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How This Chinese Fintech Company Is Innovating by Leasing Cows

Scott Galit, CEO, Payoneer, Ning Tang, Founder and CEO, CreditEase, and Venetia Lee, General Manager, Alipay Hong Kong, Macau talk about lending to underbanked populations in rural China, and emerging market at Fortune Brainstorm Tech International. Photograph by Vivek Prakash/Fortune Brainstorm Tech International

While global investors have often honed in on China’s booming urban centers, Chinese financial tech firms are beginning to look at the middle kingdom’s increasingly affluent rural, farming-based consumers.

Particularly, Ning Tang, CEO of fintech firm CreditEase, is lending consumers cows in a bid to reach those living in rural areas who might have limited access to credit and financing.

“We several years ago, we invented something called micro-leasing. Leasing is usually for aircrafts and so on—very big things, but rural Chinese borrowers need small money for equipment purchases, like tractors or heating machines and so on,” Tang said during Fortune’s Brainstorm Tech International forum in Guangzhou, China this week. “We also invented this so-called live-stock leasing. The first item was cows. Chinese farmers could lease cows from us. So such innovation is tremendously helpful.”

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Tang noted that such leases on machines and tractors usually tally up to around 200,000 to 300,000 yuan ($30,200 to $45,300), with the borrower owning the item at the end of the contract.

It’s a sizable consumer base to target. The rural population accounts for 48% of China’s total, with agriculture accounting for about 8.6% of the the nation’s Gross Domestic Production in 2015, according to the World Bank. Income in rural China has also been on the rise, with urban income narrowing to 2.7 times that of rural income from 3.3 times in 2009. And though migration toward the city has been on the rise and the nation’s dependence on farming and livestock is on the slide, rural populations and agriculture are still a significant part of the country’s economy.

“Accessibility is key,” said Venetia Lee, general manager of Alibaba-backed Alipay Hong Kong, Macau, and Taiwan on the same panel, moderated by Fortune China Executive Editor Derek Zhang. “One of our main objectives is to provide equal access to the underserved, underbanked populations of the world. There are 2 billion users who are underbanked.”

Still, while Chinese fintech firms are on the rise, the People’s Bank of China and the China Banking Regulatory Commission are growing worried about how quickly the sector has risen—and about their ability to keep up. Most recently, the two policymakers cracked down on cash loan micro-lenders—highlighting the relative youth of the industry.

“We still don’t have a well established credit bureau infrastructure,” Tang noted. “We still have a long way to go.”

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