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Challenging Confucius: Western banks in the Chinese credit card market

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  • Evans, Justin W.

Abstract

China has commanded a great deal of interest from virtually all U.S. business sectors. The Chinese credit card market is now particularly intriguing for Western banks. This article examines the strategic minefield that Western banks must navigate as they attempt to compete in the Chinese credit card industry. As an example, Bank of America (BOA)--fresh from purchasing a 9% interest in China Construction Bank (CCB) a few years ago--is now contemplating a joint venture with CCB. The new company will be tasked with leading the Chinese credit card market. Specifically, two questions are addressed: (1) whether the Chinese banking market is a sound option at this time; and (2) whether China affords an optimal environment for credit. The analysis yields several strategic lessons, and encourages caution on the part of Western bank executives as they enter the Chinese market. In particular, BOA officials must appreciate the timing of their joint venture's evolution. Additionally, BOA officials should strongly consider financial ventures other than credit, as Chinese culture should prove particularly resistant to serving as a profitable customer base in the short- and middle-timeframes.

Suggested Citation

  • Evans, Justin W., 2008. "Challenging Confucius: Western banks in the Chinese credit card market," Business Horizons, Elsevier, vol. 51(6), pages 519-527.
    • Handle: RePEc:eee:bushor:v:51:y:2008:i:6:p:519-527
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    References listed on IDEAS

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    1. Gupta, Anil K. & Govindarajan, Vijay, 2000. "Managing global expansion: A conceptual framework," Business Horizons, Elsevier, vol. 43(2), pages 45-54.
    2. John P. Bonin & Yiping Huang, 2002. "Foreign Entry into Chinese Banking: Does WTO Membership Threaten Domestic Banks?," The World Economy, Wiley Blackwell, vol. 25(8), pages 1077-1093, August.
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    Cited by:

    1. Chong, Terence Tai Leung, 2024. "Economic Prospects of the Development of the Guangdong-Hong Kong-Macao Greater Bay Area: The Competitive Advantages and Importance of the Service Sector," MPRA Paper 120638, University Library of Munich, Germany.
    2. Deanna Sharpe & Rui Yao & Li Liao, 2012. "Correlates of Credit Card Adoption in Urban China," Journal of Family and Economic Issues, Springer, vol. 33(2), pages 156-166, June.

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