Citigroup gearing up to enter China's credit card market
HONG KONG -- Citigroup is gearing up to issue its own credit cards in China this year, the latest push by a Western bank to attract Asian consumers with a growing appetite for borrowing.
In striking out on its own this year, Citigroup will expand in a country that analysts expect to soon become the world's largest credit card market, and potentially, one of the most lucrative in the future. In 2010, China's credit card industry turned profitable for the first time, according to Lafferty Group, an industry consultant.
"When it comes to credit cards, China is a virgin market with vast opportunity," says Michael Lafferty, chairman of U.K.-based Lafferty Group, who predicts that China will become the world's largest credit card market by 2015.
Citigroup, which offers credit cards in 14 markets in Asia Pacific, is also stepping up its efforts to get plastic into the hands of consumers in other fast-growing markets, such as Vietnam, and established ones, such as Hong Kong.
In Vietnam, where less than 1% of consumers have credit cards, the bank has advertised its cards in high-traffic locations such as the airport of the largest city, Ho Chi Minh City. In Hong Kong, Citigroup credit card ads can be found on taxis and billboards.
"The centerpiece of the Asia growth story is the rising affluence of consumers," their growing consumption and need for products including credit cards and wealth management, says Jonathan Larsen, head of retail banking in Asia for Citigroup.
Citigroup will launch both personal and commercial credit cards this year in China. The bank declined to reveal the timing or details of its rollout plans.
Citigroup joins other Western banks that see opportunity in Asian societies shifting from saving to spending. As consumption grows, even debt-averse consumers may embrace credit cards as a convenient way to pay, says John Quelch, dean of the China Europe International Business School in Shanghai.
U.K.-based Standard Chartered has increased its credit card, personal and unsecured lending in the region — particularly in Hong Kong, Singapore and South Korea— helping to boost its income from those products by 18% to $2.4 billion last year.
U.K.-based HSBC is focusing on the emerging affluent as it expands credit card lending across Asia, especially in markets like Hong Kong, Singapore, Taiwan, China, India, and Indonesia., Malaysia and Vietnam, says Sanjiv Sud, HSBC's head of consumer assets for Asia-Pacific. At the same time, HSBC is exiting retail banking in Japan and Thailand as part of its effort to streamline the company's sprawling operations.
