The Chinese Credit Card Market

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6 November 2009


The credit card market is developing rapidly in China. By 2010, there could be more than 200 million people in China with an annual income of more than US$2,000. These people are potential credit card customers, and with the current number of credit card users at only 38 million, there is tremendous potential for future growth.

In a new report, The Chinese Credit Card Market, Celent examines trends in the Chinese credit card industry, analyzing cardholders, customer segmentation, products, and the competitive landscape.

The credit card market in China is very different from the markets in Taiwan and Hong Kong. Revolving credit usage rate is relatively low, so net interest income accounts for only about one-third of the total income of the credit card business. Annual fees are also low in the Chinese market. In terms of credit card choice, the following factors are important: convenience, adequacy of the credit limit, annual fee policies, services, and website features.

In 2005, in terms of marketing, the workplace marketing model accounted for 40%, followed by the bank websites, which accounted for 35%. In 2008, sales from bank websites far exceeded sales from workplace marketing. In addition, low-cost direct sales (such as call centers and direct mailing) received good responses. This change of preferred channel has created an opportunity for large banks to pursue the website model and for small banks to use a direct sales model. On the whole, however, sales via the Internet and telephone are still proportionately lower.

The annual income of China's high income population is equivalent to one-fourth of the annual income of the entire population, with a growth rate of 22.5%. High-end consumer card spending is more than US$10,000, which is 50 times that of ordinary credit cards.

"China's high-income population is a very important market, and will be even more important in the future," says Hua Zhang, an analyst with Celent's Asia Research Group and author of the report. "Low-income user groups are attracted by discounts, rewards, and low installment fees, while high-end customers value services."

The population with an annual income of more than US$17,600 is mainly concentrated in Beijing, Shanghai, Shenzhen, and Guangzhou, and this concentration will increase. In 2015, people in this income bracket in these four cities should account for 45% of China's population.