Melding spear & shield

Internet finance has been one of the hottest emerging sectors in recent years, but how do corporate counsel in this industry find a balance between business performance and the law?

Richard Li explores this dilemma in an interview with Li Yikun, the general counsel of Souyidai

“Innovative”, “internet” and “finance” are buzz words seen everywhere today, whether in various forms of media or on advertising signs on streets. But doing is harder than knowing. An outsider can barely understand the difficulties involved in putting these concepts into practice. If one says that a talent with innovative skills is precious, then a talent who is brave enough to serve as corporate counsel in new emerging industries is even more difficult to find, because they must precisely grasp the inches that separate innovation and risk, as a minor miss can result in a major disaster.

Li Yikun, vice president and general counsel of Souyidai, worked at Zhong Lun Law Firm in her early years before becoming corporate counsel. In more than 10 years of work as corporate counsel, she has served in domestic enterprises as well as foreign-invested companies, and in traditional industries as well as new emerging sectors. Her ability to deal with the complex issues involved in the internet finance sector is perhaps due to this wealth of experience.

Souyidai, an internet finance platform belonging to Sohu, specializes in providing small loans to individuals and small- and medium-sized enterprises. With the skyrocketing growth of internet finance, many see this business as a disruptive force challenging traditional banking. But Li believes that, for the time being, internet finance and traditional banking are much more complementary.

She tells China Business Law Journal that the majority of borrowers on the Souyidai platform are micro, small- and medium-sized enterprises or individuals, and loans of less than RMB100,000 (US$15,000) account for 80-90% of all the loans it extends. “Many small- and medium-sized enterprises simply are not able to borrow from traditional banks, or are required to undergo review periods of several months, but these enterprises want to grow and are facing financing difficulties,” she says.

“On our platform, they need only provide the valid documents, and will be granted a loan once they have undergone our risk control review. Generally speaking, an enterprise can, through our platform’s matching service, obtain the funds that it needs on the very same day. So online lending is more convenient and quicker, and can make up for the customer-end and efficiency-related issues of traditional banks.”