The collection industry, as an essential part of the financial market, has undergone significant changes and development in China in recent years.
To regulate collection practices and protect debtors’ legal rights, the government has intensified its supervision of the collection industry, introducing a series of new regulations. For example, in 2024, the National Financial Supervision and Administration released the Regulations on Consumer Finance Companies. These regulations stipulate that collection agencies must obtain explicit consent from debtors before initiating collection activities; collectors are prohibited from using violence, threats, or abusive language; collection activities must not occur at inappropriate times, such as at night or on holidays; and agencies must strictly protect debtors’ personal information, refraining from unauthorized disclosure. Additionally, a comprehensive complaint and reporting mechanism has been established, allowing debtors to report improper collection behaviors to relevant authorities promptly. Other related policy documents have also been introduced, aiming to standardize collection practices and protect debtors’ rights.
The implementation of these new regulations has effectively curbed improper practices within the collection industry and improved the repayment environment for debtors. Enhanced supervision helps purify the industry environment, combat illegal collection activities, and safeguard debtors’ legal rights. The new rules have strengthened trust between debtors and financial institutions, reduced financial risks, and driven the industry toward more standardized and legal practices. This also encourages collection companies to focus on compliance and improve service quality.
With the rapid development of technologies like the internet, big data, and artificial intelligence, the collection industry is gradually moving toward intelligent, data-driven, and compliant practices. The application of smart collection systems and credit evaluation models has not only increased collection efficiency and reduced costs but also brought new growth opportunities to the industry. According to relevant reports, China’s collection market was valued at approximately 60 billion yuan in 2015 and grew to nearly 100 billion yuan by 2020, with part of this growth attributed to technological advancements.
As technology evolves and regulations tighten, new collection models are emerging. These include precise collection methods utilizing big data analysis and AI technologies, and standardized approaches such as the dual-track system of financial mediation plus legal litigation. These new models enhance collection efficiency and compliance levels. Precision collection through technology lowers costs and improves recovery rates, while mediation and legal litigation protect debtors’ rights and reduce disputes.
In recent years, financial mediation centers have gained widespread recognition as innovative, non-litigation dispute resolution mechanisms. By 2023, a total of 198 financial mediation centers had been established across China. These centers introduce neutral third-party roles to provide fair, equal, and effective platforms for dispute resolution. The rise of financial mediation offers new avenues for resolving disputes in the collection industry. Mediation not only improves recovery efficiency but also reduces harm to debtors, achieving win-win outcomes for all parties involved. This promotes the industry’s shift toward more standardized and legally compliant operations.
The continuous improvement of China’s credit system has provided strong support for the collection industry. However, the rapid growth of private lending and internet finance has also led to an expanding market for non-performing assets. According to the China Financial Stability Report (2023) released by the People’s Bank of China, by the end of 2022, the balance of non-performing loans in commercial banks had reached 2.98 trillion yuan, an increase of 135.9 billion yuan year-on-year. The non-performing loan ratio stood at 1.63%, a decrease of 0.1 percentage points compared to the previous year.
Despite these challenges, the collection industry continues to seek new growth opportunities in the market, leveraging its flexibility and adaptability. In the future, as the social credit system improves and technology advances, the collection industry will continue to play a vital role in China’s economy.
In conclusion, China’s collection industry is showing positive growth trends in various aspects. With the ongoing development of the financial market and the deepening of financial technologies, the industry will maintain its crucial role in the financial sector. However, it will also continue to face transformations and challenges, necessitating continuous improvement in professional capabilities, compliance standards, and service quality to meet market developments and regulatory requirements.
