by HE Liuying

With growth at home slowing, Chinese online lenders are targeting Indonesia and Mexico, where weak banking coverage fuels demand for small loans. The appeal of lighter regulation abroad is strong, but so are the risks of default.

Firms such as FinVolution Group(NYSE: FINV), LexinFintech Holdings (NASDAQ: LX), Du Xiaoman Financial and Yiren Digital (NYSE: YRD) are building local brands to tap these markets. Du Xiaoman has begun hiring in Mexico, while FinVolution runs AdaKami in Indonesia and JuanHand in the Philippines under local licenses.

Indonesia, with 271 million people, and Mexico, with 128 million, have become key entry points. Both have low credit-card penetration, leaving room for digital lenders, while Mexico's relatively high income levels and proximity to the U.S. draw cross-border borrowers.

Returns are high. Indonesia caps rates on short-term consumer loans of up to six months at 0.3% a day, or about 110% a year, while Mexico sets no clear limit. Industry insiders say Chinese firms often lend at or near the ceiling.

Losses are also steep, with 90-day delinquency rates in Indonesia and Mexico at 13-14% compared with 2-3% in China. Insiders say limited credit and identity data force lenders to charge higher rates, though defaults are easing as more data becomes available.

Chinese lenders say their edge is digital speed. Local bank loans can take hours, while Chinese systems approve in minutes. Customer acquisition costs average US$70–200, but big-data scoring and automated risk controls developed in China's competitive market help them scale faster than local rivals.

The strategy is starting to show in results. FinVolution logged 3.2 billion yuan (about US$4.5 billion) in overseas transactions in Q2 2025, up 39% year on year, with offshore revenue rising 41.5% to account for over one-fifth of the total. LexinFintech cut overseas acquisition costs by nearly 20% in Q1, while Jiayin Group tripled loan volume in Indonesia.

Ambitions are widening. FinVolution gained a non-bank finance license in Pakistan in 2024 and a buy-now-pay-later permit this June, while Yiren Digital is exploring North America and the Middle East. Jiayin and LexinFintech have also pledged further overseas expansion, and Yiren expects more than 10% of revenue abroad by 2026.

China's overseas leading push has come in two waves. The first, in 2018–2019, came after Beijing shut down the peer-to-peer lending boom that had ensnared millions of investors. The second began in 2024 as domestic growth slowed and regulators tightened rules on loan facilitation, China's co-lending model with banks.

SU Xiaorui, a researcher of Susquehanna, said the push into emerging markets is set to continue, but noted that the era of loose lending is over and firms now face the tougher task of building sustainable businesses.