Citibank Launches Credit Card for Chinese
Wed Feb 4,10:00 AM ET Add Business - AP to My Yahoo!
By ELAINE KURTENBACH, AP Business Writer
SHANGHAI, China - For the first time, Chinese who travel overseas will be able to carry a foreign-branded credit card that they can use at both ends of the trip.
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Citibank joined local partner Shanghai Pudong Development Bank on Wednesday in launching the nation's first foreign-labeled credit card for use at home and abroad. The card can be used at any retailer that takes Visa.
Chinese consumers are just beginning to awaken to the possibilities of paying with plastic, and foreign banks view the nascent credit card industry as a potential gold mine.
"We have very, very big plans for China," said Charles O. Prince, chief executive officer of Citigroup, a New York-based financial services company that owns Citibank.
Prince met in Beijing on Tuesday with Vice Premier Huang Ju, who praised the banking giant's cooperation and support of local financial institutions, state media reported.
The new gold and classic Visa cards, initially available only to Shanghai residents, carry both banks' logos. They can be used in China and overseas, and users will have access to a round-the-clock customer service hot line and card replacement service.
Richard Stanley, Citibank's country officer for China, said the new card could take advantage of Citigroup's global reach.
"Chinese consumers are traveling around the world and becoming more global themselves," Stanley said. "This gives them a tool."
As China slowly loosens restrictions on foreign banks, local banks are joining with foreign partners to boost competitiveness by upgrading their products, management and technology.
Shanghai Pudong Development Bank's chairman, Zhang Guangsheng, called the new card a "turning point" for his bank.
China began developing a credit card system with the 1986 debut of the Great Wall card. According to industry estimates, about 570 million bank cards have been issued, but almost all are debit cards that draw money directly from consumers' bank accounts.
Plans to develop a consumer credit market on the mainland face serious hurdles — chief among them the lack of a national bank clearing system and a paucity of credit records. Local banks are already being burned by delinquent home and auto loans.
But Prince said Citigroup did not view the fast expansion of China's credit market as a "bubble" similar to South Korea (news - web sites)'s woes with runaway personal credit card debt. Citibank's risk management policies should prevent similar problems here, he said.
At this stage, Citibank is providing technological and managerial advice on the card to Pudong Development Bank. In return, it gets its brand name into stores nationwide.
The Citibank-Shanghai Pudong Development Bank cards can be used anywhere inside and outside China that accepts Visa cards.
Citigroup holds a 4.6 percent share in Pudong Development Bank, China's ninth largest commercial bank, an arrangement intended as a platform for expansion here.
Last month, Chinese regulators approved both Citigroup and international competitor HSBC Holdings to issue credit cards with their Chinese partners. HSBC has begun issuing a foreign currency credit card, with partner Bank of Shanghai, and hopes it will be a hit with Chinese traveling abroad.
The banks said their target clientele would be Shanghai residents with annual incomes of more than 50,000 yuan ($6,000), who are among the country's most affluent citizens.
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