Time for a Chinese Equifax

By Frederick W Stakelbeck Jr

The expanding Chinese economy is causing fundamental changes in the way businesses and customers interrelate and the expectations associated with these relationships. Although China is still largely a “cash-centric” society with minimal credit exposure, many corporate executives, economists and global investors see sustained growth and vast opportunities in China’s underdeveloped consumer credit markets. “Chinese prosperity will boost the demand for retail-lending products such as car loans, credit cards, and mortgages,” the McKinsley Quarterly, an on-line market analysis journal, noted recently.

Recognizing the potential for significant profits, increased market share and cross-selling opportunities, large financial institutions such as the Bank of America, Royal Bank of Scotland, American Express, and Goldman Sachs have invested over US$20 billion in the Chinese banking sector over the past year alone. A recent report by The Bank for International Settlements (BIS), a international association that fosters cooperation among the world’s central banks, supports the view that consumer spending will increase as a result of lower interest rates, reduced bank losses, higher incomes and a growing middle class.

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