From Business Week: "Chinese Cozy Up to E-Commerce"

We found an e-marketing related article in Business Week explaining the growth and demand for credit cards in the Chinese youth market. Traditionally, in China people tended to save their money rather than spend it. In fact, according to the article, the Chinese average household savings rate is currently around 40%, versus the U.S. average which is under 1%. A new trend is emerging in which younger consumers are more eager and willing to use credit cards, resulting in a higher percentage of online sales.

Although the Chinese demand for credit cards is increasing, it is still difficult for people to qualify for them due to inefficient approval processes at Chinese banks. As a result, American credit card companies are gaining market share in China. In order for e-commerce to flourish in China the way it has in the U.S., Chinese banks and credit card companies must improve their services.

Currently, instead of using credit cards, Chinese consumers use virtual money to make online purchases. Virtual money is purchased with real money. We think that Chinese banks would benefit from encouraging online shoppers to switch from virtual money to using credit cards offered by the bank. This change could be accomplished through improving the efficiency of the approval process. They could also raise spending limits to make credit cards more enticing. In order for domestic banks to succeed in retaining customers, they must adapt to the new trend of spending (especially online) over saving. If the banks are successful in doing so, they can track credit card usage and collect more customer data as a result. In turn, the banks would be more successful in their e-marketing strategies.

Read the original article here: http://www.businessweek.com/globalbiz/content/feb2007/gb20070208_810426.htm