As China's pawnbrokers move from hawking bicycles and old clothes into high-interest finance, three Shanghai players plan to form the country's largest company. Chen Limei, an official of Tianyuan Pawnshop, said it and two others - Hualian and Tianbao - had applied to the Ministry of Commerce to form a national giant and were waiting for government approval. Pawnshops are thriving because they fill a market niche left by inadequacies of banks, which do not like to lend to individuals and small and medium-sized (SME) companies. Pawnshops provide an easy channel for them to raise cash quickly, while offering a high return to those who invest in them. The new firm, Hualian, would have registered capital of 100 million yuan (about HK$93.72 million) and expects other pawnshops in the Yangtze Delta to join its ranks. Hualian, the oldest of the six, set up in 1992, is as much a finance company as a pawnshop. Each of its branches in Shanghai has 10 million yuan in capital. Hualian general manager Wu Xianda said: 'Ten years ago, the goods we received were electrical appliances [such as] refrigerators and washing machines, and clothes. Now it is real estate, cars, digital cameras, computers, jewellery and Rolex [watches] worth tens of thousands of yuan. 'A fifth of our clients are bosses of private companies from Jiangsu or Zhejiang. One gave as collateral a three-carat diamond ring and an 18-carat Rolex, for which we lent him 200,000 yuan, which he needed to buy electrical cables for his shop.' Hualian has specialists in valuing watches, cameras, jewellery and property. On September 30 last year, the eve of the National Day holiday, Hualian did a record 700,000 yuan in business, receiving 329 lots from people who urgently needed money for the holiday. A Hualian official said that for a loan of 100,000 yuan backed by collateral of a flat, it would charge monthly interest of 3,500 yuan. Asked if the firm was financially sound and therefore would not sell the flat, he replied: 'Do not worry about it. We are a very profitable company.' The new company, if approved, would overtake the 1,150-outlet No 1 pawnshop chain in China, Dongfang Pawnshop in Shanghai, set up in May last year with registered capital of 50 million yuan. It operates out of a modern office building, with three floors and 1,800 square metres of space, with 28 university graduates among its staff. Its Web site says the firm is a 'new financial window at the side of Shanghai people', ready to serve SMEs and private firms. When the communists came to power in 1949, they banned the profession as a symbol of exploitation of the poor. Pawnbroking was revived in the 1980s and placed under the authority of the central bank.