Updated: 2012-11-30 09:58
By Xiao Xiangyi (China Daily)
A new-look pawnshop in Beijing. The dusty rooms, abacus and bean counters of old pawnshops have been replaced by modern display cases and computers. Jin Rong / for China Daily
Banned after the founding of the People's Republic of China, Pawnshops have re-emerged with a new and friendlier face
The traditional image of a pawnshop is dark and desperate. Typically in China, as elsewhere, they were a place where the poor went to put food on the table and entering one came with a large slice of social stigma attached. That may have been true of the traditional Chinese pawnshops, which disappeared nearly half a century ago, but the new model is quite different. The dusty rooms, abacus and bean counters have been replaced by modern display cases, smartly dressed staff and computers. The clientele are also largely different, with wealthier people and businessmen being the main customer groups.
Pawnbrokers first appeared in China, Rome and Greece about 3,000 years ago and are one of the oldest financial institutions in the world. The trade has re-emerged in China in recent years, mainly as a source of quick financing for small enterprises.
Wang Qinghong, the owner of a small company based in Tianjin that makes drinking straws, is a typical customer. Last month a supplier pushed forward the date of a down payment and Wang had to raise all the money within two days.
"At first the bank was the only lender I could think of, but it would have taken at least a week to get a loan from the bank," Wang says.
The pawnshop, by contrast, was able to give him money in a few minutes after having verified that he owned a flat
"Efficiency, convenience, flexibility and customized service make pawnshops a preferred financial channel for individuals and enterprises sometimes," says Yang Jingkun, deputy general manager of Huaxia Pawnshop, based in Beijing. Founded in 1993, Huaxia is one of the biggest pawnshops in China with 21 branches in Beijing, offering evening services.
The re-emergence of pawnshops in China is relatively new, as they were banned after the foundation of the People's Republic of China until 1989, when their renaissance began.
At first, the new pawnshops were located near hospitals or in communities and mainly accepted gold jewelry or household appliances, Yang says.
"Unlike the old days, people were no longer going to pawnshops for survival. They became a way to deal with emergencies.
"When people wanted to buy something but did not have enough money, they could pawn something valuable and redeem it on another day."
Traditionally, people pawned clothes, antiques and ornaments made of gold, silver or jade. Today, diamonds and luxury goods including bags and watches are more common. Art and wine have also begun to appear on pawnshop shelves as those markets have surged across China.
"The diversity of pawned objects is not limited to ordinary products," Yang says. "Since 1997, products such as real estate, private cars, stock equity and accounts receivable have found a place in the pawnshops."
At Huaxia Pawnshop, the monthly interest on a pawned house is 3.2 percent, private car 4 percent and common goods 4.7 percent.
The image of pawnshops today is very different to the past, Yang says. They used to be a place of shame. Entering one was a sign of absolute poverty and people pawned goods only in an act of desperation.
"That is not the case today. Many customers are wealthy people who just want a quick loan."
Pawnshop staff too are different, with many being professional jewelry appraisers, bank clerks or second-hand car salesmen, Yang says, adding that they can tell whether an object is genuine or fake.
"The most difficult part is choosing a reasonable price to offer. If the price is too low, it won't satisfy the customer. But if the price is higher than it should be, there will be risks. It's quite hard to control and it is based on the examiners' observation and judgment of the market.".
When the redemption period passes, goods are called a dead pawn, meaning the pawnshop has the right to sell them and at this stage a whole new set of customers looking for bargain luxury comes in.
Zhang Yusi, a 28-year-old lawyer from Beijing, says: "I bought two Chanel bags from a pawnshop near Nanluoguxiang. They are unlikely to be fakes as the lender approved a loan on them. I was able to buy an almost new Chanel bag at a 50 percent discount."
Traditional Chinese pawnshops were single stores, often opened by a husband and wife. Today, most are part of a chain.
"Every year we open new stores in Beijing," Yang says. "We locate our shops in commercial areas, usually in a shopping center, because there are still misunderstandings about pawnshops and we want to show potential customers what we are doing and tell them that they should not be embarrassed to visit one."
Pawnshop trade differs between regions and cities, he says. In Zhejiang, there are many small and medium-sized enterprises and stocks and accounts receivable account for more than half of all pawnshop business.
In Beijing, the business is more diversified and international. Customers include a growing number of foreigners, typically looking to pawn watches, he says.
(China Daily 11/30/2012 page26)