Beruflich Dokumente
Kultur Dokumente
Student I.D
0322845
0322362
0322884
0322613
Ee Hui Teng
0322548
0322317
TABLE OF CONTENT
No.
Title
Page Number
1.
Artistic Cover
2.
Cover Page
3.
Table Of Content
4.
Key Summary
5.
History
6.
7.
3-5
12-13
8.
Recommendations
14-16
9.
Bibliography
17
10.
Appendices
18-35
11.
Minutes of Meeting
36-38
13.
Conclusion
39-40
14.
References
43
15.
Attachment of Slides
7-11
KEY SUMMARY
The Pawnshops
Joo Ngien Pawnshop & Goldsmith and Choong Xin Pawnshop are the names of both of the
pawn shops that our team has decided to do more in depth research on. These pawnshops are
both situated in different states, Alor Gajah and Kota Damanasara, respectively.
The shop in Alor Gajah, Joo Ngien Pawnshop & Goldsmith, was the first pawnshop that we
visited as we planned our trip to Alor Gajah, earlier in order to avoid any inconvenience. The
pawnshop is owned by Chin Kian Ngok and his family, the third generation pawnshop owner
after Chin Kon Tow. The shop is located at Alor Gajah, Melaka and is commonly visited by
people with a middle or low income to exchange gold chains, watches and rings.
On the other hand, the shop in, Choong Xin Pawnshop, is owned by Ho Teck Keun. It is
located in Kota Damansara, and it is also commonly visited by people with a middle or low
income.
HISTORY
Pawn broking (lending money on portable security) is one of the oldest professions.
It was believed that Franciscans were the earliest pawnbrokers in the history.
Franciscans were known as the people who adhere the teachings and spiritual disciplines of
St Francis of Assisi and associates, which is Old Catholic. Even though it was a church
prohibition against usury, which is lending money with high interest, there is some evidence
stating Franciscans were permitted to begin the practice as an aid to the poor.
However, the pawnbrokers of China started with a man named Si Ma Xiang Ru
, a writer, selling his robe on the market so that he have money to make wine, and
sell the wine to earn profit as well as buying his robe back. And after then, well-recognized
earliest pawnbrokers began in the 5th Century. The activity were established and operated by
Buddhist Monasteries to help poor. Later, it became widely seen in the China society. There
were some businessmen who formed partnerships with Buddhist monasteries to avoid
taxation from government.
Greece and Roman too are familiar with pawn broking, which was practiced by their
people, with the word Pawn coming from a latin word patinum meaning clothing.
However, the pawn broking activities in the Western country began in Italy. They follow the
rules practiced by Roman. For the pawn broking of gold, silver and jewels, customers are
allowed to borrow a loan up to 80% of the value; where else when pawn broking everything
else, customers are allowed to borrow a loan up to 2/3 of the value. Interest calculated
monthly would be 5% to 7%, however there will be no interest charged for loans up to 5 lire.
Customers must pawn at least 6 months and renew up to 5 years. If it is not redeemed or
renewed within a fortnight, item will be sold. If the loan is up to 10 lire, taxation up to 1%
has to be paid to the government.
Pawn broking is popular in the United Kingdom too. During the 14th to 15th Centuries,
noted families became popular for their money lending. King Edward III famously pawned
jewels for the Lombard Family to help raise funds for war against France. However, in 1872,
Queen Victoria illegalized pawn broking business, due to many knockoff scandals in London.
In Malaysia, however, due to multiple racial culture, pawn broking was introduced
from both Chinese and Western influences. Malay pawn shops knew pawn broking as Pajak
Gadai Islam System (Ar-Rahnu). Ar-Rahnu started off by learning from the Western culture.
As time passes and a new civilization of Malaysia emerged, Ar-Rahnu had to follow rules
and regulations set by Pajak Gadai Islam Ar-Rahnu scheme built on Act81-Act Pemegang
Pajak Gadai 1972 under Section 46.
Chinese pawn shops mostly inherit and originated from the China pawn broking
system. But overtime, they had to follow the rules set by the government too, except private
pawn shops where higher interest rates will be charged.
pawnshop when they face problems with cash turnover. Therefore, they give the pawnshop
their valuables as deposit for loan. When they have sufficient cash, they will redeem back
their items by paying back their loan together with deposit. Joo Ngien Pawnshop charges
1.5% interest to their customer per month and the redemption period is 6 months long. The
shop faces great competition nowadays as many other newcomers have entered the market
because the operating license is now not limited anymore and anyone can operate a pawnshop.
The pawnshops main competitors are the banks, the other pawnshops and also illegal loan
sharks.
B) Choong Xin Pawnshop SDN BHD
Choong Xin Pawnshop is located at No, 32A-1, Jalan PJU 5/B, Dataran Sunway, 47810
Kota Damanasara, Selangor Darul Ehsan. The first pawnshop by the company was founded
on the year 1954 by Mr Ho Ying Chai. It is located at Kuala Selangor. Our interviewee, Dato
Ho Teck Kuen was not very sure how the business was first founded because he was not born
yet during that time. However, he thinks that the business was founded by Mr Ho when he
first came to Malaysia from China and got the chance to get familiarise with the business. He
thinks that the business creates great opportunity and that prompted him to start his own
pawnshop. The pawnshop has been operating for the past 61 years and now it has 5 branches.
The branches are located at Kuala Selangor, Batang Berjuntai, Kampar, Pandan Jaya and
Kota Damansara.
The pawnshop is a simplified version of a financial company. The shop provides pawn
service, which is receiving deposit from customers as security to give out loans. The deposits
are in the form of golds, diamonds, watches and pearls. Whenever a person needs cash, he
will bring his valuables to be pawned. The valuables is then kept by the pawnshop and he is
given cash as loan. If he wants his valuables back, he needs to return the loan and the interest.
The interest charged by the shop is 2.0% and the redemption period is 6 months long. If he
does not have enough money to repay the loan, he can repay the interest first and the
J.MEC | FNBE0115 / AUG 2015 | INTEGRATED PROJECT
redemption period will be extended again for 6 months. If he has no money to pay back the
loan and the interest, his valuables will then be brought to auction according to the pawnshop
law. The money earned from auction will then be given to him. According to Dato Ho,
around 60-70% of customer will redeem back their valuables because they pawn to solve
their short term financial problem, not because they want to sell their valuables. Even though
nowadays the items that are accepted as a deposit are only gold and diamonds, items such as
bicycles, fountain pens and sewing machine are also accepted in the past. Their main
customers mainly consist of people with middle range or lower range income and mostly are
Indians and Malays. The valuables are then recorded in a book and stored in their safe.
Pawnshops are known as a sunset business nowadays as many have never heard of it before.
However, Dato Ho do not agree that it is a sunset business as its nature of business is to
provide money for people who face financial problems and it is essential to the business. He
believes that the business will not distinguish in our society but the business will not be as
good as before. The business faces great competition because the customers will be more
selective on the pawnshop. Therefore, he thinks that good customer service is most important
strategy to face the competition and trains his workers to have provide excellent customer
service.
Location
Founder
Ho Ying Chai
Date founded
1938
1954
Current Owner
Items pawned
Gold/Diamonds/Watches/Pearls
Jewellery
Branches
2 in Melaka/2 in Selangor/1 in
Kuala Selangor/Batang
Johor
Berjuntai/Kampar/Pandan
Jaya/Kota Damansara
Total number of
Customers class
Middle or lower
Middle or lower
Regular customers
Average customers
1000
1500
Interest rate
1.5%
2.0%
Redemption Period
6 months
6 months
Competitors
Banks/Other Pawnshops/Illegal
Banks/Other Pawnshops/Illegal
Loan Sharks
Loan Sharks
workers
per month
Competitors: Maybank (left), Kedai Emas Hock Nin (middle), CIMB bank (right)
are located 250 meters away northeast from Choong Xin pawnshop, and located next to each
other. However, both RHB bank and Am bank are not as strong of a competitor towards
Choong Xin pawnshop compared to HSBC bank, due to the fact that they are competing
among themselves and HSBC bank is located only 30 meters away towards east from Choong
Xin pawnshop. All mentioned banks provide gold investment service to their customers.
other businesses in the similar market. Both of these businesses sell unique products and is
always changing constantly. Besides that, the pricing power of monopolistic competition is
weaker as this type of business does have the full ability to charge the price higher than the
market price. In order to maximize their profit, these business strive to differentiate their
products from that of their competition which is other pawnshops or even banks.
10
Technology
Due to the advancement of technology in todays era, the staff at Choong Xin prefers to use
technology in their aid to determine the price and quality of the pawned items. For them, they
think that the fake items in the market today are really identical compared to the past,
spurring them to use up to date machinery.
V) Barriers to entry
A) JOO NGIEN PAWN SHOP & GOLDSMITH
Competitors
As Joo Ngien is more of a traditional pawn shop, the customers of today would feel that
their methods are too old-fashioned, causing them to go look for other pawn shops, banks or
even illegal loan sharks to do business with.
Bank Interest
For every item that they sell, they are required to provide 1 % of their earning profits to the
bank as part of their contract with the government. Making it one of their major obstacle in
running a pawn shop business.
11
1. Competitors
2. Competition
Strategies
3. Barrier to
Entry
Competitors
Competitors
12
Bank Interest
Required to provide 1 % of
their earning profits
Part of their contract with
the bank
Major obstacle in running
this type of business
Technology Cost
Technology helps in
determine the item is
whether legitimate or
counterfeit
Requires a small fortune to
have one
Also requires quite a sum to
maintain the machine as it
requires servicing time to
time
4. Differentiated
or
Standardized
Products
Differentiated Products
Differentiated Products
5. Pricing Power
Price Taker
Price Taker
Monopolistic Competition
Monopolistic Competition
6. Nature of
Market
13
RECOMMENDATIONS
After carrying out our studies regarding our business, there are some issues that can be
improved in order to allow their businesses to perform at its best. The list below shows a few
recommendations that can be taken to enhance both pawnshops future performance in their
career.
Joo Ngien Pawnshop, Alor Gajah || Choong Xin Pawnshop, Kota Damansara
1. Brand Recognition
Current condition:
In Malaysia, pawnshops often reside in low-income neighborhoods to cater to people down
on their luck. Even though the pawnshop provides a quick and hassle free way of trading
valuables for cash to get people through to pay-day, they are lacking in terms of advertising
their brand to the public. Nowadays, we barely see promotions or advertisements about
pawnshops anymore. Both pawnshops did not focus on the advertisement of their shop. This
results in the unawareness of the public, especially the younger generation not knowing how
does pawnshop actually works because it was never properly introduced to them.
Recommendation:
Both pawnshops should package themselves properly. The pawnshop owners must expose
themselves with the current modern technology. This way, they are able to widely promote
their brand and slowly become recognized by the public. For example, owners can create a
website to introduce what their pawnshop is all about, advertise events and promotions and
announce products that are available for sale. They can also highlight their specialty areas,
such as coins, jewelry, watches, gold and include links to information about their products
history, manufacturer and also production methods. Pawnshop owners can even include
coupons and incentives for customers to visit. They can announce visits by appraisers and
antiques experts so that customers can plan to bring their items in for appraisal. Owners of
the pawnshops can also share their expertise by offering classes on coin collecting or
recognizing rare antiques, gold, and other items.
2. Changing Perceptions
Current condition:
When we talk about pawnshops, it is often being related to the ritual reserved only to lowincome workers. This perception has become a major issue for both pawnshops as it becomes
the obstruction of their businesses from propelling forward. The perception that has been
installed into peoples minds are that pawnshops are only meant for people coming from a
low-income background. It is a false perception and its a perception that must be changed in
order to see the variation of customers and generally the development of both pawnshops.
14
Recommendation:
Its important that the public are aware of what pawnshops can offer in their business. One
of the ways to expand the range of customers in pawnshops is to promote their brand name
through any form of media. The public needs to know the pawnshops real objectives and
purpose in order to attract new customers. Another way to change peoples perception is by
widening the range of items that can be pawned. In the past, pawnshops used to have a wide
range of items that can be pawned. Other than gold and diamonds, items like bicycles, sewing
machines, even branded pens can be used to pawn. But nowadays, pawnshops in Malaysia
are limited to only a few main items that the customers can pawn, which are gold, watches
and diamonds. Therefore, the owners of pawnshops should really reconsider of bringing back
the past generations way of dealing with pawn items. Owners can reconstruct their system,
organize their business structure systematically, and categorize pawn items in order to expand
the range of customers. By pawning items like antiques, peoples lives become easier in
terms of financial strain. Environmental factors could even be incorporated in a pawnshops
business through collaborations and proper planning of the whole business structure. This
way, pawnshops will be recognized by the public with the change of perception towards
pawnshops businesses. Thus, the people have more options than they may think after looking
at what pawn stores can offer.
3. Customer Service
Current condition:
The workers in both pawnshops do their work accordingly with mainly one objective, which
is focusing on the increase in sales of the shop. This is the reason why both pawnshops
businesses only standstill as there is no progression in their businesses. When there are
problems like other competitors, both of the pawnshops solve the problem by making
adjustments with the rate of exchange. But by doing so, it doesnt really help in improving
their businesses. One issue that pawnshop owners always neglect is the importance of
customer services, which becomes another reason why the performance of both pawnshops
business are always stationary.
Recommendation:
All businesses can be benefited by providing exceptional customer service. Pawnshop
owners can review the basics of good service with their staff and train them on the stores
lending and return policies. Owners must ensure that they understand the laws governing
pawnshop transactions so that they can convey them to customers. Another thing pawnshops
can do is always ask for customer feedback following a sale or service transaction with a
feedback card. They can even include space for an email address so that pawnshop staff
members can notify the customer about events, promotions and items of interest that become
available for sale.
15
4. Image Management
Current condition:
The exterior and interior look of both pawnshops isnt that attractive. The design of both
pawnshops are done in a conventional way, which is normal looking. It reflects on how the
owners are not really particular with the design of their shops. Even though the functionality
and security of the shop are done properly with the systems serving its purposes, but both
pawnshops took for granted of the packaging of their shop in terms of attractiveness.
Recommendation:
The first impression of the pawnshop to the customer is very important. Most of the people
always judge a book by its cover,that is why it is important to take note of the environment of
the shop. Potential customers who see a dusty window crammed with items as they pass by
the store may just keep walking, whereas an attractive entrance beckons them to go inside.
Thus, pawnshop owners should give their shop a fresh look with paint, a window display
with items organized by category and signs promoting your specialty items. Other than that,
pawnshop owners can even add a new pawnshop sign, polish their old ones, and also
subsequently carry out maintenance for their shop. After customers step inside, it is important
to treat them to a clean, well-lit store with items clearly marked and sorted by type.
16
BIBLOGRAPHY
1. Baye, M. (2003). Managerial economics & business strategy (4th ed., p. 578). Irwin,
Boston: McGraw-Hill.
2. Diana, C. (Ed.). (2013, September 12). The pawn industry: Quick money at a price.
Retrieved November 23, 2015, from
http://www.freemalaysiatoday.com/category/leisure/2013/09/12/the-pawn-industry-quickmoney-at-a-price/
3. Doyle, P., & Stern, P. (2006). Marketing Management and Strategy (4th ed., p. 446).
Harlow, Essex: Pearson Education.
4. Heath, R. (1998). Crisis Management for managers & executives (p. 466). London:
Financial Times.
5. Keh, H. (2004). Strategic Asian Marketing: An Essential Guide for Managers (p. 269).
Pearson Prentice Hall.
6. Little, P. (1977). Communication in business (3rd ed., p. 345). Harlow: Longmans.
7. Lucas, R. (2009). Customer Service: Skills for Success (4th ed., p. 294). Boston: McGrawHill.
8. So, Y. (2006). Explaining Guanxi: The Chinese Business Network (p. 169). London:
17
APPENDICES
Alor Gajah Pawn Shop:
Joo Ngien Pawnshop Exterior Shop House Image
Location: 2852 Jalan Besar Alor Gajah, 78000 Alor Gajah, Melaka
This is the exterior of Joo Ngien Pawnshop where the signboard can be seen hanging above
the area of operation.
The pawnshop is located in a row of shop houses where the business is carried out on the
ground floor.
18
The pawnshops plaque hangs in front of the office since the beginning of the business.
The shops license is hung in the owners office to show that the pawnshop is a legal operant.
The license states all legal information needed in order to operate the shop.
19
These are examples of where the gold are placed and arranged for sale to the public.
The gold placed here does not belong to customers who have placed their gold for loan. The
gold now belongs to the pawnshop and the pawnshop can sell the gold to customers.
This is the placement of the gold which is placed in the outer area of the store.
There is a barrier between the outer area and the interior part of the store.
20
These are where the customers bring their gold to be set on loan. They are only allowed to be
at the outer part of the pawnshop.
The transaction is carried out from the inside and outer side of the store which is separated
from each other.
This is an example of the interaction between the customers and the pawnshop worker.
The workers are only allowed to interact using a small sliding glass door under the barriers.
The interaction between them is strictly for trading using valuables such as gold, watches and
other valuable items for money only.
They are also allowed to sell the available gold placed on the display set to customers through
that small sliding glass door.
21
This is the inner counter which is a high table top placed with equipment such as a special
weighing machine for gold which is used while trading.
The people on the inside are able to look outwards whereas the people on the outside are not
able to look inside due to the difference in height.
This is another area of the inner part of the shop where the printing, accounting and other
paperwork are carried out. The back part leads to their office and safe which is confidential
and cannot be seen by outsiders.
22
This is the part of the shop where gold can be sold to the public is located. This is area where
the workers stand to carry out trading or sales.
Workers only operate from the inner part of the pawnshop. They do not operate outside as the
outer part is meant for customers to make sales or trading only.
There is a cashier machine behind the standing area that is used when sales for gold are made.
Recordings are done using the computer there and receipts are printed in that area too.
This is an example of gold sales made from the inner part of the shop where the worker
works. The worker takes the gold out of the casing and shows the customer from the inner
part which is behind the steel bars and glass window.
The sales are made through a small sliding glass window at the lower part which is below the
steel bars whereby the transaction of money and gold is passed through the sliding window.
23
This is our group photo with the owner of this pawnshop. This picture also shows the exterior
of the pawnshop where the name of the pawnshop, the gold for sale display area and the area
of sales (for customers) can be seen.
s
This is our group photo at the pawnshop.
24
This is the name of the pawnshop which is hung directly above the main door of the
pawnshop.
It shows the Chinese name of the pawnshop and a Malay translation of the pawnshop below
the Chinese name.
The pawnshops exterior consists of a glass door which separates the shop and the pavement.
Customers need to enter the shop through the glass door in order to make their transactions
unlike the pawnshop in Melacca which is only a walkthrough.
25
This is the overview of the pawnshop shop house as an individual shop lot. We were able to
see through the transparent glass door to observe or look at the operating pawnshop while
they are carrying out their business.
There is a signboard of the pawnshops name hung above the shop indicating that the shop is
located and operates at the group floor.
The pawnshop is located in an area which has no other pawnshops nearby. This means they
can avoid competition in the same row of shop lots.
26
This is an overview of where transactions are carried out in the pawnshop. Pawnshop staff sit
behind the counter which has a steel bar and glass window that separates themselves and the
customers.
The only transactions carried out here is gold loaning. There is no gold on sale.
This part of the pawnshop has a seating area for customers who are waiting for their turn to
carry out transactions. There is a notice board which enables staff and customers to view
notices easily.
27
Interview Sessions
Choong Xin Pawnshop, Alor Gajah Interview
This interview is carried out between Ee Hui Teng and Mr Chin at Joo Ngien Pawnshop
which is located in Melacca.
Interviewer: Ee Hui Teng || Interviewee: Mr Chin
Interviewer: Hi. We are students from Taylors University and we would like to know
more about how a pawnshop function.
Interviewee: Okay. No problem.
Interviewer: When was this pawnshop founded?
Interviewee: 1960
Interviewer: Who are the key founders of this pawnshop?
Interviewee: My grandfather, Chin Fun Luan.
Interviewer: What prompted the founders to start this business?
Interviewee: During the old times, there wasnt any pawnshop because most people are into
the business of selling foreign goods. When the consumers do not have enough money to buy
the goods, they will bring their goods to pawn. This results in the birth of the business.
Interviewer: Can you briefly explain the process of pawning an item?
Interviewee: Pawning means that you take gold to be pawned. It is a trading process between
gold, or other valuables, and cash. For example, when a customer brings their valuables to the
pawnshop, the gold will be calculated by gram. After calculating, we will offer the customer
a price for the gold to be successfully pawned. When the customer accepts the price offered,
we will take their gold and they will receive cash in return.
Interviewer: What should customers do if they want to redeem back their gold? How
long is the redemption period?
Interviewee: The customer would have to return the same amount of cash offered initially.
After the interest rate is calculated based on the initial amount of cash and time span they
have pawned their gold, they will have to pay off the interest rate which is 1.5% per month in
order to receive their gold back. The redemption period for one customer is 6 months
Interviewer: What if they exceed 6 months? Would they still be able to redeem their
pawned gold?
Interviewee: Yes, they will be able to redeem their pawned gold but once it exceeds 6 months,
the interest rate will increase to 2% per month. However after 7 or 8 months, the customer
J.MEC | FNBE0115 / AUG 2015 | INTEGRATED PROJECT
28
must redeem their gold and pay the interest. If the customer still doesnt come back to redeem
their gold after 8 months, the gold will then be brought to auction. After the auction, the gold
will be given to the government.
Interviewer: What happens to the gold after auction?
Interviewee: It will belong to the person who won the bid.
Interviewer: How often does this auction occur?
Interviewee: Once every month.
Interviewer: What are you the main products pawned in a pawnshop?
Interviewee: They are mostly gold, watches and diamonds because these are the most
valuable items in exchange for cash.
Interviewer: Who are your main customers?
Interviewee: Indians and Malays.
Interviewer: How many branches does your business have? Where are they located?
Interviewee: We have 5 branches in total. There are 2 branches in Melaka, 2 in Kuala
Lumpur and 1 in Johor.
Interviewer: Can you briefly explain the history of how the business first started and
recent development of the business?
Interviewee: I am not very clear about the history of this shop. But generally speaking, in the
past, most of the Hakkas are involved in this business. This is most likely how this business
first started.
Interviewer: I have heard that this is a sunset business. Is it true?
Interviewee: Yes, this is an undeniable fact. This is because the pawnshop business faces
competition from banks which causes a decrease in business opportunities. Nowadays, banks
too have pawn business so customers have a wider range of choice to select where to pawn
their valuables.
Interviewer: Is the competition strong in this business? How many competitors do you
have in this business? Can you name a few specific competition who have similar
business around this area?
Interviewee: Yes, the competition in this business is quite strong. Our main competitors are
banks such as Agro Bank and Bank Yapin. There are also other pawn shops such as Lian
Sheng Pawnshop and illegal loaners.
29
30
31
32
the past. The gold received from the customer will be weighed by using a lever-balance and
the information on the valuables and other details are all recorded using calligraphy pen.
When ball pens were invented, the business was then recorded everything in a big book using
ball pens. Initially, receipts were printed out with blank spaces. When printers came about,
the code number was introduced and printed out on the receipt. Now that we have computers,
everything is recorded into the computer and a complete receipt is printed out. The operation
of this business develops with the development of technology.
Interviewer: Recently, there is a saying that pawn business is a sunset business. Do you
agree with this statement or you think that the business will continue on even after 100200 years later?
Interviewee: The nature of business for this pawnshop is a financial company and I believe
that there wont be a sunset for any financial company. In the olden days, when cash is not
used in the society, people trade using items like rocks, poultries and vegetables. Nowadays,
a persons assets are measured by cash and inventories. In this way that the society functions,
it is impossible for a financial company to distinguish. If pawn shops distinguish in the
society, it means that banks will too because they share the same nature of business. Now that
our living standards are higher, the business revenue might be lesser but this does not mean
that there is no revenue at all. It also does not mean that the entire society do not need this
type of organization anymore because it functions to solve problems faced by people with
middle to lower range income. Therefore it wont distinguish. However, the business might
that be as profitable as before. It will not have high volume but the business will is considered
more stable.
Interviewer: Does the business have a lot of competitors? Can you list out 3 competitors?
Interviewee: Yes we have many competitors but the amount of competitors cannot be
calculated that way. All pawn shops are like different individuals. So far there are more than
400 traditional pawn shops and nowadays, there are also more than 1000 Muslim pawn shops.
All of these pawnshops are competing with each other which creates a great competition.
Interviewer: Is the competition of the business strong?
Interviewee: The competition is pretty strong because the customer nowadays are different
from before. Customers nowadays will compare the value they can get from different pawn
shops unlike the customers in the past. So this creates a strong competition. If you are unable
to provide the customer good service and price, they will shift to another shop.
Interviewer: How do you compete with each other?
Interviewee: I think that customer service is the most important factor. For example, if you go
to a bank, you will have some enquires and I will grade their service provided. If they do not
provide good service, why should I go to this bank? I would rather to go to Public Bank,
Maybank or Standard Chattered to get my house loan. Therefore I think that customer service
the most important strategy to compete with other pawnshop business.
33
Interviewer: How much capital is required to start this business? Are there any
specialized field of knowledge I need to know in order to run this business?
Interviewee: Around 20 years ago, you might only need around 1-2 million to start this
business. However, since the Malaysian currency is getting smaller now, you might need
around 5-6 million as the start-up capital. It also depends on the location of your shop. Some
locations might need up to 10 million capital. The knowledge needed will generally be the
ability to identify or determine the value of the items you want to receive such as gold. You
can not only receive gold as deposit, you may receive watches too. Nowadays, a watch may
be worth up to 500-600 thousand ringgit. You may also receive jewelleries. It depends on
what item you want to receive as deposit and you need to have the knowledge in order to
identify the value of the item. I think that stamps are also acceptable. Maybe a 1 cent stamp
can be worth around 200-300 ringgit. As long as you have the knowledge, then I think it
should not be a problem. If not, you might be fooled, conned or cheated by others.
Interviewer: There are a lot of real and fake gold and diamonds nowadays. How do you
identify and tell apart the real from the fake
Interviewee: 60% is based on experience and the other 40% can be based on technology. The
technology advancement has created instruments to identify whether the gold is genuine.
However, very real-looking replicas are also made in the market dues to the advancement of
technology. So there is a competition between the creation of replicas and the invention of
instruments to identify the replicas. In such cases, experienced elderly are able to identify the
genuine item more accurately.
Interviewer: Does your pawn shop identify the originality of the item based on
experience?
Interviewee: Yes. We need to train our staff to be able to differentiate the valuables. At the
same time, we also need instruments to aid the staff. This is why I say that 60% is based on
experience while 40% based on instruments. However, it may be 90 to 100% based on
experience in the past but it is not applicable nowadays because the replicas look too real to
be fake.
Interviewer: Do you think it is easy to operate this business?
Interviewee: I have to say that it is not that easy to operate because you need to think of ways
to improve and learn. Business with no improvements will be eliminated by its. In-depth
knowledge is also required to operate this business. This business is a high risk business,
therefore you need to have high security system. You will have to continuously improve and
monitor your staffs attitude because it is considered a service line. You also need to know
the economy of the gold, whether the price will increase or decrease in the future. So it is not
a very easy business.
34
Interviewer: How do you compete with your competitors other than providing better
customer service?
Interviewee: I think the most important is customer service. Other than that, since we receive
interest from our customers, we may charge them a lower interest rate (lower than 2%) or pay
them a higher loan, for example, offer them RM150 for valuables which might be only worth
RM100. All these can be strategies to compete. However, I still think that customer service is
prioritised because living standards are higher now.
Interviewer: Is any limit on the loan you offer to your customer? Like a price floor or a
price ceiling.
Interviewee: There are no limitations on this matter. It is pretty flexible.
Interviewer: What about the interest rate charged?
Interviewee: There is a ceiling for the interest charged. According to the pawnshop act, the
maximum amount of interest charges is 2%. There is no minimum amount of interest
required to be charged. So it is possible that you might not charge any interest to your
customer. There are no other limitations other than this.
Interviewer: Will the loan price depend on the current market price of gold?
Interviewee: The price will be the wholesale price of gold. The wholesale price is around 7080% of the retail price. But at the very end, the loan price depends on the decisions by the
owner or staff of the pawn shop.
Interviewer: Are your pricing decisions strongly affected by your competitors?
Interviewee: Generally speaking, our loan price is not strongly affected because we cannot
offer a price too high. Offering a high price will create a very high risk because the gold price
may drop at some point in time. It may cause financial problems as you will lose a lot of
money. So if you want to operate this business, you will need to be able to predict the gold
price after 6 months. You need to obtain this knowledge by learning, reading and calculating.
The gold worth RM100 now may be worth RM150 6 months later. In this case, I may offer
RM140 to my customer. Others may think that you are offering too much but it actually
depends on the operation knowledge you have. If you predict that the gold price will fall in
the future, as example the gold worth RM100 now will only worth RM50 6 months later, then
you can only offer your customer RM40. So there is no any limitations to it.
Interviewer: I think thats all. Thank you.
Interviewee: Youre welcome.
35
30/10/15
3:30 PM
Ee Hui Tengs House in Malacca
Details:
Meeting called by:
Notes taken by:
Subject:
Attendees:
NAMES OF GROUP MEMBERS
Justin Chong Yong Sheng
Michelle Wong Sook Yin
Lew Quo Ming
Liew Cherng Qing
Ee Hui Teng
Cham Zheng Chee
TUTORIAL GROUP
Friday
Wednesday
Wednesday
Wednesday
Wednesday
Wednesday
ROLE
Research/Report Writing
Recording/Report Writing
Research/Report Writing
Recording/Report Writing
Interviewer/Transport
Leader/Interviewer
Minutes:
NO. ACTIVITY
1.
Introduction
2.
Discussion of
business
3.
Delegation of duty
4.
End
ACTION TAKEN BY
Brief of current situation of the project.
Location of the chosen business and interview along with the
itinerary of the day ( Refer to Itinerary table)
Distribution of each members duty with clear instructions.
Meeting adjourned.
Itinerary:
Time
3:15 PM
4:45 PM
5.15 PM
ACTION
Arrival at Ee Hui Tengs house in Malacca
Arrival at Joo Ngien Pawn Shop and Goldsmith, begin
interview
Return to Ee Hui Tengs house
36
7/11/15
12:30 PM
Event Hall Library, Taylors University
Details:
Meeting called by:
Notes taken by:
Subject:
Attendees:
NAMES OF GROUP
MEMBERS
Justin Chong Yong Sheng
Michelle Wong Sook Yin
Lew Quo Ming
Liew Cherng Qing
Ee Hui Teng
Cham Zheng Chee
TUTORIAL
GROUP
Friday
Wednesday
Wednesday
Wednesday
Wednesday
ROLE
Recording/Research/Report Writing
Recording/Research/Report Writing
Recording/Research/Report Writing
Recording/Report Writing
Interviewer/Transport/Report Writing
Leader/Interviewer/Transport/Report
Writing
Minutes:
NO. ACTIVITY
1.
Introduction
2.
Discussion of
business
3.
Delegation of duty
4.
End
ACTION TAKEN BY
Brief of current situation of the project.
Location of the chosen business and interview along with the
itinerary of the day ( Refer to Itinerary table)
Distribution of each members duty with clear instructions.
Meeting adjourned.
Itinerary:
Time
ACTION
8.00 AM Meet at Taylors University roundabout and departure
11.30 AM Estimation of arrival at Choong Xin Pawn Shop
1.00 PM
Interview Ended and returned to Taylors University
MINUTES OF THE MEETING (3)
DATE:
TIME:
VENUE:
8/11/15
2:00 PM
Event Hall Library, Taylors University
37
Details:
Meeting called by:
Notes taken by:
Subject:
Attendees:
NAMES OF GROUP
MEMBERS
Justin Chong Yong Sheng
TUTORIAL
GROUP
Friday
Wednesday
Wednesday
Wednesday
Wednesday
ROLE
Cover
page/Summary/Comparison/Slides
Appendix/Research/Video
Meeting Minutes/Job
Description/Comparison/Video
Compile/History of Pawn Shop/Slides
Brief bio of the shop chosen/Video
Leader/Recommendations/Slides
Minutes:
NO. ACTIVITY
1.
Introduction
2.
Discussion of the
report
3.
Delegation of duty
4.
End
ACTION TAKEN BY
Brief of current situation of the project.
Discussed upon what is needed to be in the project and start
working on it.
Distribution of each members duty with clear instructions.
Meeting adjourned.
38
CONCLUSION
It has been concluded that the Choong Xin Pawnshop in Kota Damansara, Klang Valley is
commercially more successful compared to the Joo Ngien Pawnshop in Alor Gajah, Melaka
based on the comparative analysis done. This conclusion is supported by the evidences
obtained through research and critical analysis based on economics principles we had learnt.
Choong Xin Pawnshop in Klang Valley is more successful because it has a more strategic
location, incorporate advanced technology, focuses on customer service and higher efficiency.
Firstly, Choong Xin Pawnshop has a more strategic location compared to Joo Ngien
Pawnshop. Choong Xin Pawnshop is located at Kota Damansara which is a township located
in Petaling Jaya, Selangor, Malaysia. It is spread across 4,000 acre (16 km) of land. It is also
a state seat constituency which is sandwiched between Shah Alam and Petaling Jaya. Notable
landmarks located within the constituency are the old Subang Airport and the Rubber
Research Institute of Malaysia. On the other side, Joo Ngien Pawnshop is located at Alor
Gajah which is the district seat of the Alor Gajah, Malacca, Malaysia. It located on north part
of Malacca state. Alor Gajah is located 25 km, around 30 minutes drive from Malacca City.
Comparing both locations of the shops, Choong Xin Pawnshops location is better than Joo
Ngien Pawnshops as it is located at a highly populated place. Therefore, this lead to more
customers to visit Choong Xin Pawnshop in overall.
Secondly, Choong Xin Pawnshop has incorporated advanced technology in their business
but Joo Ngien Pawnshop did not. From our interview conducted, we found out that
identification of replicas are plainly based on experience at Joo Ngien Pawnshop. However,
Choong Xin Pawnshop has used advanced technology to aid this process. This has helped to
lower the risk of the business because the business will not face problems of being fooled by
their customers who want to use real-looking replicas as deposit for their loan. Joo Ngien
Pawnshop identifies replicas based on experience which may result in the occurrence of
human error as replicas created nowadays are not much different from the original ones. This
aspect is very crucial to the business because the business will need to bear great loss if this
mistake is made. For instance, a replica worth only RM100 can be perceived as an original
product which worth more than RM1000. If the pawnshop fails to identify the replica, they
will need to bear the loss of RM900 and the customer earned RM900 out of nothing.
Other than that, Choong Xin Pawnshop focuses more on customer service while Joo Ngien
Pawnshop puts their focus on the price of their product and loan interest. The perception of
success of a business is often dependent on employees who can adjust themselves to the
personality of the guest. Our interviewee representing Choong Xin Pawnshop believes that
good customer service experience can change the entire perception a customer holds towards
the organization. Therefore, Choong Xin Pawnshop concerns the priority an organization
assigns to customer service relative to components such as product innovation and pricing. In
this sense, Choong Xin Pawnshop which values good customer service spend more time and
money in training employees than Joo Ngien Pawnshop. From our observation obtained when
we visit the shop, we find that the workers at Choong Xin Pawnshop are friendlier and they
39
welcome every customer with a smile. All of this leaves a good impression to the customers
and may lead them to come back to the shop again.
Last but not least, we found out that Choong Xin Pawnshop has higher efficiency compared
to Joo Ngien Pawnshop. Not only does Choong Xin Pawnshop have modern instruments to
aid the identification of replicas as stated above, it also hires more workers compared to Joo
Ngien Pawnshop. Choong Xin Pawnshop has a total of 6 workers and 5 of them are in-charge
of the service work such as communicating with their customers and determine the worth of
items owned by their customers. On the other side, Joo Ngien Pawnshop only hires 3 worker
and among the 3, only 1 of them is experienced and able to identify the value of their
customers valuables worth. This difference stated shows that Choong Xin Pawnshop has
higher efficiency and Joo Ngien Pawnshop lacks of man power and technology advancement
to upgrade their efficiency.
In a nutshell, we have come to a conclusion that Choong Xin Pawnshop is more
commercially successful compared to Joo Ngien Pawnshop. This is due to the factors stated
above, namely strategic location, advancement of technology, good customer service and
high efficiency.
40
REFERENCES
1. Chin, F. (2015, October 30). Pawnshop business [Personal interview].
2. Diana, C. (Ed.). (2013, September 12). The pawn industry: Quick money at a price.
Retrieved November 23, 2015, from
http://www.freemalaysiatoday.com/category/leisure/2013/09/12/the-pawn-industry-quickmoney-at-a-price/
3. Donna, E. (Ed.). (n.d.). Ways to Make a Pawnshop Better. Retrieved November 23, 2015,
from http://smallbusiness.chron.com/ways-make-pawnshop-better-50526.html
4. History of Pawnbroking. (2013, July 30). Retrieved November 23, 2015, from
http://www.history.co.uk/shows/pawn-stars-uk/articles/history-of-pawnbroking
5. Ho, Y. (2015, November 7). Pawnshop business [Personal interview].
6. The History of Pawn Shops. (n.d.). Retrieved November 23, 2015, from
http://scribol.com/anthropology-and-history/the-history-of-pawn-shops
7. . (2015, June 29). Retrieved November 23, 2015, from
http://baike.baidu.com/view/1095582.htm
3.8. --. (n.d.). Retrieved November
23, 2015, from http://www.aboluowang.com/2014/0719/418544.html