Chinese confidence in foreign banks slides

By Hu Yuanyuan (China Daily)
Updated: 2009-05-04 07:45

Chinese people's confidence in foreign banks dropped considerably last year, as they became financially cautious in the global economic downturn.

According to a recent survey by marketing research firm Nielsen, only 6 percent of interviewees expressed preference for foreign banks, down from 12 percent in 2007. Those favoring local banks rose to 75 percent from 69 percent in 2007.

Zhang Yue, an ICBC marketing director, said an increasing number of Chinese millionaires have consulted his team for private banking services over the past few months, especially since October 2008.

Scandals in overseas markets, such as the Madoff case, further tarnished the image of international financial companies.

The Nielsen online survey, which involved 500 Chinese people, also showed job security has become a top concern.

"The uncertainty in the labor force remains a worry in the near future," said Mitch Barns, president of Nielsen Greater China. Around 76 percent of respondents said job prospects were bad or not so good for the next 12 months, up 21 percentage points from October 2008.

There was also a fall in confidence in personal finances with more than half of respondents saying their personal finance prospects would be bad or not so good for the next 12 months, up 15 percentage points from Nielsen's last survey.

Chinese people have shifted their focus from investing back to saving and paying off debt, with nearly six out of 10 respondents saying they would save any spare cash left over after essential living expenses, according to the survey.

"The good news for retailers, manufacturers, and service providers attempting to stimulate sales during the crisis is that, with the high level of promotional activity across the country, nearly half the respondents said the next 12 months will be a good time to buy things they need," said Barns.

Respondents said they are saving on household expenditures by cutting back out-of-home entertainment, delaying replacing major household items and looking for better deals on home loans, insurance and credit cards.

But Chinese consumers are still more confident than people in other parts of the world, especially other BRIC economies (Russia, India and Brazil), which all saw double-digit drops in consumer confidence.

"The central government's $585 billion stimulus package is an enormous shot in the arm for Chinese consumer confidence," said Barns.