In a move to claim a larger share of the market, local banks are thinking of ways to promote credit cards, especially at the year end, today's Shanghai Morning Post reported.
The China Merchants Bank has established many booths at places with large crowds, such as metro stations, convenience stores, post offices and residential communities, and is adding to their promotions by offering many preferential policies such as exempting the annual fees in the first year of use.
"We received more than 200 applicants at just one evening," said a sales employee with the bank.
Currently, most Chinese banks have issued credit cards in Shanghai, but the business is not as profitable as expected. More than 80 percent of credit-card holders will repay the account balance during the grace period.
A bank needs to invest 200 million yuan (US$24 million) to implement a system with three million credit cards, and can generally only earn a profit after five years, said an industry analyst.
Many local banks have confirmed that their existing revenues from credit card businesses were less.
With the domestic bank industry opening to overseas investors by 2007 in accordance with China's WTO commitment, Chinese banks are rushing to claim more of the individual financial market, which is considered to be the main battlefield with overseas banks, said Huang Yong, assistant to general manager of the credit card center with the China Construction Bank. The credit card business will surely have a profit potential, he said.
"If we cannot grasp the opportunity, we will be in an inferior position," Huang stressed.
Establishing sales booths at metro stations will create risks, but the small and mid-size banks without enough clients have to do so, he added.