<div id="readability-page-1" class="page"><div> <p>“Young Chinese today think nothing of buying just anything that they need on an app and getting it delivered to their door 30 minutes later.”</p> <div><div> <figure><img height="154" src="https://imageproxy.pbkrs.com/https://thebambooworks.com/wp-content/uploads/2025/03/rene-300px-1.webp?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="154" original-src="https://imageproxy.pbkrs.com/https://thebambooworks.com/wp-content/uploads/2025/03/rene-300px-1.webp"/><figcaption>Rene Vanguestaine</figcaption></figure></div></div> </div>   <p><strong>Key Takeaways:</strong></p> <ul> <li>A new crackdown on private lenders highlights a broader government strategy to lower living costs for young Chinese to revive spending</li> <li>A domestic toothpaste maker’s rapid rise shows how local consumer brands are leveraging e-commerce and influencers to challenge established rivals</li> </ul>  <p>By Doug Young &amp; Rene Vanguestaine</p> <p>We’re currently watching two unfolding stories that capture the shifting realities of China’s consumer economy. On one hand, <strong>a fresh regulatory crackdown</strong> is sweeping through China’s private financial sector, pressuring the last surviving fintech lenders. On the other, an up-and-coming toothpaste maker is brushing up for a Hong Kong IPO, riding the waves of China’s fast-paced, digital-first retail environment. Both stories reveal a changing consumer landscape where the government intervenes to lower financial burdens on young people, while agile domestic startups invent aggressive new ways to sell to them.</p> <p>The latest regulatory tightening is all about interest rates. The government is capping the maximum that fintech companies can charge for loans at 24%, with suggestions they could eventually force companies to go as low as 12%. This move is partly aimed at clamping down on hidden fees that drive up effective interest rates for consumer and small business loans to as much as 36%. In the West, credit cards and check-cashing services are famous for charging similarly high rates. But in China, we’re looking at a totally different environment.</p> <p>This crackdown is one of many steps the Chinese government has taken to lower the financial burden on consumers, especially younger people. Three or four years ago, Beijing realized the overall cost of living was one reason why the younger generation was reluctant to have kids. Raising the one-child limit to two, and eventually three, didn’t really help the falling birth rate. To combat this, regulators started taking measures to lower housing costs and killed the after-school education sector to eliminate an expensive cost for educating children. Capping loan rates is just an additional effort in that direction, part of a crusade to get consumers to spend more again to revive the overall consumer economy.</p> <p>From the lender perspective, this spells serious trouble. The few remaining publicly traded fintech lenders have extremely low valuations, way down from where they were at the end of last year. We’ll likely see companies get out of this particular business, pivot to other areas, or fold altogether. We’ve seen attempts like this from <strong>Qudian</strong>, a top performer five or six years ago, which ended up folding that business to try logistics and built a venture in Australia that didn’t work. <strong>Yiren Digital</strong> (YRD.US), which used to be called Yirendai in the peer-to-peer (P2P) lending days, started diversifying into insurance brokerage, social e-commerce, and AI. And <strong>FinVolution</strong> (FINV.US) began expanding outside China, going to Indonesia and recently setting up shop in Australia. But overall, as an investor, we’d be reluctant to put much money into this sector. It doesn’t look like there’s a lot of big potential left.</p> <h4>Social e-commerce and influencers build toothpaste brand</h4> <p>While the fintech space is contracting, the consumer products space is writing a much different growth story. We’re looking closely at <strong>Xiaokuo Technology</strong>, which has just <strong>filed to list in Hong Kong</strong>. The company is better known for its <strong>Canban</strong> toothpaste brand, which launched only four years ago but already holds 9.2% of the massive Chinese market. Getting to that share in less than four years is pretty remarkable.</p> <p>Canban’s rapid rise isn’t unique. It’s part of a larger consumer brand story that’s quite different in China from the West. While famous Western consumer brands like <strong>Colgate</strong> (CL.US) or <strong>Crest</strong> have decades of history, many Chinese brands are quite young. To compete with these global giants, you’ve got to be different and go at it with a very different strategy. Over the last six to eight years, social e-commerce and influencers — key opinion leaders, or KOLs — have developed much quicker as a marketing tool for promoting and selling consumer goods. There’s also a growing favor towards Chinese as opposed to Western brands.</p> <p>We think this dynamic has become somewhat cultural. Young Chinese people today live in a world where they think nothing of buying just about anything they need on an app and having it delivered to their door 30 minutes later. You don’t have any real Western equivalent of that speed. Some of that was enhanced through the three years of Covid lockdowns, which almost forced people to quickly adopt that new way of consuming. Throw in the influencers, who were already active in selling goods online well before the pandemic, and we’re seeing a new consumer culture. Influencers here aren’t shy at all about hawking products. If you listen to somebody, see a product, and decide you like it, you click and buy, and an hour later it shows up at your doorstep.</p> <p>We’re mixed on how this company’s IPO should do. The Hong Kong market is still pretty hot, but it’s mostly catering to tech, healthcare, and biotech companies. Pure consumer plays haven’t been as attractive. However, this is a bit of a special story. If the company can sustain its rapid growth, we could see people buying the stock. The bigger issue for investors is whether the company can execute flawlessly at the same time it’s scaling up very fast. There’s also the question of whether they really have a unique product or just a strong KOL strategy that other companies might be able to copy just as easily. But being first to market gives you some momentum, even if people eventually realize there are pretty strong competitors emerging.</p> <div><div>  <p><em>About China Inc </em></p> <p>China Inc by Bamboo Works discusses the latest developments on Chinese companies listed in Hong Kong and the United States to drive informed decision-making for investors and others interested in this dynamic group of companies.</p> <p>Subscribe to China Inc on your favorite app:</p> <figure><table><tbody><tr><td><img src="https://imageproxy.pbkrs.com/https://thebambooworks.com/wp-content/uploads/2023/03/apple-podcast-70.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://thebambooworks.com/wp-content/uploads/2023/03/apple-podcast-70.png"/> Apple Podcasts</td><td><img src="https://imageproxy.pbkrs.com/https://thebambooworks.com/wp-content/uploads/2023/02/spotify-70.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://thebambooworks.com/wp-content/uploads/2023/02/spotify-70.png"/> Spotify</td></tr></tbody></table></figure>  </div></div></div>

<p>中国消费者经济正在发生变化，监管机构对私人贷款者的打击反映了政府降低年轻人生活成本以刺激消费的战略。同时，一家国内牙膏制造商的快速崛起展示了本土品牌如何利用电子商务和网红挑战传统竞争对手。</p>

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China’s changing consumer economy: A fintech lending crackdown and a toothpaste IPO