China's rapidly expanding credit card industry is being boosted by the country's growing popularity among tourists, according to a report by Visa International.

 

By 2020, the country is expected to become the world's leading tourist destination.

 

With more and more visitors to China, credit cards such as Visa are becoming increasingly common.

 

"From 2006 to 2010, overseas tourists' Visa card spending is expected to soar to US$250 billion on the Chinese mainland," said Li Sheng, vice-president of Visa Information System (Shanghai) Co Ltd.

 

Last year, overseas tourists spent 239 billion yuan (US$29 billion) on the Chinese mainland, up 13 percent year-on-year. Of last year's total, 22 billion yuan (US$2.75 billion) was spent using Visa cards. In the first half of 2006, the amount spent using Visa cards reached 11.76 billion yuan (US$1.38), up 4.1 percent year-on-year.

 

"The credit card market in China is growing fast mainly because of increased spending," said Li.

 

Inbound tourists to China are mostly from the Asia-Pacific, Europe and the United States.

 

According to Li, the 2008 Olympics is expected to bring a 30 percent increase in the Chinese mainland's foreign exchange income, with the figure reaching US$60 billion.

 

Shanghai was the most popular destination among mainland cities for Visa International cardholders in 2005, accounting for 22 percent of total Visa spending. Beijing ranked second, followed by Shenzhen.

 

But growth in credit card use in small and medium-sized cities is the fastest, with Dongguan in South China's Guangdong Province notching up a 53 percent year-on-year rise in 2005, while Suzhou and Xiamen in East China witnessed year-on-year increases of 38 percent and 34 percent in 2005.

 

"Foreign tourists are increasingly choosing such small cities as their destinations, as many have already been to the big cities," said Li.

 

Dongguan is a city known for its modern processing and manufacturing industry. Visa card spending in Dongguan last year was largely business-related, being concentrated on hotels, restaurants, bars and airlines.

 

"Its industrial advantages help it to attract many foreign investors and tourists to the city," said Li.

"But a large gap still exists in some cities between the number of foreign-currency cards and renminbi-denominated ones."

 

According to the report, Visa International cardholders spent their money last year mostly on accommodation, shopping in department stores, and purchasing artwork and handicrafts.

 

Since 1986, Visa has been the sole authorized payment provider for the Olympic Games.

 

"The Olympic Games is a great business opportunity for local banks that issue credit cards, " said Li.

 

But the upcoming 2008 Beijing Games also present a number of problems.

 

Double-currency credit cards such as China Union Pay and Visa, which are popular in China, will not be able to bear the Olympic logo, according to Li.

 

"We are the only authorized payment provider with the International Olympic Committee, and the logo comes under intellectual property rights," Li said.

 

Visa chiefs are looking at ways to get around the problem, including printing Union Pay's logo on the back of new cards instead of the front.

 

Visa is also planning a stock market listing in the near future.

 

"We are now undergoing restructuring, and plan to be listed in the next 12 to 18 months," said Li.

 

"After listing on the stock market, all our current members will become stockholders."

 

(China Daily November 21, 2006)