its e-commerce site Rong E Gou (which in Chinese means “buy easily”) since 2014.
More than 10,000 merchants sell their products on Rong E Gou in such categories as electronics, automobiles, apparel, food and jewelry. The site also sells gold, artwork and investment products like insurance that are seldom available on a normal Chinese e-commerce site. Chinese banks are not restricted from selling tangible merchandise to consumers and businesses.
The business has been growing quickly. Rong E Gou’s total web sales, including purchases by consumers and businesses, topped 1.27 trillion yuan ($184 billion) in 2016, according to ICBC.
While ICBC does not break out sales by products, it’s likely that investment products and insurance make up a big share of the total. However, other popular products include automobiles and electronics, the bank says. For example, in 2015, Rong E Gou sold more than 100,000 iPhones. ICBC’s lending program allows buyers of expensive products to pay in installments.
The site added a business-to-business section in 2015. Since then, some 3,000 companies have sold 1.5 trillion ($218 billion) worth of products, from office supplies to manufacturing machinery, on this site to more than 225,000 business buyers. ICBC says sales on the site can help the seller improve its credit rating and obtain more loans from the bank.
ICBC promotes its online marketplace to its large consumer base: The bank reported last year that it had 210 million customers using its mobile app. Points earned through ICBC’s loyalty program can be used on Rong E Gou, and ICBC offers consumers online shopping coupons for completing a transaction at a CIBC ATM.
“E-business increases clients’ frequency of use. It also helps us to obtain more data about how our users purchase,” a spokesman for ICBC said at recent press conference. “With that data and their banking information, we can provide more products and create more revenue.”
For brands or retailers outside of China, Rong E Gou is also an opportunity to sell their goods. In 2015, the site launched a cross-border e-commerce section to the sale of foreign goods, including health products and cosmetics.
For more information about Chinese e-commerce market, please click here for the Internet Retailer 2016 China 500.