Business in China

I went to pay my credit card bill a few days ago.

It sounds strange, doesn’t it, to western ears. We are so accustomed to other payment vehicles that we don’t think of “going” to pay a bill. But, I tried three times to electronically transfer the money from my bank to the credit cards bank and it came back all three times. Three times, I faithfully executed the instructions (changing each time) given by the credit card bank and three times the credit card bank sent the payment back. My bank dutifully charged me 1.2 Yuan each time for the payment and cheerfully accepted the money back when the transfer was refused.  Let me be clear. The transfer didn’t fail. The transfer into the inbound account of the credit card bank went fine. Then, the credit card bank returned the payment – three times.

So, how does this relate to economics in China? It relates like this. Many of the minor frictions that were long ago eliminated in western economies still exist here. Your productivity for routine tasks will be lower than in a western economy. You’ll find that you or your employees have to do some things “by hand” that you just wouldn’t expect. I won’t name names, but my bank (the paying bank) is one of the largest consumer banks in the world. The credit card bank (the receiving bank) is one of the largest consumer banks in China. You might expect that they can transfer money successfully (they can) and direct it to the right account (apparently, they cannot) with some simple instructions (like “pay the account of Keith Rutledge; account number 1234”).

It was a pleasant, if short, lunchtime stroll and an interesting scene at the bank. It took the assistant branch manager and the chief teller more than fifteen minutes, with the telephone assistance – read translation – of my long-suffering and very patient assistant, to figure out how to accept my payment. Eventually though, I got the all-important “fa piao” (pronounce it fah pee oh) to prove I made the payment.

This is also a key point for westerner’s. A “fa piao” or receipt is often literally the only proof of a transaction. And, even if you can prove it by other means, without a “fa piao”, it won’t be believed. And, the “fa piao” better have the right chops or stamps on it. I’ve come, probably too much, to rely on the recording of a transaction in the various systems in western institutions. It’s reliable enough in most countries to invite dependence. Here, you get the paper and you keep the paper or you’ll be sorry. You’ll eventually need the paper and without it, you have no chance.

Look at it this way. You’ll probably enjoy the stroll to the bank and it gets you out of the office for twenty or thirty minutes. And, that’s a little bit of a good thing, even if it’s less productive than you’d prefer.