Consumer spending stays strong

PUBLISHED : Thursday, 20 May, 2004, 12:00am
UPDATED : Thursday, 20 May, 2004, 12:00am

The central government's efforts to cool the economy are unlikely to deter consumer spending, according to the world's second-largest credit-card company.

Danny Cheung, the vice-president and business manager of Greater China at MasterCard International, said that with the measures targeting only a few selected industries, consumer spending should remain strong.

'I don't think the macro-economic control measures will have much effect on the day-to-day life of ordinary people,' said Mr Cheung. 'The majority of them are still very optimistic about the direction the economy is going.'

Retail businesses, particularly restaurants and department stores, will continue to be the biggest beneficiaries of sustained spending growth.

Mr Cheung also said that MasterCard reported strong first-quarter growth for its Greater China operation, with gross dollar volume up about 28 per cent year on year on the mainland.

He conceded that the data could be distorted by mainlanders' tendency to use the same cards for both commercial and retail purchases. But he said there had been strong signs that spending on consumer goods and services is on an upward trend.

'In the past year, mainlanders have been growing more receptive to the idea of using credit cards as a means of making purchases and we haven't seen any factors stopping this trend,' Mr Cheung said.

He said Chinese banks were also getting more aggressive in promoting their credit cards, further stoking consumer spending. Mr Cheung expected even stronger growth in the second quarter.

Rival Visa International also reported significant growth in the same region, with retail sales volume on Visa cards rising 271 per cent over a year on the mainland.

In Hong Kong, one of MasterCard's major markets in the Asia-Pacific region, gross dollar volume for the first quarter surged 31.2 per cent while the number of transactions rose 9.3 per cent.