[photopress:credit_card.jpg,full,alignright]There are three essential cards for residents in China to have. These are ‘electricity cards’ used for paying your electricity for your household, ‘gas cards’ for paying for the gas you need to cook, and ‘water cards’ for the water you need to wash and bathe. It’s one of the fundamental rules of living in China that households have to pay in advance, by filling up the cards.
Another Chinese rule that foreigners may find difficult at first is the practice of depositing security money. As travelers find out in China, even people staying at five-star hotels have to pay a deposit — about twice the hotel bill — when they check in. Or, more normally, sign a blank form for your credit card and a sum is then blocked by the hotel.
You get your deposit back when you check out and the card, when it works properly, is restored to normality.
This is part of the culture and foreigners living in China either get used to it or have niggling problems. And it is changing rapidly. With the advent of the Olympic Games the use of real credit cards will soar, especially in the cities. The number of stores where you can use credit cards is rapidly increasing. Few young people working at reputable workplaces fail to carry at least one credit card.
In fact, it is the start of a revolution. China plans to expand the use of bank cards to all commercial districts, star-rated hotels and travel resorts in big and mid-sized cities, targeting 30% of retail sales in three years. That, to use a favorite word of analysts, is a tectonic shift.
People’s Bank of China, in an industry guidance on its Web site, stated at least 60% of stores with annual sales of more than RMB1 million should accept bank cards by the end of 2008. The guide was published jointly by nine government bodies so you can take it as seriously official policy. It stated China will roll out tax incentives and lower transmission costs to promote the use of bank cards.
‘China’s card business is developing rapidly, with card issuance jumping, and usage environment greatly improved,’ the central bank said. ‘However, the industry is still in its infantry.’ That is, in fact, what it says. For ‘infantry’ read ‘infancy’ although, from experience, I can tell you the difference is not huge.
According to a forecast by MasterCard, the world’s second-biggest credit-card company China will have about 75 million credit cards that can be used in the international market by 2010, from more than three million currently. There might be an element of hopeful thinking in that forecast.
Citigroup, HSBC Holdings and American Express are among foreign institutions that have begun partnerships in China to start credit card businesses.
The slight suspicion of credit and credit cards that currently still prevails outside of the major cities is similar to the situation in Germany up until, say, 15 years ago when many hotels simply refused to recognize credit cards. Checks backed by a EuroCheck card, yes. Credit cards, no. That has now totally changed but it did not happen overnight. China’s credit revolution will be bigger and faster.
Source: Chosun News and The Standard
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