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Do the Chinese Not Like Debt?


So I read now unavailable news article about how HSBC and Citigroup are entering the credit card business in China but they have run into the problem of Chinese people paying off their debt at the end of each month [3]! Why is that?

If you’re Chinese (American-born such as myself or otherwise) then this scenario will be very familiar to you (it’s probably familiar to you even if you aren’t Chinese). You are visiting a friend or relative, they take you out to a very nice dinner, and when the check arrives you fight over it. You, as the visitor, will likely never pay but you still argue and then acquiesce because that’s how things are done. The next time, you invite your friend out and you “re-pay” the “debt” of the nice meal. Years can pass between these two meals but the one in “debt” always remembers.

This is tied very deeply with a concept in Chinese society known as Guanxi, that is, the personal relationship between two individuals. Wikipedia has a brief explanation of this concept [4]. The crux of the idea is that when someone can do a favor for you, you are in their debt and should do your best to make right of it to them or their descendants.

I believe the bottom line is that Chinese folks don’t want to be indebted to someone else when they don’t have to be. Call it a pride thing but if you can do it yourself then you don’t ask someone else for help. When you do ask someone for help, you remember to repay them. I believe that the idea of being indebted to someone (in this case a credit card company) is so uncomfortable a feeling and so ingrained in society that it will be hard for credit card companies to make headway until the consumerist and commercialistic aspects of Western culture spreads more in Chinese society (which I think is an unfortunate thing). So when you do borrow money from a credit card company, you pay them back.

Or, Chinese people are just smarter about credit than the companies anticipated. 🙂

(It would be interesting to see the payback rates based on ethnicity as a matter of inspecting society but I doubt companies keep that sort of data for fear of retribution if they were ever discovered.)