Pawnshops cash in during long Spring Festival

Pedestrians walking past a pawnshop in Nanjing, Jiangsu province. By the end of 2010, the total registered capital of the Chinese pawn industry grew by 5.1 times over 2005. [Photo/China Daily]

BEIJING - The Chinese gift-giving custom during the Spring Festival boosted the business of pawnshops, with an increasing number of customers pledging high-grade gifts such as gold jewelry and Apple Inc's iPad for cash.

Chen Yuan, manager of the Marketing Department of Beijing-based Baoruitong Pawnshop, told China Daily that during the holiday, most of the impawned goods were gold, and expensive watches. Also digital products, such as laptops, digital cameras and iPads, can be often be seen on the counter.

"We did about 20 deals of such goods every day last week, and business will peak after the holidays when receivers desire more cash rather than pointless gifts," said Chen.

The existing pawn services are convenient for customers to convert personal products into cash. According to the Baoruitong Pawnshop, people need to provide personal identification as well as receipts to prove the legality of the pledges. Then they can get money immediately after the appraiser gives a price.

"The regular period for a pawn contract is 30 days. During this period, the shop will charge a fee of 4.2 percent of the evaluated price, and additional interest of 0.5 percent," Chen said.

"My company gave me a digital camera as the year-end bonus. However, I preferred to take a trip to Hainan with my family, so I am here to convert it into cash," said Hua Shi, a customer standing at Baoruitong's counter.

Huaxia Pawnshop, another major pawnshop in Beijing, said on its website that the business volume of private products pawn service increased by 43 percent year-on-year in 2010.

By the end of 2010, the total registered capital of the Chinese pawn industry reached about 58.4 billion yuan ($8.86 billion), a growth of 5.1 times since 2005, according to a report from the Ministry of Commerce.

During those five years, the pawn industry has paid about 600 billion yuan in total to individuals as well as small and medium-sized companies, which has broadened their financial channels, the report said.

Zhou Tianyong, a professor of economics at the Party School of the Central Committee of the Communist Party of China, said that the pawn industry in China will continue to expand this year.

The excessive liquidity in consumer markets and the increasing domestic demand will bring growth opportunities for the industry, and the tightening credit policy may drive more medium- to small-sized companies to borrow money in pawnshops, Zhou said.