Czech firm eyes China growth

A Czech provider of consumer finance vowed to double its business in China this year as the Chinese government advances ambitious reforms and shifts economic growth to rely more on domestic consumption.

"For 2014, we want to double or more than double the targets," Michal Skocil, chief executive officer of Home Credit China, told China Daily.

"What's most important to me is to keep developing the company and the industry in a stable and transparent way. The targets are a message to demonstrate how attractive the service is. There is very strong demand and it is a very well-developing industry," Skocil said.

Consumer finance generally refers to short-term loans for personal purchases of durable goods or services such as home decoration, health services and education.

Home Credit, a consumer finance provider from the Czech Republic, entered China in 2007. It is the only foreign company among the four consumer finance participants in a pilot program launched in four cities by the China Banking Regulatory Commission in 2009. The company now has 12,000 employees, 23,000 points of sale where it offers loans and cooperative agreements with more than 17,000 retailers.

"In general, when I look at China's new development strategy, obviously there is a strong focus on growing domestic consumption. This is exactly where consumer finance can be very effective," Skocil said.

China's central government rolled out a comprehensive reform plan late last year to deepen reform and promote further opening-up of the world's second-largest economy. Part of the plan involves providing financing to more micro-sized enterprises and low-income people.

When looking at the Chinese market, those people with average or below-average incomes "are not targeted customers of the banks," Skocil said. "Given the numbers, it's very natural to see many different needs. It's unlikely to think that one company could serve them all. So I believe having more competition in the market will bring more variety."

China recently issued guidelines calling for the expansion of a consumer finance company pilot program to more cities. It also urged further study of ways for private capital to set up consumer finance companies. The CBRC also added 10 cities to the pilot program that began in 2009.

"The establishment of such companies is ongoing," Skocil said, "I believe there is, based on the market, room for 15 to 20 national players in order to meet demand."

"If consumer finance is intended to support domestic growth, you need to do it in a controlled way and on a big scale." He noted that as some customers are already online, the company is preparing projects for an e-platform, and the projects should be ready to trial this year.

"In other markets such as the Czech market, we did add an e-platform ... But you want to be doing it step-by-step because once you are doing online transactions, you need to have the infrastructure as well," Skocil said.

"China is a reasonably big country, so you need to make sure that risk is under control. A small problem can become very big if you do not tackle it on time," Skocil said.

"The traditional channel - what we have been doing in the past few years - is still going to be the main direction for us, because there is huge space and still many people who need this service," Skocil added.