Pawnbroking, yesterday's "bloodsucker" in China, has made a comeback in the country in recent years. But this time, its image has changed to a "helping hand".

Pawnbroking, considered one of the oldest businesses in China. [File photo]

Zhang Peixing, a self-employed transport worker in Linyi city of east China's Shandong Province, bought a new vehicle this year. When loan payments on the vehicle fell due he was forced to find money to pay his debts.

While other options such as a short-term loan from a bank or a personal loan were not workable, Zhang took a friend's advice to try the pawnshop.

Zhang put his new Daewoo in Jinxin Pawnshop in Linyi and got more than 100,000 yuan in cash immediately. Ten days later, when his own money came, he redeemed his vehicle. He paid the pawnshop 1,600 yuan for evaluation and storage fee.

In east China's Shandong Province, many small business owners have had similar experiences. Statistics show that 90 percent of customers of pawnshops in the province are small businesses. With simple procedures, pawnbrokers are considered a means of financing and some people even call pawnshops their second bank.

Pawnbroking had been in China for more than 1,500 years. However, in the 1950s they became known as "bloodsuckers", because they took items at extremely low prices and -- as few could affordto redeem them -- sold them to the rich at high prices. A vivid description of pawnshops in the old days can still be seen on films and TV series today, often with a poor widow carrying a starving baby in her arms, reluctantly pawning her silver hairpin -- the last piece of her dowry and the only valuable item in her house -- to get food for the baby.

The business was wiped out after the founding of new China in 1949.

"Gone are the days when a pawnshop was the last chance for the poor to get a full meal," said Lian Huating, vice-director of the Shandong Economic and Trade Commission, "it's now a practical way of capital turnover."

Since the first pawnshop emerged again in 1987 in southwest China's Sichuan Province, more than 1,300 pawnshops have been set up in the country.

Lian noted that many investors are trying their luck in the field, lured by its potential for further development and good returns.

Customers pawning their property will have to pay a composite fee which covers evaluation fee and storage fee. Including interest rates, the total fee is about five times the rate charged in banks.

Though the charge is high, pawnbroking is welcomed for its convenience, especially for small businesses. The procedures for pawnbroking are simple with no credit survey or guarantors needed.The customer can get cash immediately, by pawning items ranging from home appliances, clothes, houses, cars, cameras, computers and mobile phones.

The difficulty of small businesses getting loans from banks hasbeen a problem in China. Statistics show that by the end of June this year, small and medium-sized businesses in Shandong completed111.6 billion yuan of investment, while less than 15 percent of the capital comes from financial institutes.

A frequenter of pawnshops, Shen Rubin said his import and export business needs lots of money at times. "I only choose an easy way of financing, it's worth it compared with the tedious loan procedure in banks and it's no loss of face compared with borrowing from friends."

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