OCTOBER 2004

GE Consumer Finance Goes to China

Within the next year, General Electric Consumer Finance will be starting a consumer credit business in China to serve the growing Chinese middle class. According to the American Banker, the company will initially partner with a Chinese bank to offer financing for customers of retailers. GE Consumer Finance is the largest private-label credit card issuer in the world, with operations in 41 countries. However, foreign banks are prohibited from issuing credit cards in China on their own and must partner with a Chinese bank.

Chinese consumers carry 621 million debit cards linked to savings accounts, but credit cards are relatively rare. According to Visa International, at the end of 2003 there were approximately 24 million secured general purpose credit cards in circulation, and only about 1.7 million unsecured cards. Merchant acceptance of general purpose cards is far smaller in China as well. About 110,000 merchants accept Visa cards in China, compared to 5 million in the United States.

GE Consumer Finance CEO David Nissen told the American Banker that "the Chinese customer is starting to become far more comfortable with credit. There are lots of debit cards in China; now credit cards are becoming a status symbol." Certainly the size of the market warrants a close look. The country's middle class—those who earn $5,000 or more per year—is expected to double by 2010 to more than 160 million people.