Dianrong: Marketplace Lending, Blockchain, and "The New Finance" in China
This case examines the strategic positioning of Dianrong, one of the largest online peer-to-peer (P2P) lending platforms in China, in its attempt to become a foundational player in the expansion of the FinTech sector in Asia. Dianrong had recently announced the acquisition of the asset-origination operations of Shanghai-based Quark Finance, augmenting Dianrong's asset management and credit evaluation capabilities across China, as well as a new initiative to develop the first blockchain platform for supply chain finance in China. The goal was to provide capital to smaller suppliers in the supply chain, and provide enhanced visibility and transparency of supply chains for large multinational manufacturers. The company had also made several recent forays into other related sectors, with their creation of "DR Group" as an umbrella corporate structure that included all wholly-owned businesses, joint ventures, and partnerships. This rebranded group structure encompassed the various aspects of "The New Finance," leveraging FinTech innovation to deliver value for borrowers, lenders, and investors. Case protagonist Soul Htite, Founder and CEO of Dianrong, and the former CTO of Lending Club, must decide how to execute on the firm's aggressive diversification plan. Recent advances at the company, while promising, were complicated by the uncertainties in the political and regulatory landscape. How should the company leverage its advantage in technology and position itself in the market? Which sectors within its larger umbrella structure were the most promising avenues to focus on? Was Dianrong tackling too many sectors and problems at once? Htite's view was that in order to truly succeed in China a technology company had to "create" much of the ecosystem and infrastructure oneself, as opposed to in the US where companies could simply "provide add-ons" to existing firms and capabilities. But the reality of trying to excel in so many different areas was daunting.