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Charging it in China: Part I
The concept sounded crazy at first: get a good or service for free without paying for it, and be trusted to pay it back in a few months from now. The concept of credit cards were first introduced in the 1887 utopian novel Looking Backward by Edward Bellamy.
60 years later, the first credit card was first used in the United States for wealthy car buyers. Since then we’ve totally embraced the idea of living our lives “on credit” or borrowing money when we need it. With so many new ways to exchange resources, pay, and earn money, it’s more fluid than ever.
One can’t help but look towards the next big country of wealth when it comes to predicting the future of credit cards. China certainly has the money the back it up, but despite credit cards being available since the 80s, their popularity and usage inch forward slowly.
As a WSJ report recently noted, three-quarters of middle class Chinese urban dwellers own credit cards, but only 9% of them are actually planning to use them this year. However, 9% is still a huge amount of people—about 130 million. Almost the same about of people with credit cards in America—176.8 million. With international commerce continuing to explode, the numbers will probably rise much faster in the next five years.
The number of card accounts grew from 11 million in 2004 to 124 million in 2008, according to McKinsey Global Institute. Then, In 2010 China Unionpay, the country’s only national electronic payment network, made it possible for citizens to pay online through Paypal. This, paired with the love of online shopping, can only mean more usage in the future.
Stay tuned for part two of Charging it in China, where we explore credit card usage habits in China, and how to encourage a growing generation of card-holders. Or read more about China’s luxury market in our article China: The Next Luxury Empire.
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