[1]Screen capture from Yu'E Bao's homepage. It's banner showing a happy man growing money from the tree.
For the first time, China's Internet powerhouses are challenging the country's financial sector, dominated by state banks that traditionally focus on larger companies over the needs of smaller firms and individuals, with a popular push into online investment products.
The recent forays of companies like Alibaba, Baidu and Tencent into the financial market by offering products similar to investment funds have been wildly successful with Chinese investors.
China’s largest e-commerce business Alibaba [2] paved the way with its affiliate Alipay's launch [3] in June 2013 of its money-market fund-like investment product called Yu’E Bao, which translates into “leftover treasure”. Alipay, a third-party transaction site similar to PayPal, offers its 800 million registered users the options to invest any money they have on the site directly into the fund, with an annual earnings rate of 3 or 4 percent and the option to withdraw the money at any time. As of November 14, Yu’E Bao has drawn 16.4 billion US dollars and become the biggest fund [4] in China.
With the huge success of Yu'E Bao, other Chinese companies have entered the scene. Baidu [5], the biggest Internet search engine and online content hosting company in China, launched its Baidu finance center [6] on October 28 and hit the maximum allowed one billion yuan (164.3 million US dollars) according to Chinese Law in less than five hours on the first day.
WeChat is already a success story in China as the country’s most popular mobile messaging app, and the Tencent-owned service will soon expand its reach beyond the realm of smartphone communication to become a financial service platform. A savings investment system will be implemented into WeChat in mid-December [7]. This system will allow users to link their bank cards to their WeChat accounts, enabling them to deposit money through TenPay, Tencent’s payment system.
Web users on popular Chinese microblogging site Sina Weibo applauded the new trend, such as “Senior financial little wicked girl [8]” (@资深金融小邪女), who works in the finance sector:
资深金融小邪女：小邪女为啥支持余额宝？因为这是草根阶层的福祉之一。一些金融机构，开始怂恿监管机构研究如何‘收拾’余额宝了。当然，监管机构也不是傻瓜。这些金融机构，甚至开始动用舆论、大V等等，展开对余额宝的攻击。尼玛，羡慕嫉妒恨，要靠真本领啊！让那些抱残守缺者，靠打压和垄断获得生存者，去死吧！
Why do I support Yu’E Bao? Because it benefits the grassroots. Some financial agencies have begun persuading the regulator to punish Yu’E Bao and using public opinion and Weibo celebrity accounts to attack it. They are envious, jealous and hateful for the success of Yu’E Bao. Down with those who are conservative and whose existence is based on monopoly and cracking down on competitors!
Sun Siyuan [9], a financial news reporter, believed that China will take lead in the online finance investment sector:
前几天和几个华尔街资深从业者聊当下在国内很火的互联网金融，但遗憾大家都未听说这个概念。华尔街大型金融机构的”高富帅”早已分配好利益格局，怎肯让搞互联网的”屌丝”动这块蛋糕？美国对于金融的严厉监管也很难让天马行空的互联网有什么大作为，但国内监管的刻意滞后让中国有机会弯道超车美国，期待！
I talked with several Wall Street financial veterans a few days ago about the hot developments in Internet finance in China, but regretfully they had not yet heard of this concept. America’s strict oversight over finance markets makes it hard for Internet companies to do something big in this area. The strict regulation on investment activities in the States also makes it hard for the Internet to develop the [online investment] sector. While in China, because of the lag in regulation, China may overtake America [in the online investment sector].
“Flying high 1985″ (@展翅高飞1985), an ordinary Weibo user, described his daily online activities related [10] to Alibaba's service:
呃。。。每天必做的事情之三：到@淘宝网 首页领淘金币，到@支付宝 查看余额宝收益，到@百度理财 看百赚收益！我是一个感恩和知足的人！
Three musts every day: go to Taobao.com to receive ‘gold coins’; go to Alipay to check benefits of Yu’E Bao; go to Baidu Finance to check benefits.
But some were more hesitant. Weibo user “Internet watcher and researcher” (@互联网观察与研究员) said [11]:
余额宝的‘暴富’只能说明中国的金融市场有多么初级和原始。
Yu’E Bao's sudden surge of wealth just reflects the primitive nature of China’s financial markets.