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ABC to Join Hands with Alibaba in B2B E-payment Field
(Comtex Business Via Thomson Dialog NewsEdge)HANGZHOU, Mar 22, 2006 (SinoCast China IT Watch via COMTEX) --The Agricultural Bank of China (ABC), a leading state-owned commercial bank, will cooperate with global leading e-commerce company Alibaba in the B2B electronic payment field.
The bank will provide better e-commerce services for tens of millions of small and medium companies. Meanwhile, the bank will take the record of transactions and credit rate of the companies at Alibaba as a key reference for the future loans to these small and medium companies.
The number of large companies accounts for about ten percent of the total companies in the world, and that of the small and medium companies is the major force. But small and medium companies may encounter some problems concerning capital insufficiency during the development. As they are at the starting period and have little market presence, banks often refuse their loans request for the sake of risks.
As the credit system of the society and credit agencies have not been thoroughly established, small and medium companies could not get the urgently-needed loans for they could not provide credit warrants or get proper warrantors. About 46 percent of small and medium companies fail in applying for loans for such reasons, according to some survey from an authoritative institution.
The Alibaba customers with high credit rate could apply for loans to the Agricultural Bank of China directly, and the bank will accept the credit rate.
Alibaba launched a special product based on the credit of the companies in 2002. It requires the companies to build a credit record first, which will follow them throughout their activities at Alibaba. There have been 130,000 members by now. If these users wanted to get support from the Agricultural Bank of China, they could make an application through an express passage. And Alibaba will provide the credit record of these companies online for the Agricultural Bank of China, and the bank will build a special express channel for these applicants, revealed Lu Zhaoxi, vice president of Alipay.com.
Although the approval procedures will stay as before and the companies could not apply for loans through the platform of Alipay only, the sharing of credit rate could reduce the difficulties of loan issuance greatly, said Yu Jin, general manager of the e-bank of the Agricultural Bank of China.
The cooperation between Alibaba and the Agricultural Bank of China will not aim at making money at present, stated the two parties. The direct revenues and contribution to profits brought by the entire e-commerce business to banks are still small compared with the traditional businesses.
However, China's e-commerce market has a great potential, noted a source with the Agricultural Bank of China. The move of Alibaba is hopeful to build a private credit system covering the entire country for bank system.
Besides, small and medium companies care mostly about the payment security problems. However, Alipay, an online payment platform, could guarantee credit for users and compensate for the transaction losses and ensure the companies that are worried about the payment security problems, according to Alibaba. The Agricultural Bank of China also confirmed the fact.
From 21st Century Economic Herald, Page 1, Tuesday, March 21, 2006
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