China Merchants Bank Consumer Credit Option: Help or Hurt?

iCredit for Chinese Workers

[Photo Credit: The Mac Observer]

Here in the United States, luxury is all part of the American experience. There are many Americans who work just to pay their bills and get by, but there are many who inherit their parents’ aristocratic status and spend their money on just about whatever suits their fancy. When middle-class and poor Americans go to purchase a smartphone, they tremble at the thought of another expensive smartphone. I talked to my aunt recently; due to my uncle’s cancer, a sad and unfortunate surprise, my aunt had to do away with her smartphone in order to use the money towards my uncle’s cancer treatment. Such is the life of every-day Americans. Meanwhile, Mitt Romney’s comments that say that “those people” sit home, do nothing, and rely on the government are not true at all. Many of us are not Mitt Romneys; we are not born into wealth, but get by each week through our budgeted wages. Yet and still, we are told that Americans are guaranteed “the pursuit of happiness.” What Jefferson meant by that phrase varies, depending on the individual you meet and the circumstances he or she is in.

For Chinese workers, however, owning an iPhone is not only a luxury, but also an unaffordable luxury. A typical Chinese worker makes approximately anywhere from $285-$600 (max) a month. As an American doctoral student, I can tell you that my apartment costs $675 a month. I work all month just to cover my bills, which lie around $1200 each month – and that is just to cover my apartment rent, tuition, life insurance, cell phone bill, and Wi-Fi hotspot plan so I can be paid as a tech writer on a weekly basis. I have few luxuries, but I feel a hole in my pocket (and heart) each month when I must pay my school $675 in order to live on campus. Affording a vehicle with tune-ups, car part repairs, and a gasoline bill would leave an even bigger hole in my pocket than the apartment rent.

Small wages, then, place Chinese workers at a distance from purchasing Apple products, the most coveted of the Chinese experience. Apple, however, has seen the growth of iPhone adoption in China in 2012, leading Cupertino to go out on a limb to help Chinese workers afford its luxury products. Apple’s newest strategy in China consists of a consumer credit option for Chinese consumers who cannot afford to pay for their iPhone or iPad immediately. Bloomberg Businessweek notes that the China iPhone costs $200 more than the American, unlocked iPhone costs ($650 in America, $850 or 5,288 Yuan in China), requiring Chinese workers to save six weeks’ salary in order to cover it. Apple’s consumer credit option will occur through China Merchants’ Bank Company. China Merchants Bank provides rather flexible options for Apple’s consumers to be able to afford any item in the Apple store, whether an iPhone 5 or a new 2013 MacBook Pro with Retina display. China Merchants will allow customers to choose whether to divide their payments into 3, 6, 8, 12, or 24. Customers can pay the entire thing in three payments ($300 per payment) or 24 payments ($35-$40 per payment). Keep in mind that the Chinese Yuan is the currency; thus, payments would be divided to fit China’s currency.

Think about this: since it takes six weeks to afford an iPhone, and Chinese workers must make a living and provide for their necessities, many will select the 12-payment or 24-payment plan. They could pay their bill off in as little as six months or as much as 2 years. Within that time, Apple will have several new products added to its collection. For some, Apple’s plan seems like a good first step for Chinese consumers but it still needs some work.