Here in the United States, rent-to-own services have a bad reputation for preying on low-income families that can’t make consistently on time payments and the vast majority of people buy their stuff straight out. In China, however, rent-to-own services are undergoing a massive boom as venture capitalists pour millions into these startups that want to sell electronics on rent-to-own plans.
99fenqi, which literally translates to “99 installments”, is the latest Chinese startup to join in on the race to sell smartphones, cameras, and laptops on rent-to-own plans. The company secured “tens of millions of yuan” in its series A round over Chinese New Year from unnamed VCs, reports 36kr today. 99fenqi is up against well-funded rivals like Qufenqi, which reportedly raised a US$100 million series C round in December, and Aixuedai, which secured US$40 million in series A funding a month later. The phrase “rent-to-own” might set off alarms for those familiar with the business model. The rent-to-own industry in the US, for instance, has come under heavy scrutiny for preying on low-income families that can’t always make payments on time. Furniture and TVs are sold far above market price, but in deceptively small weekly installments and with harsh penalties for late payments.