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The Credit Card Market in China: Opportunities for Foreign Firms

The credit card market in China has been growing at double-digit rates since the early 1990s and has boomed since 2003. China became the world’s second largest credit card market (after the U.S.) in 2012 in terms of number of cards issued and transaction volume, and is expected to become the world's largest credit card market by the year 2020.

Being highly policy-driven, the Chinese credit card market is largely directed by political calculation, policy mission and administrative intervention. Even though economic and social factors play a vital role, government regulations and policies control or strongly influence the competitive landscape, the credit card ecosystem and the industry income structure. Foreign companies must recognize that government regulators are working on a course of regulation that is oriented toward supporting state-owned and domestic Chinese enterprises.

Even so, the Chinese credit card market will continue to be the most promising market worldwide due to the size of the national economy and population.   And the relative slow-down of the Chinese economy will have a limited impact on the market given the huge scale of business opportunity and the tight control of credit risks by the central bank. Packaged Facts predicts that market growth in 2012 and 2013 will notch downward due to card migration and risk control concerns, but will pick up again from 2014 onward due to the growing customer base and developing mobile and internet payment business.

Differentiation of positioning based on brand image, promotional strategy and strategic vision is critical to success in this market. Big name foreign firms are attractive to middle- and upper-class Chinese customers, whom foreign companies can target through high-quality and exclusive services.  In addition, younger adults are forming a new generation of consumers who are more technologically- and innovation-driven when it comes to choosing credit cards, such that the most technologically advanced companies will be best positioned to perform in this market.

At the same time, the payment processing market is going through a revolution in China with the introduction of third-party payments. New competitors are entering into the market and sharing profits from card payment companies and banks. Alliances and the competitive landscape have been transformed, and payment companies will need to reconsider their positioning and partnership strategy in this market.


  • Executive Summary
    • Emergence of Market
      • Table Selected Credit Card Industry Statistics, 2011
    • Key Consumer Statistics
    • Banking Industry Overview
    • Foreign Banks in China
    • Top Chinese Players in Credit Card Market
    • Key Performance Indexes (KPIs) of Chinese Competitors
      • Table Key Performance Index of Top 15 Chinese Banks, 2011 (%)
    • Income Structure of Chinese Bank Credit Card Businesses
      • Table Credit Card Charges and Rewards in U.S. and China
    • Key Financial Data for China UnionPay
    • Foreign Bank Credit Card Business Models
      • Table Foreign-Chinese Banks' Credit Card Alliance List
    • Foreign Card Payment Companies
      • Table Key Chinese Market Statistics for Foreign Credit Card Companies
    • In the Wake of Visa/CUP Dispute
    • Market Trends
    • Market Forecast
    • Recommendations for Foreign Credit Card Issuers
    • Recommendation for Foreign Card Payment Companies
  • Market Overview
    • Market Background
      • China Emerges as Second-Largest Credit Card Market
      • An Imbalanced Market
        • Table Selected Credit Card Industry Statistics, 2011
      • China UnionPay and Its Competitors
      • Historical Development of Chinese Credit Card Market
      • Development of China UnionPay
    • The State of the Market
      • Regulatory Environment: The Market Is Opening Up to Non-Banks
      • Economic Growth and Urbanization Fuel Market
      • Infrastructure: Rapid Improvement in POS and ATM Penetration
      • Industry Performance: Emphasis Shifts to Risk and Profit Management
      • Key Consumer Statistics
      • Cultural Factors: Wariness over Borrowing and Fees
  • Competitor Landscape
    • Banking Industry Overview
    • Foreign Banks in China
      • Table Top Ten Foreign Banks in China by Assets, 2011
    • Chinese Bank Credit Card Business Models
      • Top Chinese Players in Credit Card Market
      • Key Performance Indexes (KPIs) for Chinese Banks as Credit Card Players
        • Table Key Performance Index of Top 15 Chinese Banks, 2011 (%)
      • Income Structure for Chinese Bank Credit Card Businesses
        • Table Credit Card Charges and Rewards in U.S. and China
      • Key Financial Data for China UnionPay
    • Foreign Bank Credit Card Business Models
      • Table Foreign-Chinese Banks' Credit Card Alliance List
    • Foreign Card Payment Companies
      • Performance: MasterCard Is Catching Up with Visa in International Cards
        • Table Key Chinese Market Statistics for Foreign Credit Card Companies
      • In the Wake of Visa/CUP Dispute
      • New Initiatives in Online and Mobile Payments
    • Profiles of Foreign Bank Credit Card Businesses Citi Bank
      • Background of Citi China
      • Investment in China
      • Co-branded Credit Card with SPDB
      • Citi Credit Card
      • Strengths
      • Weaknesses
      • Opportunities
      • Threats
    • Bank of East China (BEA)
      • Background of BEA China
      • Alliance with Chinese Banks
      • BEA Credit Card Business
      • Strengths
      • Weaknesses
      • Opportunities
      • Threats
    • Hangseng and CIB
      • Background of Hangseng China
      • Background of China Industrial Bank
      • Cooperation Model in Credit Cards
      • Strengths
      • Weaknesses
      • Opportunities
      • Threats
    • HSBC and BOCOM
      • Background of HSBC China
      • Background of Bank of Communication
      • Cooperation Model
      • Strengths
      • Weaknesses
      • Opportunities
      • Threats
    • Deutsche Bank and Hua Xia Bank
      • Background of Deutsche China
      • Background of Hua Xia Bank
      • Cooperation Model in Credit Cards
      • Strengths
      • Weaknesses
      • Opportunities
      • Threats
    • Bank of America and China Construction Bank
      • Background of BofA China
      • Background of CCB
      • Cooperation Model
      • Strengths
      • Weaknesses
      • Opportunities
      • Threats
    • American Express and Industrial & Commercial Bank of China
      • Background of Amex China
      • Background of ICBC
      • Cooperation Model
      • Strengths
      • Weaknesses
      • Opportunities
      • Threats
    • Royal Bank of Scotland and Bank of China
      • Cooperation Model
      • Dissolution of the Alliance
  • Emerging Market Dynamics and Trends
    • New Competitive Dynamics
      • Threats from New Entrants
      • Regulatory Environment: Foreign Invested Companies Rarely Acquire a License
      • Vendor Activities: New Alliances Are Forming
      • Impact of New Entrants: Acquiring Bank Markets Are Getting Crowded
      • Impact of Migration to IC Cards: CUP Is Crowding Out Rivals
      • Regulatory Environment: Only CUP Has Mastered New ICStandard
      • Vendor Activities: CUP Promotes New Technology Enabled Cards Overseas
      • Impact on Market: Dual-currency Credit Cards Will Be Phased Out
      • Mobile Payments: Banks and Payment Companies Must Position Themselves Effectively in the New Ecosystem
      • Regulatory Environment: CUP Wins on the Standard Again
      • Vendor Activities-The Fight Over Mobile Payments
      • Impacts on Market-Jockeying for the Right Role in Mobile Payments
      • Credit Card Rates: Regulators Are Lowering Rates to Protect Consumers and Retailers
      • Regulatory Environment: Final Rate Decrease Plan Remains To Be Decided
      • Vendors Activities: Cash-out Rate Lowered by Some Major Banks
      • Impact on Market: Credit Card Profits Will Decrease by 15% to 25%
    • Market Trends
    • Market Forecast
  • Recommendations for Foreign Firms
    • Credit Card Issuers
      • Conclusions: This Is a Difficult but Worthwhile Market
      • Recommendations: Prepare for a Longer ROI Period and Differentiate Your Positioning
    • Card Payment Companies
      • Conclusions: A Major Breakthrough Seems Imminent
      • Recommendations: Be Patient and Prepare for Third-Party Payment Processor Licenses

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