One key aspect of Asian culture is its preference for cash transactions and by this, I mean non-credit (not just coins and folding notes). Especially when engaging with Asia—a region set to contribute about 70% of global growth in 2023, as per IMF predictions—this comprehension becomes paramount. So with my roots dug deep into Asian soil, I’m here to give you a peek into this fascinating culture where cash isn’t just king—it’s the emperor.
1. Belief that Debt is Bad. There’s a strong belief in many Asian cultures that all debt is detrimental, regardless of whether it’s categorised as ‘good’ or ‘bad’ debt. The idea of owing someone money carries a stigma and is often equated with a lack of financial stability. Even the concept of paying interest, generally accepted in Western societies, is viewed with suspicion, as it implies a form of indebtedness. This sentiment encourages many Asians to opt for immediate cash payments to sidestep debt altogether.
2. Perception of Wealth. Chinese culture, in particular, has a belief that physical cash signifies true wealth. Debt, on the other hand, is about as appealing as a counterfeit designer bag—it’s just ‘fake rich.’ This perception extends across various Asian societies, reinforcing the preference for cash transactions, which are deemed a display of genuine wealth. But a savvy Asian also enjoys gaming the credit card points system, I mean who doesn’t like free flights or Dyson vacuum cleaners?
3. Privacy Concerns. Cash transactions offer a certain degree of privacy, allowing one to remain ‘off the grid’ to some extent. Given the increasing global concerns about data privacy, growing government surveillance and cyber-security, the use of cash provides an assurance of anonymity.
4. Predominant Cash Economy. Across Asia, cash remains king, especially in sectors like market stalls, bakeries, restaurants, and delis. The heavy reliance on cash transactions in these sectors perpetuates the cash culture, making it an ingrained part of daily life. I’m sure we all know someone from school whose parents owned a restaurant or bakery. I’m guilty as charged – my parents owned a Chinese restaurant 🙂
5. Historical Unavailability of Banking Services. In earlier times, banks were an exclusive club only the elite could join. Ordinary citizens were left with no choice but to stockpile their earnings and handle transactions in cash. These long-standing practices passed down through generations like a family heirloom, have kept the cash culture alive and well in Asia.
6. Strong Saving Habits. Frugality is a virtue in many Asian societies, and strong saving habits are encouraged from an early age. Many Asians are taught to save as much as 50% of their income. According to the Asian Development Bank, Asia has an impressively high savings rate—averaging around 27.11% of GDP in 2021. With such substantial savings, many are prepared to make substantial cash down payments for homes or other significant purchases. In fact, homeownership rates in China are incredibly high, with more than 90% of households owning homes. When it comes to saving, Asians are more ready for a monsoon than just a rainy day.
7. Early Financial Literacy Education. Financial literacy is prioritised from an early age in numerous Asian societies. Sometimes, it’s even considered more important than reading and writing. Understanding the value of money and the consequences of debt are central to this education, highlighting the preference for cash over credit. In the Asian mindset, the humiliation of being on the wrong end of a bad financial deal is simply untenable.
For Asians, every cash transaction is more than a financial exchange—it’s an affirmation of cultural values and fiscal freedom. So for business owners looking to tap into the Asian market, appreciating this cash preference is more than understanding a financial habit—it’s respecting a tradition.