Business, Law & Policy

Ant Financial's Rural Strategy Focuses On China's Microfinance Opportunities

Even with the explosive growth of technology in China, it's still important to remember that China is still a nation of peasants. So Alibaba's Ant Financial is now focusing its sights on a new rural financial services strategy.

To this end, the company announced plans to make a strategic investment in CFPA Microfinance and to establish a joint venture with China Insurance. The investment totals and equity stakes were not made available by the parties.

Through these deals, Ant Financial will drive growth around three major business models. The first is the data-based financial platform model, which is at the bottom of the pyramid. Relying on e-commerce services, Ant Financial's various platforms will provide comprehensive financial services, including payments, insurance, and credit, to nationwide users involved in the agriculture industry.

The second is the online and offline credit model, which is for the middle level of the pyramid and aims to meet the financial demands of small-scale operations of farmers and peasants. With this service, Ant Financial will cooperate with Alibaba's rural shopping partners and CFPA Microfinance to provide financial services such as operating loans to users in towns and villages, where online and financial services are currently inadequate.

The third is the supply chain financial model, which serves the top of the pyramid. This model targets large growers and farmers, and it aims to solve their financial service demands. In mid-2016, Ant Financial started working with business partners, including insurance companies, to jointly provide supply chain financial services to large growers and farmers.

In addition, the company will cooperate with Ministry of Agriculture of China to develop a new operating entity direct report system.

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