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Amex issues cards in china { March 30 2004 } Original Source Link: (May no longer be active)
http://www.foxnews.com/story/0,2933,115638,00.htmlhttp://www.foxnews.com/story/0,2933,115638,00.html
American Express to Issue Credit Cards in China
Tuesday, March 30, 2004
BEIJING — American Express Co. (AXP) has signed a deal with China's largest state-run bank to issue the first American Express-branded credit cards in China, a new but rapidly expanding market for foreign card providers.
American Express and Industrial & Commercial Bank of China (search) expect to issue more than 4 million credit cards within the next decade, ICBC president Jiang Jianqing said Tuesday.
China's consumer credit market is still in its infancy. A lack of risk management and customer credit profiles within the state-dominated banking industry has hampered growth in credit card issuance.
Local banks have preferred instead to issue debit cards that allow transactions to be deducted from a savings account rather than using credit limits and monthly minimum payments.
Burgeoning ranks of newly affluent Chinese, however, are shaping up to be a lucrative consumer market that companies are eager to explore.
The American Express-branded cards will be denominated in both local Chinese currency and U.S. dollars.
In a similar move last month, Citibank announced a credit card partnership with Shanghai Pudong Development Bank Co.
"Credit cards (in China) are growing very rapidly," American Express Co. group president David House said. "They doubled last year, and they will double again this year."
The deal allows ICBC not only to tap American Express's global network but also to receive guidance on risk management in consumer credit.
In turn, American Express — blocked from issuing cards directly to customers in China because of strict foreign investment laws — gains entry to the market through ICBC's branch network, the country's largest.
ICBC will issue the cards, authorize transactions, extend credit, service the debt and bear the risk of the outstanding loans.
The new card will be called the ICBC American Express Credit Card — Peony Express in Chinese. The name is derived from ICBC's existingPeony Card (search), a popular debit card launched by the bank in 1989.
Holders of ICBC American Express will be able to use them at companies accepting American Express worldwide, as well as the 30,000 merchants that accept foreign American Express cards in China.
In return, foreigners holding American Express cards will be able to use their cards at merchants using ICBC's Peony Card network.
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