Low fee incomes and lack of merchants are but a few of the risks that mainland players must consider
China's rapid economic growth and rising number of 'new rich consumers' are drawing new lenders to the mainland credit card market in ever-increasing numbers.
Industry veterans warn, however, that making a profit from card lending in China's competitive market will not be easy and only those with the right strategy will succeed.
Bain & Co, a global consultancy firm, estimates that outstanding card advances in China could reach US$16 billion by 2010, from US$3 billion in 2004, fuelled by economic growth, increased overseas travel, intensified foreign competition, and regulatory initiatives.
Not only local lenders are being lured to the expanding market. Foreign player HSBC Holdings has worked with the Bank of Communications, the fifth-largest lender in the mainland, to offer credit cards since last year, while Citic group partnered with Shanghai Pudong Development Bank and began offering co-branded cards in Shanghai in 2004.
But while acknowledging that the mainland's credit card business has the potential to grow, William Leung Wing-cheung, general manager and head of personal financial services at Hang Seng Bank, cautions that this does not mean it would be easy for lenders to make money.