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Attitudes towards Credit - China - May 2019

Covered in this report

For the purpose of this report, credit consumption mainly refers to consumers borrowing money from banks or other financial service providers to purchase goods and services. With the rapid development of e-commerce platforms and mobile payments, more and more products can be purchased on credit.

The credit products are defined as the credit-based products provided by banks, financial institutions, and online financial services platforms etc, such as credit cards, bank loans (eg consumption loan student loan, excluded home and car loan), and Ant Credit Pay from Ant Finance, an Alibaba subsidiary, etc

Credit services refers to those provided by the third-party credit scoring agencies (eg Zhima Credit, Xiaobai Credit). Credit services also include the exclusive rights and services that consumers can enjoy as an owner of the credit products (eg use and pay later, fee waiver).

“Consumers’ relaxed mindset on borrowing and the innovative internet credit products have fuelled the credit consumption to a record high level. The post-1990s generation outstripped the post-1980s to become the generation with the biggest demand for extra credit lines from the official banking system. Lower tier cities residents’ strong spending will also contribute to the increase in personal loans. As the third-party credit scoring platforms and credit ecosystem start getting established in China, consumers’ awareness of living on credit is awakening, with younger consumers and high earners taking the lead.”

-Summer Xia, Research Analyst

This report will look at the following areas:

  • Drivers of credit consumption and loans
  • Turn credit into a fortune
  • Increasing consumer touch points is the key to growth

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
        • Definition
        • Executive Summary

            • The market
              • Figure 1: Loans to households, by type, China, Jan 2014-March 2019
              • Figure 2: Average credit granted per credit card and credit utilisation, China 2014-18
            • The consumer
              • Online credit payment is the most widely accepted credit product
                • Figure 3: Usage of credit products, February 2019
              • Banks go wider, online credit providers go deeper
                • Figure 4: Usage frequency of personal loans, February 2019
              • Competitive advantages are different
                • Figure 5: Reasons for choosing credit providers, credit card and online credit payment or instalment, February 2019
              • Physical credit card being replaced on many payment occasions
                • Figure 6: Ways to use credit cards, February 2019
              • Credit ecosystem begin to get established
                • Figure 7: Benefit enjoyed as credit scoring service user, February 2019
              • Credit knowledge education is still needed to drive usage
                • Figure 8: Attitudes towards credit products, February 2019
              • What we think
              • Issues and Insights

                • Drivers of credit consumption and loans
                  • The facts
                    • The implications
                      • Turn credit into a fortune
                        • The facts
                          • The implications
                            • Increasing consumer touch points is the key to growth
                              • The facts
                                • The implications
                                • The Market

                                  • Trends in Consumer Lending
                                    • Robust growth of loans to household
                                      • Figure 9: Growth of total loans to households, China 2014-18
                                    • Short-term consumption loans are the fastest growing sector
                                      • Figure 10: Loans to households, by type, China, Jan 2014-March 2019
                                      • Figure 11: Share of different types of loans to households, China, 2013 and 2018
                                    • Growing credit cards, now 0.5 card per capita
                                      • Figure 12: Accumulated number of credit cards issued by year end, China, 2014-18
                                      • Figure 13: Average credit granted per credit card and credit utilisation, China 2014-18
                                    • Consumer spending attitudes
                                      • New loan products designed for niche consumers
                                      • The Consumer – What You Need to Know

                                        • Online credit payment and credit cards are already neck-and-neck
                                          • Claimed average number of credit cards owned: 2.4, frequently used: 1.5 cards
                                            • NFC payment hasn’t really taken off. Mobile payment has already reduced the need to use physical credit cards
                                              • Credit card issuers ought to leverage their advantages in high credit limit
                                                • Significant demographic differences in the usage of loans
                                                  • Younger consumers and high earners want to ‘cash in’ their credit rating
                                                    • Still a need for consumer education about credit and loan products
                                                    • Usage of Credit and Loan Products

                                                      • Credit Products
                                                        • Online credit payments reached usage parity with credit cards in less than five years
                                                          • Figure 14: Usage of credit products, April 2014 and April 2016 and February 2019
                                                        • Credit cards are still relevant, especially among high earners
                                                          • Figure 15: Usage frequency of credit cards, by usage frequency of online credit payment service, February 2019
                                                          • Figure 16: Usage frequency of credit cards, by personal income, February 2019
                                                        • …but should be alerted by the greater popularity of online credit products among younger generations
                                                          • Figure 17: Usage frequency of online credit payment or instalment service (a), by generation, February 2019
                                                          • Figure 18: Usage frequency of credit cards, by generation, February 2019
                                                          • Figure 19: Monthly active user of online credit payment or instalment service and credit card, by income, February 2019
                                                        • More are using credit cards for pay by instalment
                                                          • Figure 20: Usage frequency of credit card instalment, by income and generation, February 2019
                                                        • Loan Products
                                                          • Sharp decline in P2P
                                                            • Figure 21: Usage of personal loans, April 2016 and February 2019
                                                          • Bank loans vs loans provided by E-commerce players
                                                            • Figure 22: Usage frequency of personal loans, February 2019
                                                          • High earners are the key loan users
                                                            • Figure 23: Usage of personal loans, by personal income, February 2019
                                                          • Females and consumers in Shanghai less comfortable with bank loans
                                                            • Figure 24: Usage of personal loans from banks, by city, February 2019
                                                          • More 90s have taken loans, except P2P
                                                            • Figure 25: Usage of personal loans, by generation, February 2019
                                                        • Reasons for Choosing Credit/Loan Providers

                                                          • Credit card issuers should change consumers’ misperception of high interest rates
                                                            • Speed is another advantage of online credit/loan providers
                                                              • Figure 26: Reasons for choosing credit providers, credit card and online credit payment or instalment, February 2019
                                                            • The rationale behind the preference of different demographics
                                                              • Younger generation think highly of the speed and low cost
                                                                • Older consumers are discount-driven
                                                                  • Males pay more attention to credit record
                                                                    • Increasing credit limit helps drive credit card usage frequency
                                                                      • Figure 27: Reasons for choosing credit providers, credit card, by credit card usage frequency, February 2019
                                                                      • Figure 28: Reasons for choosing credit providers, online credit payment or instalment services, by online credit payment usage frequency, February 2019
                                                                    • Trust is still the cornerstone for banks
                                                                      • Figure 29: Reasons for choosing loan providers, borrow from banks, online financial service and P2P platforms, February 2019
                                                                  • Credit Cards Usage

                                                                    • A considerable amount of inactive credit cards
                                                                      • Heavy users’ profile
                                                                        • Third-party apps are the most common way to use credit cards
                                                                          • Figure 30: Ways to use credit cards, February 2019
                                                                        • Mobile NFC payment is less popular among the 70s but welcomed by the high earners
                                                                          • Figure 31: Ways to use credit cards, physical card and mobile NFC payment, by generation, February 2019
                                                                          • Figure 32: Ways to use credit cards, mobile NFC payment, by personal income, February 2019
                                                                      • Credit Scoring and Credit Service

                                                                        • Enjoying some privileges from good credit rating has become a norm for consumers
                                                                          • Figure 33: Benefits enjoyed as credit scoring service user, February 2019
                                                                          • Figure 34: Repertoire analysis of benefits enjoyed as credit scoring service user, February 2019
                                                                        • Post-1990s are most keen on ‘cashing in’ a good credit rating
                                                                          • Figure 35: Benefits enjoyed as credit scoring service user, by generation, February 2019
                                                                        • High earners care about financial and time management
                                                                          • Figure 36: Benefit enjoyed as credit scoring service user, by income, February 2019
                                                                        • Premium service is the key to vying for credit card consumers
                                                                          • Figure 37: Benefits enjoyed as credit scoring service user, by MAUs of credit cards or online credit payment only, February 2019
                                                                      • Attitudes towards Credit

                                                                        • Younger consumers and lower tier cities are more likely to see growth in using credit products
                                                                          • Figure 38: Attitudes towards credit products, by generation and city tier, February 2019
                                                                        • Banks really need to catch up with online credit service providers in inclusiveness
                                                                          • Figure 39: Attitudes towards credit products, February 2019
                                                                          • Figure 40: Attitudes towards credit products, by income, February 2019
                                                                          • Figure 41: Attitudes towards credit products, I am now using more bank credit products than 12 months ago, by company type and education, February 2019
                                                                        • Only half say their monthly income can cover credit bills
                                                                          • Figure 42: Usage of credit products, by whether monthly income can cover the bills of all the credit products outstanding, February 2019
                                                                          • Figure 43: Reasons for choosing credit and loan providers, by whether monthly bill can cover the bills of all the credit products outstanding, February 2019
                                                                        • Less than half understand the interest they pay and risks with borrowing
                                                                          • Figure 44: Attitudes towards credit products, by income and education, February 2019
                                                                        • Education can drive usage of some credit and loan products, but not for all
                                                                          • Figure 45: Usage of credit products and services, by knowledge on potential risk and interest, February 2019
                                                                      • Meet the Mintropolitans

                                                                        • Still more reliant on credit cards
                                                                          • Figure 46: Usage of credit consumption, by MinTs and Non-MinTs, February 2019
                                                                        • Privacy matters for MinTs
                                                                          • Figure 47: Reasons for choosing credit providers, by MinTs and Non-MinTs, February 2019
                                                                        • MinTs use Mobile NFC in paying for daily necessities and eating out
                                                                          • Figure 48: Ways to use credit cards, by MinTs and Non-MinTs, February 2019
                                                                        • Most attracted to fee waiver
                                                                          • Figure 49: Repertoire analysis of benefits enjoyed as credit scoring service user, by MinTs and Non-MinTs, February 2019
                                                                          • Figure 50: Benefits enjoyed as credit scoring service user, by MinTs and Non-MinTs, February 2019
                                                                      • Appendix – Methodology and Abbreviations

                                                                        • Methodology
                                                                          • Abbreviations

                                                                          Attitudes towards Credit - China - May 2019

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