Beijing winters can be brutal. There is not much in terms of snow, but between the lashing cold winds filled with dust and pollution and the painfully dry air that leads to constant coughing, the last place you want to be in the winter is outside. Yesterday, I stood outside waiting to withdraw money from a China Construction Bank ATM. The middle-aged man using the machine forced me to wait for fifteen minutes as he persisted to withdraw what looked like his life savings in renminbi, and then stuff the bills into a grease-stained pillowcase.
As unusual as this situation seems, it was not the first time I had witnessed a Chinese person withdraw such an enormous amount of cash. I personally have done so myself, as each visit to my landlord’s apartment to pay rent involves a hand-off of large wads of cash. Here in China cash is the standard method of payment. In addition to normal everyday purchases many Chinese consumers will use cash to buy cars and even real estate.
See the picture below:
However…things are changing.
While I conducted research for this post I came across article after article about how Chinese consumers prefer to use only cash for their purchases. The authors of these articles completely neglected to address the fact that different age groups may not all possess the same consumer tendencies. Then, I came across this Forbes article about online shopping by China Market Research Group’s (www.cmrconsulting.com.cn) Managing Director Shaun Rein. Rein’s company interviewed 500 young adults, ages 18-32, in six Chinese cities.
Here are some of their findings:
80% of respondents said they had made online purchases in the last six months.
The vast majority expected to buy something again in the next quarter.
70% said they would use a credit card for online purchases if they had one.
CMR’s research suggests that there will be a surge in credit card spending, especially online, as a growing number of Generation Y consumers gain access to credit cards. Through my own observations I feel that this is certainly possible. Many of my Chinese friends use credit cards when we go out shopping or for dinner. I have one friend in particular who makes at least one purchase a day on Taobao, an online marketplace similar to Ebay.
UPDATE: Rein recently hosted a panel at ad:tech. He told me in an email that companies like Li Ning expect their online sales to increase by as much as 50% this year. To use his words, “It’s booming.”
www.chinadaily.com.cn/bizchina/2007-09/14/content_6107546.htm
Will Chinese consumers make the switch to plastic? What do you think it will take for credit card usage to be widespread in China? Please leave a comment and start the conversation…
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