
Chinese Way of Doing Business: In Cash We Trust - jseliger
http://www.nytimes.com/2013/05/01/business/global/chinese-way-of-doing-business-in-cash-we-trust.html?pagewanted=all
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sitharus
I visited China 10 years ago, and the extend of cash use surprised me even
then. Nobody trusts banks.

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.

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dmoy
>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.

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sitharus
Interesting. I picked them up in 2003, the 0.05RMB were the most obvious ones,
the larger denominations were definitely more coin-like.

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dmoy
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).

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seanmcdirmid
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.

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tomflack
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?

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joblessjunkie
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.

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seanmcdirmid
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.

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tomflack
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.

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seanmcdirmid
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.

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Spooky23
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.

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snuze
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.

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ISL
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.

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w1ntermute
> 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.

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crdoconnor
The cashback incentives are usually roughly equal to the transaction fees.

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seanmcdirmid
Cashbacks incentives don't exist in China anyways, I believe. Its mostly a
crazy American thing.

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eru
Singapore also has the cashback and bonus points on credit cards.

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lcentdx
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.

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eru
In Germany, many businesses don't accept credit cards either (lots accepts
debit cards though), and cash is still popular.

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rdl
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)

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kyllo
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.

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Evbn
That seems very easy to detect (with police on foot, like US underage alcohol
stings) and send people to gulag for.

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kyllo
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.

