News, cover,

Issue 525, June 27, 2011

Translated by Li Meng

Original article [Chinese]

Joe Zhang resigned in June from UBS, where he was head of the investment bank’s Chinese operations, in order to become chairman of Wansui Microloan Co.Ltd, a Guangzhou-based micro-loan company.

He describes security analysis, his previous field, as a little "ludicrous," and says that he moved into micro lending because it’s highly profitable and offers an opportunity to cater for disadvantaged loans applicants, such as farmers and small businesses, who are ignored by China’s larger banks.

Zhang, who won Institutional Investor’s best analyst award five years in succession, seems very disappointed in China's stock market.

In the light of the recent series of accounting scandals at US-listed Chinese companies, he points out that everyone in China, from senior management, to auditors, analysts and local governments, colludes with each other.

"It doesn't matter whether a company lists or not. Going public is just a source of financing and a way of sharing success. Many good companies don't necessarily have to go this way," Zhang said angrily, adding that, “rubbish companies holding initial public offerings will only damage the interests of shareholders, regulators and themselves.”

For his new move, Zhang picked Wansui from a group of 30 micro lenders because the company only makes small loans and each of its representatives keeps comprehensive information on borrowers.

Wansui’s maximum loan is 300,000 yuan, while other micro-lenders also provide larger loans for faster profits, which enables some customer managers to slack off.

In May, Jiang Xiaoqin the previous chairman of Wansui invited Zhang to replace her. "I believed that having Joe as the chairman would help us with an overseas listing in the future," she said.

Zhang’s decision has sparked a range of reactions, but has been welcomed by many who believe that China’s deposit-taking institutions are unable to satisfy the demand for loans.