The Chinese tend to save rather than spend, but Alibaba is about to change all that, for better or for worse, with an online credit rating service that will make loans more accessible to those who were previously debt-averse. Sesame Credit Management is a private credit-scoring business owned by Alibaba founder Jack Ma. The target customer, like millions of Chinese, lacks a traditional credit history. Sesame Credit management analyzes spending data and consumer activity for those who are seeking loans.
Yu Wujie, chief data scientist at Sesame Credit, said in a statement, according to the New York Times, “They may have never obtained bank loans or applied for credit cards. However, they might be active internet users who shop online a lot, e-pay their utility bills on time, have stable residential status and have been using their mobile phone numbers for a long time. We will take these and other factors into consideration when assessing consumers’ creditworthiness.”
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China is in the midst of a transition towards a consumer demand-driven economy, and extending credit is an essential step in that direction. China currently has relatively few credit cards in use and most of the credit information comes from banks. When evaluating a credit history, factors like online shopping choices, repayment, personal information and social media use will be taken into account.