According to Mr. Tsang Kai Yin of Hop Seng Pawnshop at 9 Hau Fook Street in Tsim Sha Tsui, the pawnbroker business was started by a prime minister of the Han Dynasty, who provided small loans to those in need.
"Making loans then was risky, since there was no guarantee that the creditor could get the money back. Therefore, they had to have something in hand, and pawnbrokers appeared for that reason," said Mr. Tsang.
Pawnbrokers in modern Hong Kong also bear great risk, however."Receiving fake goods is our major loss. Fake Rolex watches are commonplace," said Mr. Tsang."Besides, the fluctuating value of gold and other valuable stones is another headache.If the market value of gold falls, the value of the gold articles on hand follows suit, and we suffer."
Hence, it is often the wish of many pawnbrokers that borrowers would redeem their goods. Mr. Tsang said, "If borrowers take back their goods, we don't need to face these risks. We can make our profits from the interest alone."
In addition, the pawnshop business is facing another obstacle: Hong Kong's modern financial sector, with advanced and comprehensive banking services, makes pawnshops superfluous.But this view is unacceptable to veteran pawnbroker Tsang: "Pawnshops cannot not be replaced by banks. This business has nothing to do with banking services. It has its own unique niche in society which no other institutions can perform."
"Do you think you can borrow a small amount of money, say $10,000, immediately from a bank?" Mr. Tsang asked rhetorically. "The banks just don't provide that kind of service.Those people who are in urgent need can get quick cash simply by advancing some of their valuables to us.Besides, it is simple and convenient to obtain cash from pawnshops. We don't bother with proof of jobs or stable incomes, which are required by banks."
Mr. Tse Tuen Fu, secretary of the Hong Kong and Kowloon Pawnbrokers' Association, agreed."Because pawnshops still survive today, they must have some value in their existence."
However, pawnbroker Tsang conceded that the pawnshop business would remain only so-so, neither disappearing nor proliferating.Society is changing, and living standards are higher now. Demand from the second-hand markets is not so great as in the past.
There are about 150 pawnshops in the Territory. Competition within the industry is keen, and the operating costs of a pawnshop are quite high because a large amount of capital must be invested in advance. Mr. Tsang said that profits are not good.
Facing these challenges, pawnbrokers have had to make adjustments.Nowadays, pawnshops are smaller in size. "There used to be multiple-storey shops for storing bulky goods, such as quilts and old clothes," said Mr. Tsang.
"Now, we have only one storey since it is too expensive to lease a large one.Pawnbrokers do not accept bulky goods any more. Gold, jewellery and watches are the most commonly accepted things."
The reduced size of pawnshops also means smaller staffs.According to Mr. Tsang, each pawnshop used to have six staff. Typically, there were two tellers responsible for deciding the value of goods, and they were the highest ranking staff.
Two others were in charge of issuing tickets to borrowers and keeping the financial accounts. Finally there were two called `boys' who were responsible for the general matters -- cooking, cleaning and carrying heavy goods."Now we restrict staff to three or four since there are no heavy goods to transport and no need for cooking," said Mr. Tsang.
Today the upper limit of each loan has been raised to $50,000 from $25,000 in 1990, and the interest rate is fixed at 3.5 per cent per lunar month by the government."The rise in the upper limit makes it possible for us to accept more expensive goods, which means greater profits," said Mr. Tsang.
At the same time, security measures have been upgraded.
"We have security systems linked to security companies. They will report to the police in case of crimes. There are fewer crimes in pawnshops since the systems have been installed," Mr. Tsang said.
The locations of pawnshops are different from the past, too.Mr. Tsang said that shops used to be located on street corners. But now in Hong Kong, there are not many suitable places.
Another change in the industry was the establishment of the Hong Kong and Kowloon Pawnbrokers' Association in 1947. Mr. Tse, the secretary of the association said, "Our aim is to act as a bridge between our members and the government, as well as to take care of the industry's interests.
"We've got 138 member pawnshops now, 34 on the Hong Kong side, 83 in Kowloon and 21 in the New Territories. The number rose from about 90 in 1982 to the present figure. There are about 10 pawnshops which have not joined us."
As an example of the kinds of activities the association carries out on behave of members, he said the association is fighting for legal protection for members interest who unknowingly accept stolen goods.
Mr. Tse said that so farthey have had good co-operation with the police."We give details of our goods to the police every day, and they notify all pawnshops if anything is reported stolen.
"However, the whole process is sometimes delayed by the late reporting of crimes. Therefore, we have in the past accepted some stolen goods before we learned that they were stolen. In such cases, the police request us return the stolen property in exchange for half of the money we have loaned.
"Obviously, we are sure to lose in these circumstances. It's unfair to us. The outcome is similar even we take the case to court ."We then risk an additional loss of time and money. We are now discussing how to make the system fairer to us," said Mr.Tse.
Concerning recruitment of staff, there is no proper channel to enter the industry. The lack of new blood is therefore another problem.
Mr. Tse and Mr. Tsang both said that there was no proper training available for pawnbrokers.
"People just learn from their working experiences, and there are fewer and fewer young people entering this industry. Besides, Mr. Tsang said, "We wouldn't recruit people carelessly. We examine their conduct and personality very carefully."
The industry's characteristics make its recruitment difficult.
"We adhere to the Lunar Calender, including its holidays, so Saturdays and Sundays are our off days. We have nine to 10 holidays per year. This may probably keep people away from entering our business."
Moreover, the method of calculating salary is quite different from the way it is done in ordinary businesses.Mr. Tse said, "The basic salary is the lowest for the highest position and `boys' get the highest basic salaries.
"The commission is the highest for the highest position and decreasing downwards. Therefore, their salaries depend very much on the gross profit of the shops."
In addition, there are some other customs which they follow for no specific reasons.
"On the first and the 15th days of every lunar month, we must have congee. While on the second and the 16th days, we have more delicious dinners."
The design of the doors is another important point."There must be two metal doors perpendicular to each other. People who go through the first door are watched by staff through a small window in the second door, ensuring that they are not followed by others before entering the office," said Mr. Tse.