The Chinese Credit Card Market Presents Great Opportunities
Credit Card Market
Through the year ending December 31, 2004, China issued 762 million bankcards, of
which 664 million were debit cards and 98 million were credit cards, according to the
latest statistics from the People's Bank of China (hereafter, PBOC), the nation's central
bank. There are over 150 banking card issuers, including the 'big four' banks: the
Industrial and Commercial Bank of China; the Bank of China; the China Construction
Bank, and the Agricultural Bank of China. There is also a fast-growing second tier of
shareholding banks and city commercial banks that issue banking cards. China's state
owned commercial banks also issue dual-currency cards that allow cardholders to
purchase goods within China, in RMB, and while abroad, in US dollars.
Nationwide, about five percent of purchases are made using bankcards, up 2.9 percent
from three years earlier. The percentage is as high as 20 percent in big cities such as
Beijing, Shanghai, and Guangzhou and Shenzhen. Consumers use their credit cards
mainly to purchase houses, vehicles, and home appliances, as well as to pay utility bills.
China UnionPay, which was established to set up a national processing network
connecting merchants and banks, has set up a national bankcard information switch
center and bankcard network service centers in 18 cities. As of December 30, 2005,
China had approximately 500,000 POS machines and 70,000 ATMs. About 300,000
merchants in China accept banking cards.
There are many opportunities for U.S companies in the credit card market:
* Credit card-related hardware, including POS and ATMs etc.;
* Credit card-related software for banks and merchants;
* Credit, risk and client management software or training programs for banks;
* Disaster back-up system for the banks' individual credit information database
* Call center related products for banks
The Chinese government is working with relevant industries to advance the development
of the credit card system in China.
In August 2005, the PBOC promulgated the Provisional Rules on Management of Individual
Credit Information Database, which is a milestone in the construction of a national credit
information system. Once activated, the system will play an important role in ensuring
the smooth operation of an individual credit information database and in facilitating the
healthy development of credit card industry in China. Since 2004, efforts have been
made to speed up the construction of an individual credit database on the basis of the
national bank credit registry and inquiry system network. After a successful pilot
operation of the individual credit database was conducted in seven cities in December
2004, the database has since been expanded to cover 127 commercial banks
throughout the country. The network connects four state-owned commercial banks, 12
national joint-stock commercial banks, and 111 city commercial banks. Additionally, two
commercial banks in unidentified cities are currently conducting tests.
China is gearing up to host the Beijing 2008 Olympics Games, an international event that
can help to spur faster growth in the credit card industry. According to the Beijing
municipal government's credit card development plan, by 2008, 90 percent of business
establishments in Beijing will accept credit cards. Card expenditures will account for 25
percent of total consumption.
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