A two-day boycott on handling bank cards by an alliance of 46 retailers was launched Wednesday in Shenzhen, the southern boomtown of Guangdong Province, after a series of negotiations on card transaction fees with local bankers failed late last month.
Zheng Mingqiang, general manager of Mingkeda Electronics, said that the escalation of alliance action is simply to make their voices heard, since the bankers have not responded to their complaints.
According to Zheng, Mingkeda Electronics is one of the hardest hit in a "razor margin business," since most electronic goods purchases are made with bank cards. The store is fully supporting the boycott, with posters proclaiming "No bank cards" in prominent positions near the counters.
The Chinese Consumers Association opposed the action, complaining that the boycott would damage customers' interests.
But Zheng indicates that most problems can be averted. "Our stores have taken some remedial measures to make sure the refusal of the card won't trouble our customers," he says. The ATM has been stocked with a larger amount of cash than usual, and shoppers are being further mollified with discount prices on goods.
Some of the alliance retailers, however, fearful of incurring customer wrath, are excusing their refusal to accept cards with claims of "system maintenance."
China Resources Vanguard, the city's number one retailer, joined the boycott. A company spokesman said that they pay more than 2 million yuan (US$240,000) in bank card transaction fees to Shenzhen Unionpay every year.
Last year, the 46 retailers in the alliance paid 46.6 million yuan (US$5.6 million) in handling fees to Shenzhen Unionpay, nearly five times the 2002 figure. Alliance retailers account for nearly 80 percent of overall retail revenue in the coastal city.
The alliance complained that the present 1 percent handling charge on bank card transactions should be cut to 0.5 percent, the same fee as neighboring Guangzhou.
But the Shenzhen Banking Association, which represents 17 banks, refused to consider the proposal. It claimed that the point-of-sales section in every bank in Shenzhen has been losing money, and a 0.5 percent reduction in transaction fees was out of the question.
Retailers have asked China Unionpay (Shenzhen), the official bank card clearance provider, to disband because of its monopoly.
Industry insiders revealed that US retail giant Wal-Mart, which has established its China headquarters in Shenzhen, initially joined in the negotiations. However, it withdrew from the alliance and had no comment to offer on the dispute.
Wal-Mart is not the only defector. Some retailers did not even take down their signs inviting the use of bank cards. A member of management at one department store, who declined to give his name, said that his company could not afford to risk lost sales right now. Children's Day falling on a weekday this year already meant a decline in June sales figures, he said.
Staff at Maoye Department Store's Shenzhen Branch said that they had heard something about the boycott, but had never received any official instructions to participate.
A Shenzhen industry insider confirms that there is already friction and factionalism within the retailers' alliance. Some prefer to adopt a wait-and-see attitude, hoping the banks will relent.
Moreover, he says, although all official negotiations have been conducted for the alliance, the banks have hinted that there are some private deals to be had, with special rates offered under certain circumstances.
Meanwhile, the activists among the retailers have threatened to take stronger action if bankers continue to ignore their appeals. The deadlock has drawn the attention of the local government, which has already intervened in the negotiations.
(China.org.cn, China Daily June 3, 2004)
