Shanghai Oriental is so vast it is known locally as the “aircraft carrier” of pawn shops.
And it is thriving as the Chinese economy sinks into the mire. “We’ve had a 30 per cent rise in the number of customers and a 70 per cent rise in the number of inquiries,” said Wang Fuming, its founder.
The flashy Shanghainese, who would have thought nothing last year of buying designer trinkets, are now pawning their Gucci bags and Rolex watches in desperation. “There’s has been a big increase in white collar workers who are mortgaging their luxury goods for emergency cash. That’s been quite apparent,” said Mr Wang.
Display cases inside the store offer Patek Philippe men’s watches for a relatively reasonable 78,000 yuan (Pounds7,800) and diamond engagement rings (the shame!) starting at a modest 1,500 yuan or so.
Interestingly though, the pawn shop is being increasingly used by small businesses, who find it difficult to get loans from the bank.
Wen Jiabao, the Chinese prime minister, was full of talk today at the National People’s Congress about helping small businesses but unless they have the right connections, the only companies who can get loans are state-owned behemoths.
Mr Wang said that nearly two-thirds of his clients are small and medium-sized businesses and that he advances sums of up to 10 million yuan, or a million pounds!
The loans last for a maximum of six months and carry a monthly interest rate of more than three per cent. In return, entrepreneurs often put up their factories, homes and usually all the gold they have to hand in order to secure the deal.
Shanghai Oriental, which has been going since 2002, has loaned out 6.7 billion yuan so far. “Small businesses in China cannot go to the bank, but even if they could, it is easier to come to us. We can structure the loan on a variety of collateral, unlike a bank, and we have a simple and short process. It used to be a month, but we’ve now reduced the wait time for a loan to five days during the financial crisis,” said Mr Wang.
In previous years, companies came to him to help get money in order to expand or buy more raw materials. This year, however, he said companies are desperate to pay their wage bill, or to have enough cash to tide them over until the next order.
Until China’s opening up, at the end of the 80s, pawn shops were illegal – a hated symbol of capitalist exploitation. Now, Mr Wang says that private business in China can’t exist without them.
Posted By: Malcolm Moore at Mar 5, 2009 at 11:17:37
Source: The Telegraph