Piaohao and Qianzhuang banking systems in China

Based in north central china, Piaohao banks were created by Shanxi province locals. They were the major banks in operation in cities between the 1800’s and the 1900’s, servicing cities located in the inland trade routes in the west and north countries. Their main clients were merchants who travelled occasionally and therefore needed help clearing accounts as they conducted business transactions in different parts of China (Wilson & Yang 434).  Other than settling accounts and transferring funds through drafts, Piaohao banks offered services such as currency exchange, loans and deposit accounts to their clients. Their popularity was facilitated by various transactions such as the one engaged with the government after the Opium war. The government used the Piaohao bank to pay an indemnity to the British which was completed successfully through drafts (Wilson & Yang 438). The banks were either owned by a single family or a small group of families that were wealthy enough to invest capital into banking.

            Based in China’s south central east coast, Qianzhuang banks commonly served Shanghai city. Between the 1800’s and 1900’s, they financed the American and European foreign trade via the port cities in southern China. Their main clients were merchants from shanghai who engaged in foreign trade and also traded foreign goods locally (Wilson & Yang 434). Qianzhuang banks offered services such as deposits, accounts settling, issuing short term loans and exchanging currency for their clients. The bank’s success was greatly promoted by the growth in foreign trade in china which prompted stakeholders to invest in the bank (Wilson & Yang 439). The banks were owned by groups of families where the owners either hired professionals or managed the banks themselves.

 

Work cited

Wilson C and Yang F, “Shanxi Piaohao and Shanghai Qianzhuang: A comparison of the two       main banking systems of the nineteenth century china” Business History, 2016