"Company profits are declining, layoff rumors are spreading, and morale is low," said a source from a lending facilitation company in East China, noting that the new lending regulations have significantly impacted business, with loan volumes halved.
On October 1, 2025, the National Financial Regulatory Administration's "Notice on Strengthening the Management of Commercial Banks' Internet-Assisted Lending Business and Improving Financial Service Quality" took effect. It requires ensuring borrowers' comprehensive financing costs comply with judicial guidelines.
Larger platforms can withstand the impact, but smaller ones, especially those with outstanding loans under ¥10 billion, are hit hard. Layoffs of 20%-30% are common, and some companies are pivoting to installment malls.
Several sources revealed that smaller lending platforms are targeting subprime borrowers—those rejected by major platforms like Huabei, JD, or Meituan, or blacklisted by financial institutions—as well as users familiar with installment mall "tactics."
These malls mark up products over 30% above market prices, adding installment fees capped at 24% APR. Some even create closed-loop systems: users buy overpriced goods, then resell them to partnered recyclers at 50%-70% discounts.
One such platform, "Tao Duoduo," launched recently. Unlike branded malls run by banks or e-commerce giants, these rely on costly third-party traffic. Tao Duoduo rebranded as a "focused installment and fintech service," offering loans and credit lines through partner Henan Zhongyuan Consumer Finance.
For example, Tao Duoduo sells an M2-chip iPad Air (512GB) for ¥8,156—nearly double JD.com’s ¥4,199 price. With 24% APR installments, total costs far exceed retail prices. Calculated against JD’s price, effective APR exceeds 100%.
Platforms like Xiaoxiang Youpin and Lu Youxuan show similar markups. A 1.4g gold ring priced at ¥2,399 on Xiaoxiang sells for ¥1,620 on Taobao (48% premium). Lu Youxuan’s iPhone 17 Pro (256GB) costs ¥11,850 vs. Apple’s ¥8,999 (31% premium).
Xiaoxiang offers buyback services—users mail purchased gold to recyclers for ~56% of the inflated price. "Many borrowers know these goods are just 'air,'" said an industry insider. "They never physically receive them."
Tao Duoduo and Lu Youxuan lack official buyback options, but third-party recyclers offer 60-65% buybacks—contingent on users having platform credit lines. Lu Youxuan warns such "cash-out" practices violate terms and risk scams.
On complaint platform Hei Mao, Tao Duoduo faces ~600 grievances over inflated prices and high-interest loans. One user reported paying ¥5,257 for gold worth ¥4,140, then facing aggressive collections after brief delays. Xiaoxiang has 30,000+ complaints, including coercive collections and unresponsive客服.
Another platform, Yang Xiaomai (owned by QUANTGROUP, HKEX: 2685), faces 30,000+ complaints alleging fake goods and hidden fees. QUANTGROUP’s IPO filings show 98.1% of revenue comes from Yang Xiaomai, inspiring smaller firms to emulate its model despite controversies.
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