The young and the cautious

Cardholders interviewed in focus groups told us that they believe it's more convenient to pay with a card than cash, and that they believe carrying cash can be unsafe.

However, these positive associations of credit cards were tempered by the concerns of the loss of financial control.

At least two-thirds of all of the students interviewed believed that paying by credit card encourages people to spend beyond their means, even if they use the card infrequently. And, they have tremendous feelings of guilt associated with using a credit card or racking up debt.

Several students made comments similar to this: "I don't like using future money to pay for today. I did not make any money today and I still used money (to purchase products) when I use my credit card . ... I feel guilty for that."

So, clearly, it is not just the convenience of the service provided that influences card usage, but there is also an underlying fear of overspending and a loss of financial control.

The good news for credit card companies is that the lure of promotions sometimes outweighs the risk aversion.

This, our analysis suggests, is particularly the case for promotions that advertise discounts and additional free products because they tap into the cultural perceived necessity to both save and yet simultaneously accumulate products to show wealth to others.

Signaling wealth is very important, though it is still best done in China by flashing cash around.

As one respondent in our study observed, "Cash is still king . A businessman with a lot of cash in his wallet shows that he is affluent."

Reminding the young and the affluent that they are part of a new generation is also important in getting buy-in. Students spoke about credit cards making them "feel cool" and as objects to emphasize that they are different, and perhaps more sophisticated, than their parents.

But overall, marketers have a tough job on their hands trying to convince China's Little Emperors to churn up debt using revolving credit. They still retain many of the conservative cultural attitudes of their parents when it comes to debt.

They are also keenly aware of the high costs of using a credit card to make cash advances. Unlike their peers in the West, young Chinese consumers do not have a laissez-faire attitude to money and long-term savings goals.

The implications for the West are we shouldn't count on credit cards to get the tills ringing in China to help stimulate developed economies.

Bank executives, meanwhile, should consider other financial offerings for the enormous, but fairly elusive, young customer base in China.

The author is an assistant professor of marketing at the Nottingham University Business School China. Her full research report on credit cards in a Chinese cultural context, with professor Steve Worthington and David Stewart of Monash University's department of marketing, is in the latest Journal of Retailing and Consumer Services. The opinions expressed in the article do not necessarily reflect those of China Daily.

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