Self-employed Businesses: Extensive and Vulnerable
Mar 06-2020
A joint research project by the Institute of Digital Finance (IDF) at Peking University and the Research Institute of Ant Financial Services Group (RIAFSG) reckons that China’s self-employed businesses numbered 97.764 million in 2018, 54.8% higher than the tally of the Fourth National Economic Censuses. The researchers are Wang Jingyi, Guo Feng and Li Yongguo. Prof. Huang Yiping, Director of IDF and Deputy Dean of the NSD, and Li Zhenhua, Executive President of RIAFSG, are consultants for the project.
The project is a nod to the importance of self-employed businesses. It also seeks to present their plight under the epidemic and the positive role of Fintech. Nationwide, self-employed businesses contribute up to 230 million jobs and generate 230 million transactions per day. With combined business volume at 1.31 trillion yuan per year, they account for one third of China’s total retail sales.
The researchers deployed machine learning to crunch Alipay data concerning ‘Barcode Merchants’ – those who use one specific Alipay barcode to close deals. Self-employed businesses refer to offline individual merchants who may or may not have registered with the authorities. The research started from the hypothesis that in Hangzhou City, where Alipay is headquartered, all self-employed businesses have become Barcode Merchants. Parameters derived from Hangzhou were then applied to other parts of the country, which was divided into 267,000 Thiessen Polygons.
Also studied was the fallout of the epidemic. In Hubei Province, the epicenter of the epidemic, the number of active Barcode Merchants and their transaction volume plummeted by 59.3% and 69.7% respectively in the two weeks starting January 20th. In other parts of the country, they were down by around 40% and 50% respectively.
By matching Barcode Merchants’ data with the PKU Digital Inclusive Finance Index, the research shows that Fintech could mitigate the negative impact of the epidemic on self-employed businesses. When targeted loans based on digital technology increases by 1%, the negative impact of the epidemic could be lessened by 2.57% on average. The research team proposed that funds should be pushed to financial institutions closest to self-employed merchants, and digital finance should be put in full
