Mobiles and Laptops are Status Symbols for both Chinese

Amsterdam / Prague

08/25/2010 - Showing off the newest mobile or laptop to friends. This is what motivates young Chinese people to use credit to buy the most modern technological products. The young generation wants to show that they “have enough money” and go with the flow. A similar trend is occurring in Russia where the ownership of high-end gadgets is also a sign of status. The economic crisis, which wasn’t avoided by even the largest countries in the world meant that even Russians had to be more modest with their spending. Home Credit, one of the consumer finance providers in CEE and Southeast Asia, looked at customer preferences in the countries that it operates.

In China, the fastest growing market in the world, the newest mobile or laptop are a symbol of status.  This applies primarily to younger people, who are the most concerned with image.  As soon as there is something new on the market, young people need to have it and are willing to borrow for it.  Mobile phones hold a 65% market share in terms of products financed by loans in China. “The older generation was used to saving for things they wanted to buy and only very slowly started to use credit.  Appliances and furniture for example, which Czechs are furiously buying on credit, are rarely bought by the Chinese,” explains Michal Skocil, CEO of Home Credit China, adding that the Chinese government is cleverly supporting the development of consumer loans in order to increase domestic consumption. Another favourite credit purchase in China is motorcycles. With the Chinese government trying to keep traffic under control because of air pollution, electric mopeds don’t even require registration, driving the Chinese to acquire them.

Statistics from the east show that more than half of Russians had to limit their spending in 2009 because of the crisis. “People put off buying products for their household, like appliances or renovations. More expensive and luxurious things, which are a demonstration of social status in Russia, also had to be replaced by cheaper products,” said Ivan Svitek, CEO of Home Credit in Russia, adding that Russians moved from larger loans with longer payment plans, to smaller loans paid in a shorter amount of time. This trend started to reverse at the end of 2009 thanks to the stabilization of household incomes.

In Vietnam, the primary consumer product bought on credit is small motorcycle. The motorcycle is consistently the most important mode of transportation and in smaller provinces, four people can end up sharing one bike.  This creates a huge market for motorcycle loans – Home Credit closes about ten thousand a month. Selling electronics or appliances on credit is still complicated in Vietnam.  “Specialty stores are rare, you’ll usually find groceries, a drug store, televisions, furniture and fans under one roof, and everything is paid for in cash,” says Ajay Bandhu, the head of Home Credit in Vietnam.  Shifting this mindset has become one of the government’s top priorities and the overall state of Vietnamese infrastructure is starting to change.

Consumer attitudes have also changed in the Czech Republic. As a nation of handy people, Czechs would rather repair old things and do renovations themselves. Much like in Russia, Czechs also put off exotic vacations and buy cars at used car dealerships.

Belarusians use credit most often to buy modern technology, followed by home appliances. They are most interested in mobiles, notebooks, video cameras, cameras and televisions. In terms of appliances they buy washing machines, refrigerators, microwaves and vacuum cleaners. Kazakhs on the other hand reduced their purchases of computers in 2009 because of the crisis and used credit to buy household products and appliances.