Danwei FM

Danwei FM: Chinese demand more plastic

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Your correspondent had a business textbook in university that illustrated, with neat little box diagrams, the cultural differences in economic behavior between East and West, specifically that Americans buy everything on credit while Asians stow all their money in low interest bank accounts like pack rats.

Analysts still harp about Asian resistance to consumer credit, often using Confucian clichés such as in a 2006 article in Marketplace by Bloomberg:

China's frugal mentality dates back 25 centuries to the philosopher Confucius, who said: "He who will not economize will have to agonize."

Culture serves as a nice way to explain away inconsistencies one is too lazy to investigate, until evidence to the contrary can no longer be ignored.

Danwei guest contributer Shaun Rein makes this point with credit cards, arguing that Chinese, especially Chinese youth, have a growing demand for consumer credit as their salaries rise along with their choices in where to spend.

Obstacles still persist, however. Most of China's banks ignore consumer credit as they focus on lending money to state-owned institutions who then pour the money into an overheated stock market. China also lacks the West's mechanisms for credit checks, which means stiflingly low credit limits.

Nonetheless, the future is bright for consumer credit in China.

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There are currently 2 Comments for Danwei FM: Chinese demand more plastic.

Comments on Danwei FM: Chinese demand more plastic

Why is it so mandatory that Chinese people use credit cards? If they don't have the money for it , don't buy it! Very simple.
The truth is, foreign credit card companies make a killing financially by intervening into the personal lives of anybody who use a credit card. They do so by making people believe it is the "modern" thing to do, and so, ignorant people follow.
Confucius was correct 100% with his saying those who do not economize, agonize. Very true, and this is the kind of truth credit card agencies don't want/ They don't want people to save money and buy only what they need.
Credit card companies need people to need, to be ignorant, and borrow money for something they don't need at all.

Profiting off of the desires of people is not virtuous, and companies exploiting the ignorance of the Chinese people are simply not being virtuous, and I am sure they don't care.

People don't need a credit card, but it is the advertising of ideas that promote Ego, and greed which brainwash people.

It is sad, but China will become a market society, only focusing on how much money a person has. Quality of life continues to wane, and people can only think of how much money they have, and how much they should borrow to buy something they cannot afford.

That's nice, chalk this one up to western materialist influence.

Peace, and Blessings.

people respond to incentives. when there is no incentives to use a credit card, or when incentives can't outweigh troubles of using a credit card, consumers hate to use plastic. if most chinese outbound travelers use credit cards, they find the need to do so. many local consumers who buy at a supermarket in the community use a plastic card issued by that supermarket chain for two reasons i can see. first, the card comes as a benefit or a gift from danwei (not your's, hehe), which means the consumer does not need to go through red tape and they get cash cards regularly (god knows they are in a position to get them)so that they can transfer plastic cash to the credit card (though it is not a credit card in its strict sense). second, by putting all the cash to the account to the supermarket chain, they are given a 5% discount when the card is used. fringe benefits come this way to some consumers whose danwei is generous and has a big money box. for the supermarket chain, it gets cash injection from these danwei. in return, it gives discounts. in this sense, the card is by no means a credit card. it is just a plastic you swipe at a supermarket. all the money you use from the card is already in the account of the supermarket.

this is the card popular with some consumers. bank credit cards are not so popular for many reasons. i guess i will not bother to use a credit card, since there is no incentive to use one in most cases. banks don't bother to woo me and banks do charge a fee for the credit card account in my name if i have a card. so why should i bother to own a card, let alone use a card? cash is okay. it does not give me any incentive, but it does not cause trouble.

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