Funds needed within 1 yr. – RMB10,000,000 (equil.HK$12,000,000 by the start of 2012)
Funds needed from 2 – 5 yrs. RMB20,000,000 (or depending on performance )
Funds will be used to provide small unsecured personal or corporate loans to individuals and private Chinese enterprises in Shanghai for start. Average loan sizes range from RMB50,000 to 100,000.
Required returns between 20 – 30 % per annum. (being the borrowing rates)
We are looking for 80-90% injection, with other investors taking up 80-90% ownership.
Our task is to appoint sales/marketing, credit approval, compliance, collection staff.
A China enterprise is to be incorporated by a recognized big audit firm or an entrusted law firm in Shanghai, obtain license, opening of bank accounts in Shanghai, would also deal with annual secretarial, accounting, auditing and taxation of the company each year.
A mutually approved firm of solicitors to be appointed to handle disputes
Bank accounts be controlled by joint signatories and monitored by internet banking.
A board of directors to be consisted of 3-5 directors.
Why start now?
China’s middle class size is set to increase steadily for the next 20 years. They are just like HK 20 years ago, and HK finance companies now have become so big and successful.
This is still a relatively young market.
We foresee, with the squeezing of credit in China by slowly withdrawing the massive QE back in 2008/09 in order to curb inflation, people / companies are going to need short-term finances in the coming years.
A co-founder (an ibanker) of a famous HK money lender sold his business a few years ago to a very large global bank, has secretly started the same formula in China half a year ago.
We are well connected in Shanghai, most of our relatives and friends are in Shanghai and the surrounding areas, and are in friendly terms with the government officials. This also makes the collection process much easier.
We are currently partly involved in a money lending business in HK
The application of the license requires some of the shares to be held by people who reside in Shanghai, and it does help having trustworthy partners.