Wal-Mart Launches China Credit Card

September 18, 2006

BEIJING -- Wal-Mart Stores Inc., the world's largest retailer in terms of sales, announced the launch of its first credit card in China in conjunction with Bank of Communications, a major Chinese bank.

The venture is likely the first credit card issued by a foreign retailer, analysts say. It marks a milestone in China's evolving consumer market, where less than 5% of the population have credit cards, according to industry estimates.

The Bank of Communications Pacific Wal-Mart credit card marks "a completely new cooperation between the finance and retail industry," the bank said.

The card will initially be launched in six Wal-Mart stores in Shanghai, Nanjing and Fuzhou, and "soon spread over the country," said a bank official.

Wal-Mart officials in China said the card is a regular credit card that can be used anywhere, but that will provide users special discounts at its stores. It will be a dual-currency card that can also be used anywhere outside China.

In June, media reports said the Bentonville, Arkansas, company had been close to issuing a credit card with another Chinese bank. A Wal-Mart spokesman in China didn't rule out other credit-card announcements and said the company, which has about 60 stores in China, "will continue to introduce new services that can add benefits to the customers."

The Bank of Communications' credit-card unit is jointly run with HSBC Holdings PLC, which owns a 20% stake in Bank of Communications. In recent years, foreign banks have begun forming joint ventures with local banks to issue dual-currency credit cards, but none are profitable so far, analysts say.

"China's credit-card market is growing very fast and is beyond infancy stage now," said MasterCard International economist Yuwa Hedrick-Wong.

McKinsey & Co., estimates that credit-card profits in China could hit $1.6 billion by 2013.