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Consumer Attitudes Towards Debt - China - July 2014

Published By :

Mintel

Published Date : Jul 2014

Category :

Banking

No. of Pages : 151 Pages


In the near future, the biggest opportunity still lies in loans for financing large household purchases.  Consumers want to have more say in the loan design, which is currently the biggest gap in the market.
Table of Content

Introduction

Definition
Methodology
Abbreviations

Executive Summary

Trends in Lending
Figure 1: Loans to households, China 2008-April 2014
Figure 2: Share of total loans to households by loan type and growth rates, China 2008-13
Figure 3: Projected share of different types of loans in household lending, China 2013 versus 2020
The Consumer
Usage of credit and loan products
Figure 4: Usage of credit cards, loans or other credit products, April 2014
Reasons for not using loans or credit products
Figure 5: Reasons for not using loans or credit products, April 2014
Purpose of using loans
Figure 6: Current purpose of using loans and potential interest over the next 2-3 years, April 2014
Motivating factors for using loans
Figure 7: Factors that encourage consumers to use loan products to cover household expenditure, April 2014
Credit card usage habits
Figure 8: Credit card usage habits, April 2014
Attitudes towards credit and loans
Figure 9: Consumer attitudes towards borrowing and debt, April 2014
Figure 10: Consumer attitudes towards loans, April 2014
Figure 11: Consumer attitudes towards credit cards, April 2014
Consumer segmentation
Figure 12: Consumer segmentation, April 2014
Key issues
What drives people’s openness to borrowing?
What are the opportunities to grow consumption loans?
How to market loan products to young adults?
What innovations can encourage people to use more loans and credit products?
What we think

Issues and Insights

What drives people’s openness to borrowing?
The facts
The implications
Figure 13: Agreement with “I am worried about relying too much on purchasing on credit”, by age, April 2014
Figure 14: Agreement with “Borrowing money is acceptable as long as you can repay it on time”, by education, income and age, April 2014
Figure 15: Agreement with “It is better to spend only what you can afford rather than taking out an overdraft”, by education, income and age, April 2014
What are the opportunities to grow consumption loans?
The facts
The implications
Figure 16: Potential interest in using loans to finance car and home improvement, by age and gender, April 2014
Figure 17: Motivating factors for people to use loans among existing car loan users, April 2014
Figure 18: Potential interest in using loans to finance holidays and luxury products, by city, April 2014
How to market loan products to young adults?
The facts
The implications
What innovations can encourage people to use more loans and credit products?
The facts
The implications

Trend Applications

Dispel the myth about scary loans
Insurance cover for forgetful credit card users
Do it now rather than regret later

Trends in Consumer Lending

Key points
Loans to households: four times its size in 2008
Figure 19: Loans to households, China 2008-April 2014
Short-term consumption loans have grown faster
Figure 20: Share of total loans to households by loan type and growth rates, China 2008-13
Figure 21: Size of credit granted and overdraft on credit cards, China 2009-2014 (Q1)
Future growth outlook
The removal of bank lending rate floor
More private capital in the banking sector and retailers’ innovation
The rise of online P2P lending
Consumer lending to account for two thirds of GDP by 2020
Figure 22: Projected share of different types of loans in household lending, China 2013 versus 2020

The Consumer – Usage of Credit and Loan Products

Key points
85% of consumers have undertaken some sort of money borrowing
Figure 23: Usage of credit cards, loans or other credit products, April 2014
Credit card usage by target group
Figure 24: Usage of credit cards, by age and gender, April 2014
20-39-year-olds are more likely to need loans to cope
Figure 25: Usage of loans, by age, April 2014
Figure 26: Repertoire of usage of credit cards, loans or other credit products, by age, April 2014
Different approaches by high and low earners
Figure 27: Usage of loans, by income, April 2014
Borrowing from people I know happens more often in tier two/three cities
Usage of credit and loan products goes up with education level
Figure 28: Repertoire of usage of credit cards, loans or other credit products, by demographics, April 2014

The Consumer – Reasons for Not Using Loans or Credit Products

Key points
Not used to the idea of being in debt is still the number one barrier…
Figure 29: Reasons for not using loans or credit products, April 2014
but there are still some differences across age groups
Figure 30: Reasons for not using loans or credit products, by age, April 2014

The Consumer – Purpose of Using Loans

Key points
Home improvement and investment are top two purposes
Figure 31: Purpose of using loans, April 2014
Figure 32: Selected purposes of using loans, by age group, April 2014
Big potential for car loan to grow over the next few years
Figure 33: Potential interest in using loans, April 2014
Marketing loan products according to needs state by lifestage
Figure 34: Selected potential interest in using loans, by age, April 2014
Figure 35: Selected potential interest in using loans, by age, April 2014
Tier one cities versus tier two/three cities
Figure 36: Potential interest in using loans, by city tiers, April 2014

The Consumer – Motivating Factors for Using Loans

Key points
What consumers expect most: flexible terms and lower cost
Figure 37: Factors that encourage consumers to use loan products to cover household expenditure, April 2014
Higher income groups are more demanding in both product and process
Figure 38: Factors that encourage consumers to use loan products to cover household expenditure, by income, April 2014
Making it easier for young adults with short-term needs
Figure 39: Factors that encourage consumers to use loan products to cover household expenditure, by age, April 2014
Different considerations based on purpose of the loan

The Consumer –Credit Card Usage Habits

Key points
The majority use credit cards as a money management tool rather than a source of credit
Figure 40: Credit card usage habits, April 2014
Figure 41: Credit card usage habits – “Being charged for late payment” by income and city tier, April 2014
Different views about paying by instalments
Figure 42: Credit card usage habits (continued), April 2014
Women are more motivated by reward schemes
Figure 43: Credit card usage habits – “Using my credit card just for getting bonus points”, by gender, April 2014
Using credit cards overseas and increasing credit limits
Figure 44: Credit card usage habits (continued), April 2014

The Consumer – Attitudes towards Credit and Loans

Key points
People are generally becoming more open to borrowing…
Figure 45: Consumer attitudes towards borrowing money, April 2014
Figure 46: Consumer attitudes towards borrowing money (continued), April 2014
Figure 47: Agreement on “Borrowing money can be a useful way to protect savings/investments.”, April 2014
but about half of them still prefer to live within their means
Figure 48: Consumer attitudes towards spending by borrowing, April 2014
Tier two/three consumers are more conservative
Figure 49: Consumer attitudes towards spending by borrowing, by city tier, April 2014
Helping people to understand better about loan products is key
Figure 50: Consumer attitudes towards loan services, April 2014
The majority think banks are more reliable than online P2P lending sites
Figure 51: Consumer attitudes towards P2P lending, April 2014
People are more positive about the benefits of credit cards…
Figure 52: Consumer attitudes towards using credit services, April 2014
yet not everyone feels relaxed about relying on credit cards
Figure 53: Consumer attitudes towards using credit services, April 2014
Figure 54: Agreement on “Using credit card is a reflection of irrational spending”, by demographics, April 2014

Consumer Segmentation

Key points
A spectrum of attitudes towards debt and credit
Figure 55: Consumer segmentation, April 2014
The Conservative
22% of online population surveyed
Demographic traits
Marketing perspective
The Progressive (42%)
42% of the online population surveyed
Demographic traits
Marketing perspective
The Neutral
36% of the online population surveyed
Demographic traits
Marketing perspectives

Appendix – Usage of Credit and Loan Products

Figure 56: Usage of credit cards, loans or other credit products, April 2014
Figure 57: Usage of credit cards, loans or other credit products, by demographics, April 2014
Figure 58: Repertoire of usage of credit cards, loans or other credit products, April 2014
Figure 59: Repertoire of usage of credit cards, loans or other credit products, by demographics, April 2014

Appendix – Reasons for Not Using Loans or Credit Products

Figure 60: Reasons for not using loans or credit products, April 2014
Figure 61: Most popular reasons for not using loans or credit products, by demographics, April 2014
Figure 62: Next most popular reasons for not using loans or credit products, by demographics, April 2014

Appendix – Purpose of Using Loans – Current

Figure 63: Purpose of using loans in the past, April 2014
Figure 64: Most popular purpose of using loans in the past, by demographics, April 2014
Figure 65: Next most popular purpose of using loans in the past, by demographics, April 2014
Figure 66: Purpose of using loans in the past, by usage of credit cards, loans or other credit products, April 2014

Appendix – Purpose of Using Loans – Near Future
\'
Figure 67: Potential interest in using loans, April 2014
Figure 68: Most popular potential interest in using loans, by demographics, April 2014
Figure 69: Next most popular potential interest in using loans, by demographics, April 2014

Appendix – Motivation Factors for Using Loans

Figure 70: Factors that encourage consumers to use loan products to cover household expenditure, April 2014
Figure 71: Most popular factors that encourage consumers to use loan products to cover household expenditure, by demographics, April 2014
Figure 72: Next most popular factors that encourage consumers to use loan products to cover household expenditure, by demographics, April 2014
Figure 73: Factors that encourage consumers to use loan products to cover household expenditure, by Potential interest in using loans, April 2014
Figure 74: Factors that encourage consumers to use loan products to cover household expenditure, by Potential interest in using loans, continued table, April 2014

Appendix – Credit Card Usage Habits

Figure 75: Credit card usage habits, April 2014
Figure 76: Usage of credit card – Application to increase my credit limit, by demographics, April 2014
Figure 77: Usage of credit card – Being charged for late payment, by demographics, April 2014
Figure 78: Usage of credit card – Using up more than half of my credit balance, by demographics, April 2014
Figure 79: Usage of credit card – Paying only the minimum monthly amount of my credit balance, by demographics, April 2014
Figure 80: Usage of credit card – Paying by credit card is my first payment choice, by demographics, April 2014
Figure 81: Usage of credit card – Paying in instalments whenever this is available, by demographics, April 2014
Figure 82: Usage of credit card – Using my credit card overseas, by demographics, April 2014
Figure 83: Usage of credit card – Using my credit card just for getting bonus points, by demographics, April 2014

Appendix – Consumer Attitudes towards Credits and Loans

Figure 84: Consumer attitudes towards credits and loans, April 2014
Figure 85: Agreement with the statement ’Only those who are struggling with their financial situation need to borrow money’, by demographics, April 2014
Figure 86: Agreement with the statement ’It is better to save up for something rather than taking out a credit/loan’, by demographics, April 2014
Figure 87: Agreement with the statement ’It is better to spend only what you can afford rather than taking out an overdraft’, by demographics, April 2014
Figure 88: Agreement with the statement ’Borrowing money is acceptable as long as you can repay it on time’, by demographics, April 2014
Figure 89: Agreement with the statement ’Borrowing money can be a useful way to protect savings/investments’, by demographics, April 2014
Figure 90: Agreement with the statement ’I am becoming more comfortable about being in debt than before’, by demographics, April 2014
Figure 91: Agreement with the statement ’Earning bonus points by using credit card is appealing to me’, by demographics, April 2014
Figure 92: Agreement with the statement ’Credit cards can offer more flexibility when managing finances’, by demographics, April 2014
Figure 93: Agreement with the statement ’Using credit cards is a reflection of irrational spending’, by demographics, April 2014
Figure 94: Agreement with the statement ’I am worried about relying too much on purchasing on credit’, by demographics, April 2014
Figure 95: Agreement with the statement ’I would proactively consider using loan products if there were better loan services’, by demographics, April 2014
Figure 96: Agreement with the statement ’It is more reliable to take loans from a bank than from an online agency’, by demographics, April 2014

Appendix – Consumer Segmentation

Figure 97: Consumer segmentation, April 2014
Figure 98: Consumer segmentation, by demographics, April 2014
Figure 99: Usage of credit cards, loans or other credit products, by target groups, April 2014
Figure 100: Reasons for not using loans or credit products, by target groups, April 2014
Figure 101: Purpose of using loans in the past, by target groups, April 2014
Figure 102: Potential interest in using loans, by target groups, April 2014
Figure 103: Factors that encourage consumers to use loan products to cover household expenditure, by target groups, April 2014
Figure 104: Usage of credit card, by target groups, April 2014
Figure 105: Consumer attitudes towards credit and loans, by target groups, April 2014

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