{"id":53250,"date":"2021-10-20T08:33:05","date_gmt":"2021-10-20T00:33:05","guid":{"rendered":"https:\/\/daxueconsulting.com\/?p=53250"},"modified":"2022-10-13T18:35:58","modified_gmt":"2022-10-13T10:35:58","slug":"crowdfunding-china","status":"publish","type":"post","link":"https:\/\/daxueconsulting.com\/crowdfunding-china\/","title":{"rendered":"Everything you need to know about crowdfunding in China"},"content":{"rendered":"\n

Crowdfunding in China started to develop relatively late compared to the global market: the market size peaked in 2016 with 48,467<\/a> successful campaigns in that year. Chinese crowdfunding models include investment-based, non-investment based and integrated crowdfunding. The investment-based crowdfunding model includes equity-based and property-based crowdfunding. Non-investment-based crowdfunding model includes reward-based and donation-based crowdfunding.<\/p>\n\n\n\n

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Download our full report on the crowdfunding market in China<\/a>Download<\/a><\/div>\n\n\n\n

How crowdfunding in China differs from the West<\/h2>\n\n\n\n

China has different classifications for crowdfunding<\/h3>\n\n\n\n

Property-based crowdfunding has 3 different types: real estate<\/a>, vehicle, and 3C products, while in Western countries, it usually only includes real estate crowdfunding. Moreover, Peer-to-Peer (P2P) lending is illegal in China whereas it a popular crowdfunding type in other developed countries.<\/p>\n\n\n\n

Differences between equity-based crowdfunding and venture capital<\/h3>\n\n\n\n

Equity-based crowdfunding in China has have more limitations in terms of distribution channels compared to the US<\/a>, but the entry barrier for crowdfunding investors is much smaller than the entry barrier for venture capital investors<\/a>.<\/p>\n\n\n\n

The number of platforms greatly declined over the last four years<\/h3>\n\n\n\n
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Data Source: Qianzhan, designed by daxue consulting, Market share of different types of crowdfunding products in China<\/em> <\/figcaption><\/figure><\/div>\n\n\n\n

Because of tighter regulations as well as the instability and high risk of investing in properties such as vehicles, a large portion of property-based crowdfunding platforms closed down in China. Thus, its market share plummeted significantly over the last five years. By April 2020, there were 59 crowdfunding platforms in China, an 88.9% decrease from 532 platforms<\/a> in 2016.<\/p>\n\n\n\n

Crowdfunding in China: key trends<\/h2>\n\n\n\n

Three main factors influence crowdfunding in China: new regulations, adjustment with monetary policies and the scale of leading crowdfunding campaigns. China Treasury yields dropped from 3.6% in 2015<\/a> to 2.6% in the first half year of 2016, causing large amount of capital seeking for alternative investment methods in the later half of 2016, including crowdfunding. Due to that, total crowdfunding value in China in H2 2017 increased significantly.<\/p>\n\n\n\n

Characteristics of the Chinese crowdfunding market<\/h3>\n\n\n\n

Since China\u2019s government increased screening requirements for investors and crowdfunding platforms, internet giants such as JD and Xiaomi closed their investment-based crowdfunding business in 2017<\/a> and shifted the focus of their business to non-investment based and integrated categories.<\/p>\n\n\n\n

IP + products are the new hot crowdfunding items<\/h4>\n\n\n\n

Crowdfunding platforms are focusing more on reward-based crowdfunding due to the strict supervisionand high risks<\/a>inherent to investment-based crowdfunding. As the main users of online shopping and investment are Gen-Y and Gen-Z<\/strong><\/a> who like to follow trends, the timeliness of crowdfunding matches the short burst nature of movies and contemporary trends. Thus, IP products are very popular in reward-based crowdfunding.<\/p>\n\n\n\n

The topics about films\u2019 and museums\u2019 periphery, and literatureare the most welcomed by consumers in China. In terms of products, blind boxes, handcraft modelsand cultural creationscater to consumers the best.<\/p>\n\n\n\n

Regulations and policies<\/h2>\n\n\n\n

Crowdfunding platforms’ activities are under the supervision of China\u2019s Securities Regulatory<\/a> Commission. They have to register under a certain threshold of capital. Besides, public activities are also strictly prohibited on the platforms.<\/p>\n\n\n\n

Other requirements include that an equity-based crowdfunding platform must have at least 5 million CNYregistered capital in China and two or more senior managers with 3 or more yearsof working experience in finance or information technology. Number of total investors for each program should be less than 200 and any type of public advertisement is not allowed.<\/p>\n\n\n\n

However, there are no specific laws for reward-based crowdfunding, which falls under the application range of Contract Lawand Administrative Measures for Online Trading.<\/p>\n\n\n\n

Leading local players and failure cases<\/h2>\n\n\n\n

JD includes crowdfunding as one of the nine sectors of JD Finance<\/h3>\n\n\n\n

JD Crowdfunding is an integrated crowdfunding platform established in July 2014 with 21,182 campaigns<\/a> in total. Investment policies are strict, therefore most crowdfunding campaigns are based on rewards and donations while JD regards it as one of its channels for selling products. Among all projects, the technology category takes the largest share of crowdfunding campaigns.<\/p>\n\n\n\n

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Source: JD Finance designed by daxue consulting, Categories of crowdfunding programs<\/em> <\/figcaption><\/figure><\/div>\n\n\n\n

There are some obvious advantages of JD platform<\/a>:<\/p>\n\n\n\n