Top Biz News
First consumer finance company may struggle to attract interest
By Shen Jingting (China Daily)
Updated: 2010-03-02 11:08
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China's first consumer finance company, the Bank of Beijing Consumer Finance Company, officially started operations in Beijing Monday.
The company, which is a subsidiary of Bank of Beijing, is one of several consumer finance companies involved in a pilot project approved last July by the China Banking Regulatory Commission.
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Receptionists at the counter at the Bank of Beijing Consumer Finance Company, China's first consumer finance company. [CHINA DAILY] |
By the end of the year, China will have a total of four consumer finance companies, although the Bank of Beijing Consumer Finance Co will be the only one to operate in the capital.
But a finance expert said the new company will have a tough time getting customers.
Beijing residents will need time, possibly a long time, to get used to the idea of consumer finance companies, said Zhao Xijun, deputy dean of the Financial and Securities Institute at Renmin University of China. Commercial banks have already established lending programs, which the Chinese public is more familiar with, said Zhao.
"I doubt if this new company, even though it is owned by a bank, will even be able to get one percent of the lending market in Beijing this year," he added.
"Whether such companies will be successful in China in the long run remains to be seen and depends a lot on how well they perform in the first few years," he said.
The Bank of Beijing Consumer Finance Co said it has already talked with major electronics and furnishing companies in Beijing, such as Dazhong, Gome and Easyhome, about allowing people to apply directly for loans in the stores.
"Our target clients are mainly low and middle-income people or young families, who have a stable job and receive regular salaries," a woman surnamed Wang at Bank of Beijing consumer Finance Company, told METRO.
First-time applicants will be restricted to loans to buy durable goods, such as electric appliances and furniture. People will be able to get loans for house decoration, weddings and travel on their second application.
Getting a loan through a consumer finance company is generally simpler and the process shorter, compared to getting a loan from a bank. Loans will be approved within an hour at Bank of Beijing Consumer Finance Co, said Wang.
The company will be open after working hours and on weekends.
"I would like to try, as this is quite a new method of getting a loan and seems to be particularly well suited to our young people," said Si Shengchang, 30, who works at a local finance company.
"I think I am probably more comfortable than most people about using a consumer finance company because I work in the financial industry," said Si.
