The number of credit cards in use on the Chinese mainland has
more than doubled over 2006 to more than 40 million, FT.com
reported citing a report released by McKinsey, the consultancy, on
Friday.
The report estimates the number of credit cards in the Chinese
mainland has doubled each year for four years in a row to reach
about 43 million by mid 2007.
However, given its huge population, China has very low
penetration rates. It signifies a huge potential for an industry
that would mean 13 billion yuan (US$1.73 billion) in profits by
2013, according to the report.
A recent survey by CCTV shows that only 20 percent of Chinese
own a credit card, while in some developed countries the
penetration rates are over 80 percent.
Most of the Chinese tend to be conservative, and they feel more
comfortable with the practice of spending the money they really
own.
According to the McKinsey report, 94 percent of credit card
holders pay off the balance of their cards before they have to make
any interest payments.
"We have still not made money on credit cards and this is
because of Chinese people's spending culture," said a senior
Chinese banking official.
He said Chinese banks were working to increase the use of credit
cards and the length of time customers take to repay but were
mindful of the risks involved in indiscriminate card issuance and
eager to avoid the repayment crises seen in Taiwan Province and the
Republic of Korea in the past decade.
China is now making efforts to open up its financial industry
wider. Analysts say the government is soon expected to open it to
overseas banking groups such as HSBC and Citigroup, which are now
only allowed to offer co-branded cards with domestic partners.
For the past few years the central government has encouraged the
creation of a consumer credit industry to promote private
consumption and balance China's rapid economic growth.
As the necessary payment infrastructure expands rapidly across
the country, Chinese consumers are using credit cards to pay for an
increasing array of goods and services.
(China Daily September 14, 2007)
