China's credit card business is poised to blossom into a 100 million card market -- four times the current figure -- in the coming five years.

Bankers said the fledgling industry is still too immature to open to foreign banks which are likely to spark fierce market competition.

As part of its commitments to the World Trade Organization, China has undertaken to open its renminbi business to foreign banks within five years.

"Now we have only four years left," said Hua Qingshan, managing director and executive vice-president of Bank of China, the country's first and largest credit card issuer.

The credit-card business, now on a fast development track, "will grow into a profit generator for domestic banks and will likely be a focus of competition among domestic and foreign banks," he said.

To survive the competition, "we must try our best to catch up with our potential foreign competitors," Hua said.

Industry observers said a credit card war is likely to flare up next year among domestic banks as major players have been determined to grab a bigger market share.

"We aim to maintain our leading position in the market," Hua said.

He said that his bank is exploring ways to make its credit card business more professional.

As a major part of its overall strategy, the bank set up a credit card center in Beijing earlier this year to centralize the control of the bank's nationwide credit card business.

In the past, the bank had one credit card center in each of the provinces, causing great inconvenience for cardholders who travel frequently from one province to another.

"The Beijing center is something between a specialized company and the credit card management department of the bank," Hua said. "But when time is ripe, we will develop it into a specialized company."

He added that the move would depend on the internal restructuring of the bank.

The Industrial and Commercial Bank of China has already established a specialized credit card management company and early reports said the bank intended to seek a separate stock market listing for its credit card company.

Bank of China also plans to issue credit cards across the country next year. Most of China's bank cards have been debit cards or quasi-credit cards which require card holders to deposit a set amount of guaranteed funds at the issuing bank.

Bank of China has already begun issuing credit cards on a trial basis in some southern coastal areas such as Zhejiang and Guangdong provinces and big cities such as Shanghai and Shenzhen.

Foreign banks and insurance companies are also making preparations even before they are allowed to enter the market.

Many are applying to the central bank for licenses to issue foreign currency credit cards in China.

Senior managers of the world's major credit card issuers -- such as Visa and Master Card of the US and JCP of Japan -- have been visiting China frequently in the past two years to show their interest in this market because of its big potential.

(China Daily October 8, 2002)