This message was clear at a three-day banking conference jointly organized by the Asian Banker and the Shanghai Banking Association, which began in Shanghai yesterday.

Since foreign banks brought the retail banking concept, including fees, to China earlier this year, Chinese bankers have also been exploring new services and sources of income other than lending.

Currently, Chinese banks offer only a handful of consumer credit services in addition to the most basic deposit mechanisms.

Statistics show that the aggregate amount of retail lending business accounts for less than 8 per cent of overall lending in China.

Consumer banking contributes the lion's share of profitability to most US banks, said Joe Belew, president of Consumer Bankers Association to some 100 bank officials attending the conference, adding that Citigroup's global consumer businesses generated 25 percent growth last quarter.

China's retail banking includes approximately 8 million people, mainly located in the top 15 cities and metro areas, according to Paul Sheehan, head of Asian banking and finance research at ING Securities, adding the number will reach 35 million by 2007 - the key date when China will fully open its finance sector.

Though a small percentage of the total population, it will still make China's market more than six times that of Singapore and Hong Kong combined.

The tremendous market potential attracts both domestic and foreign players.

Besides Citibank, HSBC and Standard Chartered, which have applied for credit card businesses, General Motors and General Electric's financial arms are also seeking partners in China to set up joint venture financial companies.

Facing competition, local bankers have learned the consumer banking strategy very quickly, according to Emmanuel Daniel, editor-in-chief of Asian Banker.

A source close to local banks said their non-performing loan ratio in consumer banking was about 9 to 12 per cent, much higher than their foreign counterparts.

Risk management had thus become one of the major concerns among Chinese banks in the post-WTO era, said Ling Tao, vice-governor of 's Shanghai branch.

（China Daily August 15, 2002）