China unveils gold vending machine

The country's first gold ATM is officially put into use in Beijing's Wangfujing Street on Sunday. It was shut down again the same day due to technical problems. The machine dispenses gold bars and coins and is operated by Gongmei Gold Trading. [Photo/China Daily]

China's first ATM dispensing gold bars and coins was switched on this weekend and then swiftly switched back off again.

The equipment, which was activated in the capital's bustling Wangfujing shopping area on Sunday, was shut down the same day because it was not producing receipts.

Li Weizhou, operations manager of Gongmei Gold Trading, which installed the ATM, said the machine will be running again in "one or two days", but refused to name a specific date.

Despite teething troubles, the company expects the machine to be a big hit and hopes to have 2,000 similar ATMs in place within the next two years. The majority will be in private clubs at banks and at landmark buildings in large cities.

The vending machines are already used in countries such as Germany, the United States, Italy and the United Arab Emirates, and Gongmei predicts they will be hugely popular in China, the second largest consumer of gold in the world.

"The people in Asia have a unique taste for gold, especially in China and India, and the channels of investment in China are way too narrow right now," said company president Zheng Ruixiang.

"To put residents' cash deposits into gold deposits can reduce cash flow and reduce pressure on commodity prices," he added.

The touch-screen machines dispense gold bars and coins of various weights based on the market price of the metal, which is updated every 10 minutes.

The machine in Wangfujing can only complete withdrawals. However, Zheng said his company has four more machines on the way and plans to be able to offer buy-back services in November.

Each gold bar or coin dispensed features a two-dimensional barcode that can be recognized by a scanner attached to the ATM.

"The machine will also be able to detect the specific type of gold product and determine the price," said Zheng, whose company launched the service after winning approval from China Unionpay and the People's Bank of China.

A report by the World Gold Council in May shows China edged out India as the largest gold consumer in the first quarter of this year, snapping up 90.9 tonsu of the metal. It also said the demand for jewelry in China soared 21 percent in the same period.

"China's appetite for gold has increased rapidly over the past few years," said Albert Cheng, managing director of the Far East at the World Gold Council. "In March 2010, we predicted gold demand in China would double by 2020, but we (now) believe this doubling may in fact be achieved sooner."

For some investors, however, paper money remains a more convenient choice.

"It (the gold ATM) might cater to some people who are fond of gold products, but I still prefer paper, as I have no fondness for gold and paper is much easier to handle and store," said Huang Guohu, an investor in Suzhou, Jiangsu province.