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世界上最大的催收公司在湖南

不良贷款的催收有三大作用:

(1) 减少金融机构的损失,
(2) 修复欠款人的信用,
(3) 为信贷市场的顺畅运行提供润滑剂。他们是信贷市场的管子工和清道夫。

A plumber for the credit-card market

By Joe Zhang, 

With 8,000 employees in Changsha City, and a revenue of about 100m US dollars in 2017, Yongxiong is probably the biggest pure-agency debt collector in the world. Just before the company launched a plan to expand into 27 capital cities around China, I spent two days with its founder, Tan Man, 43, in Changsha and in his home village in Xinhua County, Hunan Province.

Tan grew up in a big family. His father has eight siblings and he has five. For his family's recent Lunar New Year gathering, his maids cooked meals for over fifty people for several days. Luckily his golf mansion is big enough. And with a population of 1.6 million, Xinhua happens to be one of the most populous and officially-designated Poor Counties in the country.

Tan grew up poor. After graduating from Xiangtan University in 2000 with a law degree, he failed to find a job for two years. To survive, he borrowed from his relatives and then had to become an apprentice in a pickled-duck shop. He soon started his own duck shop. Sadly, he lost money and went deeper into debt.

In 2002, he landed a job as a junior lawyer in Foshan, Guangdong. His modest salary was not enough to cover his own living expenses. He even borrowed from his employer. When he was let go for a personality clash with a partner at the law firm some two years later, he owed his employer several thousand yuan. Only after his debt had been forgiven could he obtain an exit reference letter.

Not all was lost, however. What he had learned at the law firm was invaluable: in fact, he had become the best-known debt collection lawyer in Foshan. His Hunan accent was extremely strong, “but at least I can pronounce very accurately the few key words that matter, such as unpaid debts, litigation, and negotiation”, Tan laughed as he revealed the secret to his success in his Changsha mansion.

He struck out in 2005. He soon set up his own Tianman Law Firm in his native Hunan Province.

“Debt collection is a tough business. You suffer debtors’ rejections and sometimes even abuses. The reputation as a debt collector is not exactly grand. You have to spend a lot of time to find the debtor's 'updated' telephone number. As we focus exclusively on credit card delinquency and the average ticket size is just above 10,000 yuan, you cannot afford to knock on the borrowers’ doors so we exclusively work the phones.” Tan told me over spicy Hunan dishes.

Tan is an avid golfer and has driven his Land Rover to see every corner of the country. “Life is short. You must enjoy it to the full.” He has never been overseas but that is about to change. He invited me to spend a month with him and other friends in the US in the next summer. He described his business as on autopilot: “if I spend two months in, say, Tibet, the business will run by itself”.

His business took an unusual turn in 2014 as he spent about one hundred million yuan to develop an Internet portal to provide legal services for small businesses. At one time in 2015, he had over 100 IT engineer working for him. That venture did not work out financially, “but at least I have turned myself into a software programmer and now even the head of my IT Department cannot fool me easily”, Tan joked. The IT team has been downsized to about 30.

When his firm was small, the banks always demanded a down payment for the privilege to act as a collection agency. Not any more. Yongxiong's size and track record has convinced many banks relax the down payment requirement.

Typically, Yongxiong is paid half of the money it collects from the delinquent credit card holders. Yongxiong only works on those bad debts older than two years. What is wrong with younger overdue loans? “Because those younger debts are easier to collect, so the banks pay a smaller fraction for your services. Competition is also fiercer there. We choose to crack only the toughest nuts and are rewarded better as a result”, Tan proudly told me. But Yongxiong is now acquiring Shenghe, a firm specialised in that segment. Shenghe, also based in Changsha, is owned by Yongxiong's former managers. It has a presence in four other provinces (with a total of 380 employees) and a revenue of about 30 million yuan in 2017. The acquisition (if it is eventually consummated) will broaden Yongxiong’s product offerings. In addition, it will bring crucial litigation skills to Yongxiong that has so far relied exclusively on non-litigation collection techniques. Yongxiong’s other acquisition target (a Shanghai firm) is in the debt collection business for online lenders such as Qudian and Lexin.

Indeed, the business has a low barrier to entry. But to do well, the barrier is high. All the banks have tough selection criteria and a start-up may try a long time to be just short-listed. That is to say that you have just become eligible to bid for the bank's assignments. And it takes one bad job to wipe you out, or for the bank to disqualify you. No wonder several big-name competitors have asked Yongxiong to consider taking them over.

Yongxiong's business has strong cash flows and does not need funding. But extra funding will add spice to Yongxiong. “You know, consumer debts in China cannot be bankrupted away and they stay with debtors for the rest of their lives. So if we have more money, we can buy some unpaid debts and keep them for as long as we like. Many borrowers who fall on hard times today will eventually climb out of the trouble. These unpaid debts will become more valuable with each passing day just like good wines", Tan joked.

Years ago, Yongxiong served the big four banks. These days it focuses on mid-size banks “because they reward Yongxiong better, and more promptly”. But the acquisition of Shenghe will add the big four back to its client list.

Yongxiong's business may look unappealing, but that is where its moat starts.

* Collection on the banks’ long-dated (2-year+) credit card delinquency is shied by most competitors.

* It is a pure agency business and has allowed it to learn the tricks in a lower-risk environment.

* It is the oldest (since 2004) and the biggest collection agency. It is in full compliance with all rules.

* Highly profitable, 50-100% ROE in recent years.

* Its business almost doubles each year in recent years. Its high growth is only constrained by hiring difficulties at present. But it is tackling the problem by opening offices in other cities.

* Growth potential is vast. New growth engines will be in NPL acquisitions and regional offices.

* it is counter-cyclical in nature.

Tan is very proud of his business as he believes that debt collection helps “to oil the wheels of capitalism. On the one hand we help the banks minimise losses, and on the other we help borrowers repair their credit standing. Our work imposes a measure of discipline on the market. Call us a necessary evil if you will.”

Tan is fully committed to building the Credit Management College within Xiangtan University in conjunction with Tulane University in Louisiana, USA. A tripartite agreement was signed last week. It will be funded exclusively by Tan.

Yongxiong's economics are roughly as follows (these are my own estimates, not the company's):

About half of sales go to pay wages and bonuses, 15% for telephones, office rentals and utilities, up to 20% to pay taxes, and up to 20% are net profits.

Yesterday, news came while I was eating lunch with Tan that a competitor was humiliated and was forced to surrender a big collection assignment from a Shenzhen-based big bank. What happened? “The assignment was for three months. But a month into the assignment, the competitor learned that it was not able to recover meaningful sums. Winner's curse perhaps. Now there is the dispute about refunding of the down payment, etc. The bank will ban that collection agency from future bidding.” I urged Tan to ring the bank right away. “No. We are running at full capacity. I have to turn down lots of business. I used to chase business and drink lots of hard liquor with bankers. Not any more! I now only drink with friends. Like you. If a bank insists on my down payment, I tell them to get lost.”

What do you say about those internet platforms that match NPLs and collection firms? “Not very practical. Debt collection is hard labour. You have to plough, plough, plough. I can tell you fanciful stories about artificial intelligence, but nothing can substitute the plough, although we have arguably the best database in the industry. If we have more money, we should lend to those borrowers who have eventually repaid their overdue debts. Or someone should even finance their repayment if their intention to repay is clear.”

Even though Yongxiong has offices in only one city, its business spans the whole country. Unlike its competitors, it insists on dealing directly with each bank’s headquarters.

In my previous visit to Yongxiong, I met with some mid-level managers and entry-level employees. I am happy to report that the workplace environment is healthy and respectable.

Personal charm

A confident man (although media-shy), Tan does not much care what other people think of him. He is charismatic in his own way, and I even think his charisma is a bit like Deng Xiaoping's. Each time he travels - and he travels often - he does so with a group of friends as well as his family (he has four sons), he looks after everyone, paying for their expenses and makes sure that they get the most out of the travel. Asked why he had been broke while a junior lawyer in Foshan over two decades ago, his reply surprised me: he had always paid for his friends' meals, etc.

Tan does a lot of work for the collection industry as a whole and therefore he has no real enemy or no real competitor, according to a local official. For almost two decades, he has donated generously to schools and universities.

23 February 2018

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