Spotlight on Marcel Lewandowski: Microfinance in China

By Louisa Wah Hansen

Marcel Lewandowski, an alumni student of CUHK Business School’s MBA program (Class of 2012), is Strategic Director of MicroCred China Limited, a Paris-based micro credit lender with branches in numerous developing nations around the world. Originally from Hamburg, Germany, Lewandowski has been working in the inlands and remote areas of China since 2006. With his specialized knowledge in micro-lending, Lewandowski has contributed substantially to the establishment of this form of financing in the mainland, where farmers and small businesses usually have great difficulty in borrowing small sums of money for expansion. Here is an excerpt from an interview with Lewandowski:

CBK: Did your first exposure to China change your perspective and career path?

ML: Yes. I liked China so much that I started looking at opportunities to live and work there. I enrolled in a four-year program at the University of Bremen, studying business, culture and the Chinese language. During my third year of studies, I went to China, spending half a year in the Sichuan University and half a year in apprenticeship. For three months, I was an intern at the PR and Communications Department of Volkswagen in Beijing. But I realized it wasn’t what I wanted to do. Too many colleagues spoke English and German, but what I really wanted was to speak Chinese!

CBK: What were some of the insights you gained through your work there?

ML: I saw China in a way that most foreigners wouldn’t. For example, I have gained insights into the Chinese local banks, learning how to deal with them, who, in most cases, espouse a very traditional management style. The good thing is, we were welcomed by them and seen as foreigners who had expertise and something new to offer. So we trained them in a strict way to ensure a sustainable system going forward. When I started, there were about 15 loan officers. Within one year, we had 50-60. Traditionally, the hiring was done by guanxi. But we took over the process to make sure only people suited for this job were hired. Our partner banks were actually relieved as they felt they wouldn’t be obliged to hire relatives or friends anymore. We also put into place a strict code of conduct. For example, loan officers are forbidden to receive any gifts from their clients. If they did that, they would be fired, as we didn’t want our clients to think that they had to bribe our officers to get a loan. We wanted to change the mindset of the smaller banks. As a result, some city commercial banks saw a window of opportunity to develop a niche in the market. Why? Because individuals or small businesses would never go to the commercial banks for loans, as these banks usually never catered for the needs of small individual clients and presented a lot of bureaucratic obstacles. So, clients would go to their friends and families instead. There was obviously a vacuum in the field of micro-financing. This is where I and my team came in.

CBK: What brought you to Hong Kong after such a great success?

ML: Well, having implemented projects in different provinces of China, I felt that I started to lose interest after having done the same thing for a number of years. In addition, for a foreigner, moving around in the countryside and 4th-tier cities was very strenuous. So I started to look into MBA courses in Greater China. Since Hong Kong is a mix of East and West with a lot of connections with the mainland and at the same time, more of a global vision, I thought, “Why not?” I ended up choosing the Chinese University of Hong Kong Business School as it offered what I wanted: a double concentration in finance and China Business, and the possibility of finishing the degree in one year. I wasn’t looking for a drastic change in terms of industry, but rather, a step up in my career. As luck would have it, at the end of my MBA course, I was approached by my current boss out of the blue—through one of my connections made at the school—and invited me to join his company, MicroCred, to expand its microfinancing business in China.

CBK: What are some of the challenges that MicroCred has faced in China so far?

ML: Due to legal requirements, our funding sources are restricted and we can only operate in specific geographical areas where we hold licenses to operate. As with microfinance all over the world, despite very efficient operations, achieving large scale is the key to achieving commercially sustainable operations, so we need to expand. We have over the years gained the trust of the local authorities. When we explained to the government how these restrictions affect our business, they see that we serve clients that are otherwise excluded from bank financing. So they have given us more and more support and opportunities to expand further.

CBK: Recently, Internet banks have emerged in China. Do you see that as a challenge for your business?

ML: Internet banking will affect the whole financial system, including the microfinance industry. However, for us, this is not going to directly affect our business at this point in time because the Internet banks mostly target clients with a data track record on e-commerce sites such as Taobao and Alibaba. For the smaller clients in the provinces, there is still a lot of businesses offline. While we are looking to incorporate big data into our P2P business model, millions of entrepreneurs still need our service. It is, after all, the grassroots economy we are supporting.

At the end of the day, we are excited about all the developments driven by new technology and business models in the banking sector. Hopefully, all of these will push the entire banking and finance sector to become more inclusive, so that the scope of grassroots finance in China can be expanded.