JCB Co., Japan's largest credit card company, plans to ally with the Industrial and Commercial Bank of China (ICBC) and other Chinese lenders to increase fees from outside its home market, where competition is increasing.

The company is in talks with ICBC, China's largest lender, and as many as eight other companies, JCB Executive Vice President Masahiro Omoto said. The company announced in September that it had signed a preliminary agreement with the Bank of China.

Expanding in China would help the Tokyo-based JCB gain ground on Visa International and MasterCard International. In Japan, the Mizuho Financial Group and other banks are strengthening their credit-card businesses to boost market share.

"It's becoming harder to survive within the Japanese market alone,'' Omoto said. "The time has come for us to pursue real business overseas.''

At present, only three out of every 100 Chinese citizens carry credit cards, according to the Japan Research Institute Ltd., a private research company based in Tokyo. In contrast, Visa estimates that each Japanese person has 2.57 credit cards on average.

As of March 31, 2004, JCB had 51.6 million cardholders, mostly Japanese, in 189 countries. About 500 Chinese citizens had JCB cards issued in Hong Kong, according to Omoto.

Visa had over one billion cards worldwide as of December 2003, including 203 million in Asia and more than 860,000 in China. Asia accounted for 122 million of MasterCard's 632 million cardholders at the end of 2003.

China, whose 1.3 billion people have household savings of US$1.5 trillion according to the People's Bank of China, only lets local banks issue credit cards. Overseas banks won't be able to offer local-currency loans to Chinese individuals until December 2006.

China has three types of cards: debit cards linked to savings accounts, secured cards that require users to put up collateral, and unsecured cards that don't require collateral.

JCB will offer the banks its brand name on the cards, enabling customers to use them at the 11.7 million restaurants and stores worldwide that accept the Japanese company's card, in return for a fee.

JCB will be going up against stiff competition in China, said Minoru Hattori, an analyst at Okasan Holdings Inc. in Tokyo. "The major players are already in China,'' he said.

There were about 3 million unsecured credit cards in China carrying the Visa logo as of September. The company said last year that it expected to have 50 million customers in five years.

American Express, the world's fourth-biggest credit card brand, is teaming up with ICBC to issue cards while Citigroup, the world's largest financial services company, offers its credit cards with Shanghai Pudong Development Bank, in which it owns a 4.6 percent stake.

HSBC Holdings issues credit cards with Bank of Shanghai and has also set up a three-year agreement to issue them through the Bank of Communications.

(Shenzhen Daily January 10, 2005)