Shanghai, August 3, 2009 – Alibaba.com (HKSE: 1688.HK), the world's largest B2B e-commerce company, today signed multiple agreements with China Construction Bank (CCB) to expand its loan-assistance program (Ali-loan) to small companies in China's Zhejiang Province, Hangzhou City and, for the first time, Shanghai. The two companies will run the program with the support from local governments in each region, namely the Shanghai Municipal Government, Zhejiang Provincial Government and Hangzhou Government.
The Ali-loan program aims to facilitate a total of RMB6 billion in loans by the end of 2009, with each individual loan being capped at RMB2 million. As of June 30, 2009, Alibaba.com, CCB and the other supporting banks had facilitated loans in excess of RMB2.6 billion to around 1,400 small and medium-size enterprises (SMEs) in Zhejiang Province.
"After the initial success of Ali-loans in Hangzhou and Zhejiang Province, we are now pleased to provide small businesses in China's financial hub of Shanghai with easier access to much needed capital. The expansion of this program is another example of how Alibaba.com is helping SMEs in China grow and prosper. The support from the local governments further demonstrates how important small businesses are to the overall economy, especially during today's tough economic climate," said David Wei, CEO of Alibaba.com.
Alibaba.com and CCB first launched the pilot lending scheme in Hangzhou in mid-2007, with Industrial and Commercial Bank of China (ICBC) joining in soon afterward. Under the program, Alibaba.com helps banks assess the creditworthiness of its paying customers based on their trade activity and credit score on its online marketplace.
In 2008, 600 SMEs obtained a total of more than RMB1 billion in loans from CCB and ICBC. Earlier this year, Alibaba.com broadened the program to include six more banks: Bank of China, China Merchants Bank, China Postal Savings Bank, Shanghai-Pudong Development Bank, Agriculture Bank of China and China City Commercial Bank.
"We are on track to meet our target of offering RMB6 billion in loans to small businesses in China in 2009. We will continue to expand this program to more provinces and cities across China, and by the end of the year we expect to offer Ali-loans in Beijing, Shenzhen, Suzhou, Guangdong Province and Jiangsu Province," Wei added.
Under the agreements signed today, CCB, Alibaba Group and the three regional governments of Shanghai, Zhejiang Province and Hangzhou City will set up a loan reserve pool of RMB60 million in each region, which will serve as a guarantee for loans given to local businesses. The loan reserve pool, to be managed by CCB, will distribute the risk of bad debts evenly among the three parties. According to statistics from the China Banking Regulatory Commission (CBRC), as of June 2009, the Non-performing Loan (NPL) ratio among commercial banks in China was 1.77 percent, in comparison the NPL ratio on Ali-loans for the same period was just 1.08 percent.
How the Ali-loan program works
The Ali-loan program offers three types of loans to Alibaba.com's paying customers: credit loans, security (mortgage) loans and joint liability loans (group loans).
• Credit loan: A company-established credit score on Alibaba.com assists businesses in borrowing from the bank.
• Security loan: A small business borrows (with a mortgage) to buy equipment or facilities through the bank.
• Joint liability loan (group loan): Multiple small companies form a group to borrow from the bank using their credit scores on the e-commerce platform and guarantee to support each other. The small companies who select this option, the most popular under the Ali-loan program, are usually part of the same supply chain.
The key reason for the program is that most SMEs have difficulties obtaining a bank loan because they cannot adequately demonstrate their creditworthiness. By acting as a bridge to the banks, Alibaba.com helps establish a credit score for the small businesses based on their performance on its online marketplace. A bank using that score then collects more information on the performance of the small business including sales performance and other relevant data from Alibaba.com. SMEs can also provide evidence of performance, including videos and financial information, for the bank's consideration.
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Alibaba.com Limited (HKSE:1688) (HK.1688) is the global leader in business-to-business (B2B) e-commerce and the flagship company of Alibaba Group. Founded in 1999, Alibaba.com makes it easy for millions of buyers and suppliers around the world to do business online through three marketplaces: a global trade marketplace (www.alibaba.com) for importers and exporters, a Chinese marketplace (www.alibaba.com.cn) for domestic trade in China, and, through an associated company, a Japanese marketplace (www.alibaba.co.jp) facilitating trade to and from Japan. Together, its marketplaces form a community of more than 40 million registered users from over 240 countries and regions. Originated from Hangzhou in eastern China, Alibaba.com has offices in more than 40 cities across Greater China as well as in Europe and the United States.
About Alibaba Group
Alibaba Group is a global e-commerce leader and the largest e-commerce company in China. Since it was founded in 1999, Alibaba Group has grown to include the following core businesses: Alibaba.com, Alibaba Group's flagship company and the world's leading B2B e-commerce company; Taobao.com, China's largest consumer e-commerce company; Alipay.com, China's leading online payment service; Yahoo! Koubei, a company providing online classified listings for local services and search; and Alisoft.com, an Internet-based business management software company targeting SMEs in China.
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