Ant Group’s Xiang Hu Bao, the last major mutual aid platform still operating in China, will officially shut down on Friday. China’s tech giants have all terminated their services in this line of business, which involves claim-sharing offered through basic health plans, as regulators curtail the scale of financial services provided by tech companies.
Xiang Hu Bao, which uses a crowdfunding mechanism to help participants pay medical bills if they contract a critical illness, had more than 100 million active users in 2020. Members would chip in with small payments on a regular basis, and the money would be redirected to members who have been diagnosed with serious diseases or have incurred severe injuries.
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Since its launch in 2018, Xiang Hu Bao has accumulated over RMB 27 billion (USD 4.3 billion) and helped over 186,000 people pay their medical bills, according to calculations based on the company’s bimonthly announcements.
However, Chinese authorities decided to rein in this type of service provider, as many platforms offered what amounted to insurance coverage despite lacking the relevant credentials. In September 2020, regulators rolled out new rules asking all operators in this space to obtain the necessary licenses.
“The mutual aid industry has gone through significant changes in the past year,” said a notice issued by Xiang Hu Bao in December 2021 said, adding that the shutdown is meant to protect the interests of all participants in the long run.
Xiang Hu Bao’s wind-down follows closures of more than ten mutual aid services in 2021. Food delivery giant Meituan closed its healthcare coverage program in January 2021, then Tencent-backed Waterdrop and Qingsong Huzhu also halted their mutual aid services in March last year. Similarly, Didi halted the operation of its online mutual aid platform in October 2021.
As one of the frequent targets of China’s ongoing regulatory crackdown directed at the internet sector, Alibaba-affiliated Ant Group has been restructuring its business since its USD 35 billion IPO was put on hold in November 2020. Ant is now urging its members to sign up for other insurance products provided by the company. Over 10 million users of Xiang Hu Bao have turned to a critical illness insurance product called Jian Kang Fu, according to the company’s announcement.
Fintech services are set to face a more stringent operational environment this year. Last week, nine of the country’s top regulators issued a set of lengthy guidelines for internet platforms, and said that there will be evolving rules that govern their financial businesses.