Tech

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

A Chinese internet company, seeking new sources of income and ways to leverage a large user base, decides it wants to get into finance. It makes bold claims about its unique ability to see into the very soul of its customers, thanks to a warehouse of data and analytics.

Welcome, Sina Corp. Now please take a number and join the queue. Ahead of you are Baidu Inc., Alibaba Group Holding Ltd. and Tencent Holdings Ltd. Oh, and JD.com Inc., which joined recently but is confident of cracking the big time.

Sina Chairman Charles Chao has been candid about his bid for glory.

"This is a long shot. We need patience in this area," he told Bloomberg's David Ramli. Sina plans to set up a separate finance unit and will need to get the required licenses, he said.

Room to Grow
Online payments are big in China, but online lending hasn't reached its full potential
Source: iResearch
Note: Data shows penetration rate (number of users/number of internet users.) 2016-2020 are estimates.

Part of Sina's motivation is to build stickiness. With user growth slowing, the company behind China's Twitter-like service wants to hold the attention of those customers for longer. Adding financial services has helped Tencent and its WeChat offering.

It's a bit of a stretch to believe that Sina's blogging service, called Weibo, gives it any more detailed knowledge than what its competitors can glean from their users. And there's overlap in each company's customer base, anyway.

That doesn't mean Sina shouldn't try. JD.com aims to be a top three player globally, its CEO was reported as saying back in February.

Big Potential
The online wealth management and lending pies are set to get even larger
Source: iResearch
Note: 2016-2020 are estimates. Annotations represent year-on-year growth.

Chao needn't aim so high. China's internet-finance market is huge, yet still in its infancy. Online wealth management grew by 54 percent last year and is expected to double again over the next four years, according to iResearch Consulting Group. Online lending is set for a 54.1 percent rise this year alone, the Chinese data firm predicts.

Sina doesn't need the largest slice of the pie so long as that pie keeps expanding. When growth reaches its inevitable limit, Chao might be left with something big and tasty he can sell.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net