Analysis Of Credit Card Market In China

It has been nineteen years that Korea and China have been established diplomatic relations together. There have been positive interactions in economical, cultural and educational areas and these led to many succeeds. After Korea and China established diplomatic relations, exchanges in financial areas including bank industry also credit card industry have been developed and spread, and this is a global transition. After reform and opening, China adopted credit cards market. In1978, Guangzhou branch of the Bank of China and the Bank of East Asia Limited in Hong Kong began to work on credit card business together, and in1985Zhujiang branch of the Bank of China issued the very first credit card in China. This was starting point of credit card industry in China. Chinese government established China Union Pay to develop bank-card payment network throughout all regions in China in March,2002. Also, to acquire Chinese credit card market by prior occupation, attempts to advance other foreign banks and credit cards companies have been established.Chinese credit card market has been develop rapidly after China government joined WTO and opened its financial industries internationally. Especially, after China joined WTO, the credit card market in China has accomplished huge growth based on development policy, issue of alliance credit cards or establishment of co-pay systems supported by government. China has great opportunities to achieve improvement in credit card industries via Beijing Olympics in2008and Shanghai Expo in2010. Public Bank of China(PBOC), which is a central bank in China, has defined regulations for production of public currency, and also regulated IC chip usage for all credit cards used in China since2004.Also, regulations and permissions for development, approval and issue of application of IC chip for credit cards are performed in China. It is expected that Chinese credit card market will grow and expand more rapidly as economy and living standard of people in China are improved, and credit card market is open globally.Yet, debit card is the leading type of cards in China. Credit card market in China is at transition stage from early phase to developmental phase, so credit card market accompanies many problems including lack of risk management experiences and network for credit card affiliate payment, people’s living patterns preferring saving to consumption and so on. As the amount of credit card issued is increased rapidly, over use of credit cards or distressed-debt are also increased as Korea experienced during IMF economic crisis.Chinese credit card market is attractive to foreign banks, but it will not be competitive compared to other credit card markets. This is because Chinese government set discrimination against foreign banks in terms of regulations; thus Chinese credit market is lack of transparency to regulate import of foreign credit card industries. With this problem, lack of branches or stores makes it difficult to procure clients of foreign banks.In conclusion, current structures and situations of Chinese bank industries and its opening and developmental transition will be discussed in this article. Also features and characteristics of credit card markets in Korea and U.S.A. will be analyzed to suggest effective management strategies to improve the credit card market in China.