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Wednesday, 26 November 2008
Pawnshops in China making a comeback amid economic downturn
Pawnshops are making a comeback in China. Amidst the slowing economy, the pawn industry is thriving by meeting the demands of small firms and individuals who want short-term loans quickly.
Pawnshops in China making a comeback amid economic downturn
SHANGHAI: Pawnshops are making a comeback in China. Amidst the slowing economy, the pawn industry is thriving by meeting the demands of small firms and individuals who want short-term loans quickly.
Besides traditional items like gold, silver, ornaments and antiques, pawnshops in Shanghai also take motor vehicles, property, real estate and even industrial equipment.
According to experts, pawnshops fill a gap in the financing industry.
Wang Fuming, managing director of Shanghai Oriental Pawn, said: “Looking back over the past seven years, our goal has been to deal with what banks can’t do - that is mostly short -erm loans for small enterprises. This can be 5, 8, 10 or 15 days, or at most half a year. Banks can’t operate like this.”
Shanghai Oriental Pawn Company is the biggest pawnshop in the city, with 70 per cent of its loans going to small- and medium-sized enterprises (SMEs) and 30 per cent to individuals.
“From 2001 to 2007, according to statistics, we have offered 30 billion (yuan)in loans in total, which include movable property, civil products, and houses. 70 per cent of the financing went to small enterprises, and the estimated amount would be around 15-18 billion, exceeding last year’s 13 billion yuan,” said Wang.
Martin Ma, managing director of Shanghai Hengtong Pawnbroking Co. Ltd said: “Our main customers are small business owners or their partners. Their borrowings are mostly used to pay staff, purchase materials, or business treats. They make up about 70 per cent. The remaining 20-30 per cent use the loans for non-business matters.”
In 2001, there were 12 pawn shops in Shanghai. Today, there are 144 stores and that figure is expected to hit 180 by next year.
Another attraction of pawnshops is the lower interest rate they charge - about 3 per cent compared to 6 per cent at banks.
One Chinese resident said: “Banks charge higher interest rates, and it is more flexible here as I can come whenever. It is more convenient.”
According to Hengtong Pawnbroking, about 5 to 8 per cent of people default on their payment or abandon their goods. But this amount can easily be recouped.
“There are others who are happy to purchase these second-hand goods because they are much cheaper than the market price,” said Ma.
According to official reports, China’s pawn industry generated US$13.5 billion for the third quarter of 2008.
The State Economic and Trade Commission said the industry could be open to overseas investments in about five years time.
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Pawnshops in China making a comeback amid economic downturn
SHANGHAI: Pawnshops are making a comeback in China. Amidst the slowing economy, the pawn industry is thriving by meeting the demands of small firms and individuals who want short-term loans quickly.
Besides traditional items like gold, silver, ornaments and antiques, pawnshops in Shanghai also take motor vehicles, property, real estate and even industrial equipment.
According to experts, pawnshops fill a gap in the financing industry.
Wang Fuming, managing director of Shanghai Oriental Pawn, said: “Looking back over the past seven years, our goal has been to deal with what banks can’t do - that is mostly short -erm loans for small enterprises. This can be 5, 8, 10 or 15 days, or at most half a year. Banks can’t operate like this.”
Shanghai Oriental Pawn Company is the biggest pawnshop in the city, with 70 per cent of its loans going to small- and medium-sized enterprises (SMEs) and 30 per cent to individuals.
“From 2001 to 2007, according to statistics, we have offered 30 billion (yuan)in loans in total, which include movable property, civil products, and houses. 70 per cent of the financing went to small enterprises, and the estimated amount would be around 15-18 billion, exceeding last year’s 13 billion yuan,” said Wang.
Martin Ma, managing director of Shanghai Hengtong Pawnbroking Co. Ltd said: “Our main customers are small business owners or their partners. Their borrowings are mostly used to pay staff, purchase materials, or business treats. They make up about 70 per cent. The remaining 20-30 per cent use the loans for non-business matters.”
In 2001, there were 12 pawn shops in Shanghai. Today, there are 144 stores and that figure is expected to hit 180 by next year.
Another attraction of pawnshops is the lower interest rate they charge - about 3 per cent compared to 6 per cent at banks.
One Chinese resident said: “Banks charge higher interest rates, and it is more flexible here as I can come whenever. It is more convenient.”
According to Hengtong Pawnbroking, about 5 to 8 per cent of people default on their payment or abandon their goods. But this amount can easily be recouped.
“There are others who are happy to purchase these second-hand goods because they are much cheaper than the market price,” said Ma.
According to official reports, China’s pawn industry generated US$13.5 billion for the third quarter of 2008.
The State Economic and Trade Commission said the industry could be open to overseas investments in about five years time.
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