May 28

China Business News: Fintech Firms Report Q1 Net Profit Decline

Editorial Staff
Jun 3, 2022
China business
Image: Phuong Uyen Vo Hoang via Unsplash

Welcome to China Business News, NEO’s weekly roundup of top business developments as reported by news outlets in China and the region.

This week’s highlights:

  • Mid-cap fintech companies failed to continue their record growth of 2021 in the first quarter of 2022: Four U.S.-listed Chinese fintech companies – FinVolution, LexinFintech, 360 DigiTech and X Financial – showed a decline in net profit in their Q1 2022 reporting. LexinFintech (NASDAQ: LX) saw total operating revenue decline by 41.77% year-on-year. X Financial (NYSE:XYF) saw net profit decline by 27.44% y-o-y, while 360 DigiTech (NASDAQ: QFIN) and FinVolution (NYSE: FINV) saw net profit decline by 12.46% and 9.44% y-o-y, respectively. The Huatai Securities analytics say the short-term impact of the epidemic is not yet over, but expect fintech company performance to recover in the second half of 2022 as the impact of the outbreak gradually fades. (The Economic Observer)
  • China’s cybersecurity market rebounds post-pandemic: Chinese companies working in such fields as zero trust, threat detection, supply chain management and DevSecOps took part in the online finals of the Tencent Digital Security Innovation competition on 31 May. The 2021 Network Security Industry and Finance Report shows that total financing for China’s network security industry reached RMB 15.89 billion in the past year, an increase of about 52% y-o-y, with 559 investment institutions flocking to the country’s cybersecurity sector. Influenced by the epidemic, the growth of China’s cybersecurity market slowed in 2020, with a y-o-y growth of 11.3%. Analytics predict that the network security market will maintain a growth rate of more than 15% over the next three years, and the market size will exceed RMB 80 billion by 2023. (First Financial)
  • China responds to development of unified standards in the global semiconductor industry: According to Zheng Li, CEO of JCET Group – the largest outsourced semiconductor assembly and test (OSAT) company in mainland China and the third-largest globally – the protocol is a double-edged sword, so the industry now prefers the open-source Chiplet protocol. Li told Caixin Global that China does not have to be a “maverick” in developing Chiplet standards, and can also invest in the development and implementation of mainstream protocols, just as Huawei, ZTE and China Mobile have invested in 4G/5G global unified standards. Chiplet, or “small chip,” is a tiny integrated circuit (IC) that contains a well-defined functionality subset. By changing the capabilities of different chips and using new designs, interconnection and packaging technologies, chips from different technologies and even factories can be used in a single package. (Caixin Global)
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