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Pawnshops gain popularity in China

03-01-2012 08:16 BJT

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Pawnshops in China have long played the role of providing people with cash during desperate times. But over the past few decades, pawnshops have nearly disappeared. Recently, they’re coming back to life as small borrowers are turn to these stores for loans.

Chen Wenlong is a broker at the Huaxia Pawnshop in downtown Beijing. Everyday he receives dozens of customers coming to pawn their goods in exchange for a loan.

Chen Wenlong said,“Most of our customers are individual businessmen, and there are also some from small and medium sized enterprises. For example, most of our jewellery on sale comes from jewellery wholesalers who come to us for short term loans."

Recently, pawnshops are coming back to life as small borrowers
are turn to these stores for loans.

Items like watches, jewellery, gold and almost anything that is worth money can be pawned in this shop, and it takes almost no time at all.

Chen Wenlong said,“The process to secure a loan here is very simple. For example, you just have to take your personal ID, your properties and the documents when you bought them, then you can receive hard cash in five or six minutes."

But pawnshops are still under the shadows of the past. For most Chinese, turning to a pawnshop for money is often considered disgraceful and an act of last resort for people in desperate need of money.

Yang Jingkun, deputy general manager of Huaxia Pawnshop, said, “When I first came in, I felt embarrassed working here. But as people know more about it, it’s getting more popular now, its popularity is a recognition of our positive role in people’s life.”

But this popularity didn’t come out of nowhere. Last year the central bank of China raised its reserve requirement ratio six times to combat rising inflation. But measures to mop up excessive liquidity in the market also weighed on the already cash-strapped SMEs and individuals.

Yang Jingkun, deputy general manager of Huaxia Pawnshop, said, “One outstanding feature of a pawnshop is it can provide customers with swift and convenient financial services. Some of our customers, need short term financial support to get over difficult times, but they are often turned down by traditional banks which only offer longer term loans.”

That’s when pawnshop businesses spotted a good opportunity, and rapid growth came with strong demand. According to Huaxia Pawnshop, by the end of 2011, over 5000 pawnshops were opened around the country, seeing a total transaction of over 200 billion RMB. And more investment is expected to follow.

Pawnshops are one of the oldest financial businesses in China. Now they are welcoming a new booming era. Quick money from the brokers might protect small businesses from short term financial straps, but its rapid growth also in a way indicates that many small borrowers are feeling the pinch from a tight financial environment.

Editor:Zhang Dan |Source: CNTV.CN

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