Prepaid cards in China | OutSourceHouse
One of the most interesting parts of doing market research in China is learning water tower place about the innovative water tower place ways of doing business. water tower place The weekends ago got the fracas over the address of the iPhone 4S China at the Apple store in Beijing I think. If you do not follow the story, basically, was intended to open the shop in the morning and people had queued all night for a chance to buy one of the new phones. Never opened the shop in the end of the day that Apple staff safety concerns, citing much to the anger of the people who had braved the cold.
If you look at pictures and reports of the event, it is clear that there was a lot of people were waiting queues need and the typical iPhone user. Many of them in fact what is called huangnius (yellow cows) are the scalpers who buy the iPhone water tower place 4S at retail for about US $ 790 (compared to US $ 650 in the US for a 4S 16GB unlocked) and then sell it on the gray market for 20 +% markup.
Huangnius not limited to electronics though. Actually the first time I heard about them when I came to Shanghai a few years ago and wanted to exchange RMB for USD. You can go through the banks, but as the currency water tower place is capital controlled, you are limited to how much you can convert. There will be no limit to the amount of RMB buy huangniu but, of course you'll have to take his rates, but if you need the USD, you need the USD. The prize for the best business model, however, to go to the huangniu that are involved in the prepaid card industry.
As we discussed in previous commentaries, pre-paid cards in China are very popular and are often given by companies as part of an annual bonus to their employees. A key part of the equation is the 'fapiao' or official water tower place invoices that they receive for the cards. In order to account costs in China, you must have an official fapiao is submitted to the tax authorities to show that you actually did incur an expense and are not just faking invoices. There are of course ways that companies counterfeit or buy fapiao actual water tower place fapiao, but all content is unique.
Back to the prepaid cards and the huangniu, so in the west, there are of course some companies give you money today for your money tomorrow. Likewise, the huangniu buy pre-paid cards openly. So let's go through how the whole process works:
A large company, let's call it ACME, some will buy prepaid cards from a prepaid card issuer such as a retail store chain is usually great for the actual face value of the card, let's water tower place say 1000 rmb (renminbi or rmb for short is is another name for Chinese Yuan; 1000rmb is about US $ 150). ACME will pay the issuer and the official receipts (fa Piao) from the issuer water tower place and be able to claim either as a business or salary expense depending on ACME accounting and will then give the cards to be their employees as part of their annual bonus or just as part of their regular compensation.
Now, to say that the only prepaid card issuer's good at the store and the ACME employee who received the card rarely shops at the store, water tower place or just really needs the money right away. They can then contact the huangniu which, if it is a popular type of prepaid water tower place card, buy it off the ACME employee for a certain percentage of the original value, let's say 800 rmb in this case. Huangniu is at this point a number of options including reselling it to an individual consumer may be interested in the card for say 900rmb, thus making a profit 100RMB. This makes a lot of sense, and when it was explained to me, is not a surprise.
What was surprising to me in this case that the huangniu sometimes sell it back to the issuer itself. So think about this, the issuer has sold the card for 1000 rmb and immediately becomes a liability to the company (such as a bank loan) The user can then use that card to buy goods. Do not want to make things too simple here, but what the issuer would love is that users never actually use the cards and they expire along with their values. 1000rmb suddenly moves from being a liability to a cash asset. If this is not possible, the issuer would want to get the most value back from the card as possible.
So to do that, the issuer will actually buy the card to neamhú
One of the most interesting parts of doing market research in China is learning water tower place about the innovative water tower place ways of doing business. water tower place The weekends ago got the fracas over the address of the iPhone 4S China at the Apple store in Beijing I think. If you do not follow the story, basically, was intended to open the shop in the morning and people had queued all night for a chance to buy one of the new phones. Never opened the shop in the end of the day that Apple staff safety concerns, citing much to the anger of the people who had braved the cold.
If you look at pictures and reports of the event, it is clear that there was a lot of people were waiting queues need and the typical iPhone user. Many of them in fact what is called huangnius (yellow cows) are the scalpers who buy the iPhone water tower place 4S at retail for about US $ 790 (compared to US $ 650 in the US for a 4S 16GB unlocked) and then sell it on the gray market for 20 +% markup.
Huangnius not limited to electronics though. Actually the first time I heard about them when I came to Shanghai a few years ago and wanted to exchange RMB for USD. You can go through the banks, but as the currency water tower place is capital controlled, you are limited to how much you can convert. There will be no limit to the amount of RMB buy huangniu but, of course you'll have to take his rates, but if you need the USD, you need the USD. The prize for the best business model, however, to go to the huangniu that are involved in the prepaid card industry.
As we discussed in previous commentaries, pre-paid cards in China are very popular and are often given by companies as part of an annual bonus to their employees. A key part of the equation is the 'fapiao' or official water tower place invoices that they receive for the cards. In order to account costs in China, you must have an official fapiao is submitted to the tax authorities to show that you actually did incur an expense and are not just faking invoices. There are of course ways that companies counterfeit or buy fapiao actual water tower place fapiao, but all content is unique.
Back to the prepaid cards and the huangniu, so in the west, there are of course some companies give you money today for your money tomorrow. Likewise, the huangniu buy pre-paid cards openly. So let's go through how the whole process works:
A large company, let's call it ACME, some will buy prepaid cards from a prepaid card issuer such as a retail store chain is usually great for the actual face value of the card, let's water tower place say 1000 rmb (renminbi or rmb for short is is another name for Chinese Yuan; 1000rmb is about US $ 150). ACME will pay the issuer and the official receipts (fa Piao) from the issuer water tower place and be able to claim either as a business or salary expense depending on ACME accounting and will then give the cards to be their employees as part of their annual bonus or just as part of their regular compensation.
Now, to say that the only prepaid card issuer's good at the store and the ACME employee who received the card rarely shops at the store, water tower place or just really needs the money right away. They can then contact the huangniu which, if it is a popular type of prepaid water tower place card, buy it off the ACME employee for a certain percentage of the original value, let's say 800 rmb in this case. Huangniu is at this point a number of options including reselling it to an individual consumer may be interested in the card for say 900rmb, thus making a profit 100RMB. This makes a lot of sense, and when it was explained to me, is not a surprise.
What was surprising to me in this case that the huangniu sometimes sell it back to the issuer itself. So think about this, the issuer has sold the card for 1000 rmb and immediately becomes a liability to the company (such as a bank loan) The user can then use that card to buy goods. Do not want to make things too simple here, but what the issuer would love is that users never actually use the cards and they expire along with their values. 1000rmb suddenly moves from being a liability to a cash asset. If this is not possible, the issuer would want to get the most value back from the card as possible.
So to do that, the issuer will actually buy the card to neamhú
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