Banks roll out ‘barbecue loans’ to businesses in China’s new grilled-food capital Zibo as they compete for new borrowers

Banks in the city in Shandong province are offering fast, cheap loans to barbecue restaurants and suppliers in a bid to capitalise on the craze
Zibo emerged as a popular tourist destination after its barbecued food became an internet sensation, sparking a massive influx of visitors

Banking & finance

Pearl Liu

Published: 5:02pm, 7 May 2023

Why you can trust SCMP

Banks in the industrial town of Zibo in Shandong province, recently dubbed the “outdoor barbecue capital”, are offering fast, cheap loans to restaurants and suppliers in a bid to capitalise on the craze as competition among Chinese lenders for good borrowers intensifies.

Qishang Bank launched a low-interest loan, named Bozi – Bo refers to Zibo while Zi means tasty – last month offering as much as 1 million yuan (US$140,000) to barbecue related merchants and suppliers – shops selling grills, for example – that have been operating for more than six months.

The loan, which can be approved the same day, has an interest as low as 3.65 per cent, equal to the central bank’s benchmark one-year loan prime rate (LPR).

Qishang Bank is one of several lenders that have rushed to generate new business in the wake of Zibo’s new-found fame.

The hitherto little known city in the east of China, has suddenly emerged as a popular tourist destination this year after its speciality barbecued food became an internet sensation, sparking a massive influx of visitors.

01:24

Chinese city of Zibo named new ‘outdoor barbecue capital’ sparked by online craze

Videos on sites such as Xiaohongshu and Tik Tok show thousands of people travelling to the city to savour the now-famous grilled treats. Zibo’s train station saw a record 480,000 inbound and outbound passengers on Friday.

Several banks in the city have seized the opportunity, swiftly rolling out new loans targeting the barbecue industry.

Zhangdian Rural Commercial Bank launched a product on April 19 it called the “golden grill preferential loan”, offering between 200,000 yuan and 500,000 yuan loans at 4 per cent interest rate to small business owners in the industry. The applications can be processed online within 3 days.

Dongying Bank’s unit in Zibo created two new products. The “E skewer loan” is capped at 1 million yuan and has a 5.65 per cent borrowing cost while the “barbeque loan” offers up to 500,000 yuan and has an interest rate of 4.35 per cent.

The benefits to the lenders may be short-lived, however, as there is no guarantee that Zibo’s barbecue frenzy is anything more than a passing fad, warned Wang Pengbo, a financial industry analyst with BoTong Analysis.

“Latching on to trendy businesses could boost a bank’s loan size in the short term, but it may not be sustainable as trendy things are changing all the time,” he said.

The rush by Chinese money lenders to tap the explosion in the barbeque scene is just one example highlighting their hunger for new loan customers, good quality ones in particular.

Last year, bank deposits outpaced loans by 44.51 trillion yuan in China, the largest gap since 1997, amid the uncertain economic outlook.

The biggest five banks in China all experienced sharper deposits growth than loans growth in the first quarter, led by Agricultural Bank of China, which saw deposits increase 10.2 per cent while loans only climbed 6.9 per cent, according to data compiled by CreditSights, a unit of Fitch Group.

“Banks may see increasing pressure to offer credit in the first half of 2023,” said Ming Ming, chief economist at CITIC Securities.

Additional reporting by Elise Mak