Canada    FinTech Guide    Chapter 12    China


12. Online-Pawning
China  China

In China, O2O is the most popular business model for pawning.

The common process of online-pawning is: a customer makes a request on the website of a physical pawnshop, then the pawnshop will contact the pawner if it is interested in the pawn. However, the crucial step of a pawn transaction is completed offline. The borrower should take his/her pawn to the pawnshop (or the pawnshop might offer a door-to-door service occasionally), the inspection and quotation of the pawn will both be completed face to face.



Legal Affairs


There are two approaches to provide online-pawning services in China:

  1. Incorporating a company to be engaged in pawning and this company faces the customer to conduct pawning through its own website or through the third party platform; or
  2. Incorporating a company to set up an online platform on which the pawn shop and the customer could meet and close the deal.

As for (a), as a pawn shop, the company shall apply to competent MOFCOM, which is in charge of commerce operation, and obtain the License for Operation of Pawn Business.

The valid term of the License for Operation of Pawn Business is 3 years.

After obtaining the above license, the pawn shop could further apply for an ICP filing in order to set up a website through which it could face the customer to do business. If it conducts the business through the third party platform, it is not necessary to obtain an ICP filing.

As for (b), the FinTechs just set up a platform/website for matching the pawn shop and the customer. In that event, the FinTech running the platform is not required to obtain a special license to provide such services.

To sum up, licenses and rules above shall be applied to any pawn shops including online ones.



Economic Conditions


There are only a few companies providing online-pawning services in China, such as Tianhua Pawnshop and Easydang.



Contributing Authors

JunHe LLP

Norah Yinuo Zhang
Beijing, China

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Chapter Index:


1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

Disclaimer:
The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018