Qudian Inc (NYSE: QD) had a tough week. Since the news that Ant Financial, Alibaba’s financial services affiliate, might not renew its partnership with QD, the latter stock price went free fall.
QD is heavily dependent on Ant Financial for its customer traffic as well as risk control. Ant Financial’s initial investment propelled QD onto a rocket growth trajectory – IPO at almost US$10 billion after only 3.5 years in operations.
Is Why important?
Insiders are telling us that QD was very useful to Ant: it absorbed the risky but highly profitable ‘bad’ customers that Ant would avoid processing itself; it paid Ant a hefty service fee for using its services; and the ownership of less than 20% allowed Ant not to consolidate books.
There are also speculations why Ant decided to end this relationship: some said that they no longer see QD as useful to them; others suspected the Ant team who originally made the investment has moved on; there are also rumours saying that the repeated gaffes by QD’s CEO, Luo Min, was the reason.
Regardless, this is the latest case demonstrating that it is not always easy to sleep with giants. We previously wrote about Ofo being used as a pawn by Alibaba and what happened to a startup in Indonesia after receiving an investment from a big boy.
And this article by Bloomberg Businessweek summarises the challenges of being invested by a giant from China very well.