Chinese Way of Doing Business: In Cash We Trust(nytimes.com)
nytimes.com
Chinese Way of Doing Business: In Cash We Trust
http://www.nytimes.com/2013/05/01/business/global/chinese-way-of-doing-business-in-cash-we-trust.html?pagewanted=all
6 comments
>The other interesting thing about Chinese currency is how light the coins are. They feel like they're made of plastic.
This is only the really old designs (1950s), also really small coins. 0.01 and 0.05 RMB coins are cheap and flimsy aluminum or something (? dunno exactly what metal). You almost never see those any more.
The newer 0.1, 0.5, and 1.0 coins are equivalent to US coins in sturdiness, some kind of brass or nickel or something.
This is only the really old designs (1950s), also really small coins. 0.01 and 0.05 RMB coins are cheap and flimsy aluminum or something (? dunno exactly what metal). You almost never see those any more.
The newer 0.1, 0.5, and 1.0 coins are equivalent to US coins in sturdiness, some kind of brass or nickel or something.
Interesting. I picked them up in 2003, the 0.05RMB were the most obvious ones, the larger denominations were definitely more coin-like.
Yea, and you're seeing less and less of those now, especially in bigger cities where prices are getting crazy high. Also most stores are really good about keeping things in even 0.5/1 increments, instead of having everything be X.99 or X.95 (for the most part).
I went to the bank to pay a USD bill in RMB and they gave me 1 and 5 fens in my change. Mostly, I never see fen unless I go to the bigger grocery stores.
That would be fen (.01x). They are made of plastic as their value is so low. Mao (.10x) and Yuan (1x) are more like real coins, though mao's are smaller than yuan, and they have a plastic mao variant also, I believe.
Weird that a tightly controlled nation like China hasn't killed the fen yet.
China is not a tightly controlled nation. It is not democratic, but there is a lot of local diversity in how it is governed.
Fen probably wasn't eliminated due to inflation fears. For the same reason, they won't issue a bill larger than 100RMB even though it would be very useful.
Fen probably wasn't eliminated due to inflation fears. For the same reason, they won't issue a bill larger than 100RMB even though it would be very useful.
A side note: I'm currently in China, and as the article describes I have huge wads of 100RMB bills in my possession.
They smell terrible.
Is this usual for paper money? My home country went polymer over 20 years ago so I can't actually remember. Do used american bills smell like the sweaty palms of the thousand people who used them before you?
They smell terrible.
Is this usual for paper money? My home country went polymer over 20 years ago so I can't actually remember. Do used american bills smell like the sweaty palms of the thousand people who used them before you?
Yes, US currency also smells very bad.
However, the US seems very aggressive about replacing worn bills. This may be related to the fact that so much of our currency goes in and out of automated machinery these days, and people don't hang on to cash very long.
Anecdotally, bills today seem much tidier than they did when I was a kid. Of the dozen bills in my pocket right now, none is older than 2006, and none are crumpled.
However, the US seems very aggressive about replacing worn bills. This may be related to the fact that so much of our currency goes in and out of automated machinery these days, and people don't hang on to cash very long.
Anecdotally, bills today seem much tidier than they did when I was a kid. Of the dozen bills in my pocket right now, none is older than 2006, and none are crumpled.
100 RMB bills get replaced pretty quickly also; its rare to see an old one. 50 RMB bills can be more worn, and its kind of a pain because the DPRK counterfeiters usually go after these notes. Recently, they've caught on to this and have been replacing 50 RMB bills more often.
1RMB notes are an abomination, and considering that there is a coin of that denomination I'm surprised they haven't been abolished. In my wallet now I have a couple of them dating from 1999. Dirty.
They only mint 1RMB coins in the south (e.g. Shanghai). Beijing and the north have mainly paper bills, we do get coins for the subway, however. Coins are annoying if clean, since we aren't used to them.
Laundry? US bills are made of cloth.
I'm actually starting to lean this way myself. Many of our routine expenses (food, gas, restaurants) are now cash transactions. I think I'm smarter with money as a result.
I used to pay my rent every three months in cash, which was essentially 20K RMB all in cash. I was almost thinking of investing in a man purse.
Now that my rent has gone up and they want me to pay once every 6 months, we just go to the bank and do a huge transfer directly to my landlord's account.
Now that my rent has gone up and they want me to pay once every 6 months, we just go to the bank and do a huge transfer directly to my landlord's account.
I don't get it. What the problem with paying with check? You are not going to dissapear in two days and you are going to pay in advance, right?
There are no checks in China. There are barely checks in any country outside of the United States.
I experienced the same thing in Mexico. I always assumed it was because you couldn't trust a check (i.e., no way to verify the account balance).
I'm still shocked my companies here in the U.S. that don't offer non-check payments. Most government agencies require cash or check (I never carry either).
I recently switched to Simple bank, which doesn't offer checks, and I've definitely hit a few snags along the way because of it.
I'm still shocked my companies here in the U.S. that don't offer non-check payments. Most government agencies require cash or check (I never carry either).
I recently switched to Simple bank, which doesn't offer checks, and I've definitely hit a few snags along the way because of it.
There are barely checks in any country outside of the United States.
Don't generalize. Checks in Tunisia are used from small transactions ($20) to very big ones (certified checks).
Don't generalize. Checks in Tunisia are used from small transactions ($20) to very big ones (certified checks).
Barely is not a strong generalization, it leaves some wiggle room. E.g. checks used to be used a lot in Europe but have been replaced mostly by e-payment. Check usage peaked worldwide in the 90s, and is decreasing; the US just seems to be behind that trend a bit.
Checks were never used very much in most of east Asia. They have some use in India given its UK heritage.
Checks were never used very much in most of east Asia. They have some use in India given its UK heritage.
Sounds awful. With the rewards of credit cards these days, you're basically throwing away money. Fidelity offers an AmEx card with 2% cashback on all purchases, and there are plenty of other options to choose from.
If it's self control you're after, does cash really make a difference? I think modern personal finance tools as Mint do a better job with budgeting.
Personally, I have used plastic ever since I was old enough to have a debit card, and I've never looked back.
Pay in cash, and the retailer gets the resources, not a third party. Long-term, this should be good for you both.
Rewards points are a sign of inefficiency.
Rewards points are a sign of inefficiency.
When reward points are being offered, you are being inefficient with your money if you do not take advantage of them when everyone else does. I agree that they shouldn't exist in the first place, but that is out of my control.
> Pay in cash, and the retailer gets the resources?
Huh? The retailer is paid the same amount (sans the transaction fee) either way. The cashback incentive is to get people in debt.
Huh? The retailer is paid the same amount (sans the transaction fee) either way. The cashback incentive is to get people in debt.
The cashback incentives are usually roughly equal to the transaction fees.
Cashbacks incentives don't exist in China anyways, I believe. Its mostly a crazy American thing.
Singapore also has the cashback and bonus points on credit cards.
I used to think this way.
I've found that I spend 5-8% less on average on food, meals, etc. I'm not a spendthrift by any means, I budget and pay my bills just fine and don't have money problems.
I had a wallet stolen while travelling and lost access to my cards (except AMEX, who had it FedEx'd to my hotel by 8AM the next morning) for about a week. So I ended up using cash for about a week and I was shocked that it actually had a measurable impact.
Try it for a week -- you'll be surprised.
I've found that I spend 5-8% less on average on food, meals, etc. I'm not a spendthrift by any means, I budget and pay my bills just fine and don't have money problems.
I had a wallet stolen while travelling and lost access to my cards (except AMEX, who had it FedEx'd to my hotel by 8AM the next morning) for about a week. So I ended up using cash for about a week and I was shocked that it actually had a measurable impact.
Try it for a week -- you'll be surprised.
First off, it's a byproduct of corruption, pay through credit card's easily tracked, ordinary people don't do that. Second, not like first world countries, many business here don't accept credit card, some who accepts would charge additional fee.
In Germany, many businesses don't accept credit cards either (lots accepts debit cards though), and cash is still popular.
I hated only having 100 RMB notes available when I visited China; pretty much explains why even men carry purses there (I ended up carrying my laptop bag everywhere, which kind of sucked)
This is because plastic leaves a paper trail and cash does not. If you pay in cash and don't ask for a receipt, the seller doesn't pay tax on it, and will often give you a discount.
That seems very easy to detect (with police on foot, like US underage alcohol stings) and send people to gulag for.
Not in a country of 1.3 billion people and only 1.6 million police officers, where everyone selling goods or services practices this.
Besides, I don't think enforcing tax collection is, or has ever been, a function of the police force.
China's internal revenue service tolerates widespread sales tax evasion via undocumented cash transactions, even if for no other reason than that they lack the auditing infrastructure necessary to enforce collection.
Meanwhile, in the cases when someone does ask for a receipt for a cash transaction, it is always because they want to "expense" it. Salary rates in China, at both state-owned and private enterprises, are shockingly low, but they compensate for it by allowing their employees to claim expense reimbursement for practically anything. Therefore, there is even a black market for receipts. If you spend cash on an expensive meal in China and you get a receipt, you can even sell that receipt to a receipt trader, who will resell it to someone else for 1% of the amount on the receipt, and then that person will claim it to their company as an expense, and get reimbursed cash for it. This sort of fraud is rampant in China.
Besides, I don't think enforcing tax collection is, or has ever been, a function of the police force.
China's internal revenue service tolerates widespread sales tax evasion via undocumented cash transactions, even if for no other reason than that they lack the auditing infrastructure necessary to enforce collection.
Meanwhile, in the cases when someone does ask for a receipt for a cash transaction, it is always because they want to "expense" it. Salary rates in China, at both state-owned and private enterprises, are shockingly low, but they compensate for it by allowing their employees to claim expense reimbursement for practically anything. Therefore, there is even a black market for receipts. If you spend cash on an expensive meal in China and you get a receipt, you can even sell that receipt to a receipt trader, who will resell it to someone else for 1% of the amount on the receipt, and then that person will claim it to their company as an expense, and get reimbursed cash for it. This sort of fraud is rampant in China.
Coming from a country where I visit an ATM maybe half a dozen times a year and a bank branch even less it was quite a shock. Fortunately I can still count change pretty quickly.
The other interesting thing about Chinese currency is how light the coins are. They feel like they're made of plastic.