BEIJING: FOREIGN CREDIT CARD FIRMS NEED LOCAL PARTNERS
Move at odds with pledge to boost market access made to US president previously
CHINA is pressing foreign payment card companies to form local joint ventures for onshore operations, said three people familiar with the matter, a move that would counter a pledge on market access Beijing made to United States President Donald Trump.
The push to get foreign card issuers to enter into equity tieups with Chinese companies, instead of running fully-owned units, comes ahead of Trump’s visit to China this week, and could further delay access to China’s rapidly-growing market for foreign card companies like MasterCard and Visa.
The Trump administration has been a fierce critic of what it sees as China’s mercantilist policies. In September, Robert Lighthizer, the US Trade Representative, criticised China for forcing companies into joint ventures.
Trump also called the US trade deficit with China “horrible” ahead of a trip to Asia that started on Friday and includes visits to five countries, including China.
Foreign card companies have been lobbying for more than a decade for direct access to China, which is set to become the world’s No. 1 bank card market by 2020, according to GlobalData, a research company.
In 2012, the World Trade Organisation ruled that China was discriminating against foreign card companies.
In May, Beijing and Washington agreed on a deadline for China to issue guidelines for the launch of local operations by US payment network operators, leading to “full and prompt market access.”
Some of the foreign card issuers, who were looking to set up their wholly-owned operations in China, have “informally” been told by the authorities to enter into equity joint ventures with local companies, said the three people, who have been briefed on the discussions with the central bank.
It was not immediately clear whether the foreigners would be allowed to own majority stakes in the joint ventures, said the people. In most other financial services businesses, foreign companies are allowed to own minority holdings. Reuters