China's 1,300 or so pawnshops have been transferred from the control of the People's Bank of China to that of the State Economic and Trade Commission, according to Business Weekly of China Daily.
The change of status from financial institution to industrial and commercial enterprise is expected to lead to many changes, such as looser regulations and better taxation policies.
"To regulate pawnshops as industrial and commercial enterprises is actually a proper response to market demand," said Li Cheng, general manager with the Beijing-based Baoruitong Pawnshop.
China's 1,500-year-old pawnshops were wiped out after the founding of the People's Republic of China in 1949, but emerged again in 1987. As small financial enterprises under the control of the central bank, pawnshops could focus on individuals and private businesses and grant small loans with a simpler application process than that in commercial banks.
Pawnshops have been restricted in many respects including the capital funds, the setting-up of branch organizations and business scope.
Also, pawnshops have not been able to settle "dead pawns"-- items given up by customers-- but have to do it through intermediaries. This means a kind of broker gets involved to sell the item the customer no longer wants.
This has not only increased costs for pawnshops, but has also meant they are unable to settle some dead pawns as China's intermediary market is still immature, said Duan Ming, general manager with the Beijing Jinbao Pawnshop.
(China Daily)
