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Alibaba Denies Taobao Loans, Alipay Merchant Fees Linked

Sina Tech, 10/24/11

At an Alibaba Cloud Computing ("AliCloud") developers' meeting on October 24, Alibaba Group VP Hu Xiaoming denied recent rumors that the funds backing Alibaba B2C and C2C subsidiary Taobao's small business loans were connected to the Alipay merchant consumer protection deposit fees. Hu added that interest rates for the loans were in compliance with China Banking Regulatory Commission (CBRC) regulations.

Recent media reports have called into question claims that Taobao had provided RMB 8 bln in loans to merchants, alleging that the claimed figure far exceeds the RMB 400 mln in registered capital held by Alibaba's small loans subsidiaries, and have also said that the 1.8% monthly interest rate on the loans "could be considered a high interest rate." Small and mid-sized merchants participating in last week's attacks on Alibaba's Taobao Mall service cited concerns that merchants' consumer protection deposits for Alipay were being used to back loans to Taobao merchants.

Hu said that there was no connection whatsoever between merchants' Alipay guarantee fees and Taobao SME loan funds, adding that under governmental regulations Alibaba's small loan subsidiaries are forbidden, and always have been forbidden, from using publicly deposited funds or diverting Alipay clients' guarantee fees.

According to figures from Taobao, 99.9% of loans issued over the roughly one-year period since the loan service first launched have totaled RMB 500,000 or less. As of last month, 96,000 clients had been issued loans.

Addressing interest rates for the loans, Hu said that interest rates for all of Taobao's loan products were drafted in compliance with People's Bank of China (PBoC) and CBRC regulations setting interest rate limits of 90% to 400% of PBoC rates for loans in the same class during the same period.

Taobao Loans are a service provided by Zhejiang Alibaba Small Loan Company and Chongqing Alibaba Small Loan Company. The two companies were established with the approval of the Zhejiang provincial and Chongqing municipal government, respectively, and have a total of RMB 800 mln in registered capital from shareholders including Alibaba Group, Wanxiang Group, Intime Group (1833.HK), and Fosun International (0656.HK).

Keywords: Taobao Internet Alipay B2C China Banking Regulatory Commission People's Bank of China SME AliCloud Alibaba Group Taobao Mall e-commerce funding regulation Intime 1833.HK

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