Money
Customers sold new way to go shopping
By Shi Jing (China Daily)
Updated: 2010-03-02 12:12
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A 36-year-old foodstuff salesman became the first person in China to try out a brand new way of shopping, signing up for newly launched consumer financing in the capital yesterday.
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 Zhang Hongqi fills in forms to become the first consumer of the city's first consumer financing company.
Shi Jing/China Daily
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Zhang Hongqi made history in the Dazhong Electronics outlet in the Central Television Tower, becoming the first customer of the Consumer Finance Company of the Bank of Beijing.
"On average, only one yuan a day will be charged extra for my new iPhone," Zhang said. "It is really a bargain. And I only needed to provide proof of my income status, which was produced by my company. It is really convenient."
He completed his purchase in 20 minutes.
Zhang's new cell phone cost 5,880 yuan. Annual interest will cost him 366 yuan at a rate of 11.32 percent, which is about twice the current prime interest rate.
During the one-year term of the loan, Zhang will pay about 520 yuan a month and can enjoy his phone right away.
"I do have a credit card but I have no idea how I can possibly pay in installments with this card," he said. "This consumer finance company is the first one ever introduced to the Chinese mainland. So, I thought it would be a good idea to have a try."
Zhang has worked for a food company based in western Beijing for about five years.
"I make 3,650 yuan a month now," he said. "It is true that I could have made the purchase in one go but the phone is not cheap and if I did, I would probably have nothing left for the next two months. This way, I have room to make other purchases."
Song Wenchang, vice-general manager of the Consumer Finance Company, Bank of Beijing, said the newly introduced company will complement the business of the bank.
"The Consumer Finance Company has different targets to credit card companies. We view everyone with a regular income and a stable job as our future customers," said Song. "The retail market is very promising in Beijing, with a turnover volume of about 530 billion yuan last year. So, we hope credit cards and consumer financing can work together to explore a bigger potential market."
First consumer finance company may struggle to attract interest
by Shen Jingting
China's first consumer finance company, the Bank of Beijing Consumer Finance Company, officially started operations in Beijing yesterday.
The company, which is a subsidiary of Bank of Beijing, is one of several consumer finance companies involved in a pilot project approved last July by the China Banking Regulatory Commission.
By the end of the year, China will have a total of four consumer finance companies, although the Bank of Beijing Consumer Finance Co will be the only one to operate in the capital.
But a finance expert said the new company will have a tough time getting customers.
Beijing residents will need time, possibly a long time, to get used to the idea of consumer finance companies, said Zhao Xijun, deputy dean of the Financial and Securities Institute at Renmin University of China. Commercial banks have already established lending programs, which the Chinese public is more familiar with, said Zhao.
"I doubt if this new company, even though it is owned by a bank, will even be able to get one percent of the lending market in Beijing this year," he added.
"Whether such companies will be successful in China in the long run remains to be seen and depends a lot on how well they perform in the first few years," he said.
The Bank of Beijing Consumer Finance Co said it has already talked with major electronics and furnishing companies in Beijing, such as Dazhong, Gome and Easyhome, about allowing people to apply directly for loans in the stores.
"Our target clients are mainly low and middle-income people or young families, who have a stable job and receive regular salaries," a woman surnamed Wang at Bank of Beijing consumer Finance Company, told METRO.
First-time applicants will be restricted to loans to buy durable goods, such as electric appliances and furniture. People will be able to get loans for house decoration, weddings and travel on their second application.
"We currently do not offer house and car loans, since the central government does not allow us to do so during this trial phase," Wang said.
Getting a loan through a consumer finance company is generally simpler and the process shorter, compared to getting a loan from a bank. Loans will be approved within an hour at Bank of Beijing Consumer Finance Co, said Wang.
The company will be open after working hours and on weekends.
"I would like to try, as this is quite a new method of getting a loan and seems to be particularly well suited to our young people," said Si Shengchang, 30, who works at a local finance company.
"I think I am probably more comfortable than most people about using a consumer finance company because I work in the financial industry," said Si.
