Reuters: Chinese tourists’ purchasing power helps UnionPay to become No 1 foreign card brand in South Korea
2014-12-25
Reuters, December 24 (Shanghai) - Thanks to the huge overseas purchasing power by Chinese tourists, UnionPay International, the subsidiary of China UnionPay, is having more say in expanding in the global markets. In the South Korean market, UnionPay has surpassed global competitors to take the first place among foreign card brands in the country.
Bomee Sheng, General Manager of UnionPay International South Korea, said on Wednesday that UnionPay cards have occupied approximately 40% of the market share in foreign tourist spending in South Korea, ranking No 1. This year, the market share of UnionPay International in South Korea will obtain further increase and is expected to exceed the total of all other foreign card brands.
Sheng said most Chinese tourists use bank cards instead of cash in overseas spending and they would prefer to use UnionPay cards as long as convenient local card using environment is available. According to some incomplete statistics, about 90% of the spending of by Chinese tourists in South Korea is through UnionPay cards.
China has been the largest international tourism spending source country worldwide for consecutive years. Last year, the total amount of outbound tourism expenditure approached 128.7 billion US Dollars. According to data released in July by the Global Blue Group, the largest VAT Refund Service System in the world, the per capita overseas shopping expenditure of the Chinese also ranks No 1 with an amount of RMB 6,727.
The huge overseas purchasing power generated by Chinese citizens has provided great support to UnionPay International in expanding to overseas markets. But it is not necessarily the only factor that drives UnionPay to surpass its competitors, convenient overseas card using environments is also a must.
“Purchasing power is right there, if we failed to prepare in advance, the market share would have been grabbed by other card brands,” said Sheng, who also noted that the South Korean market has become one of the most convenient overseas markets for using UnionPay cards after around 10 years of development and an increasing number of Chinese tourists are getting used to using UnionPay cards.
In South Korea, UnionPay credit cards can be used at almost all signature-based merchants. Due to the substantial improvement on transaction procedures and user experience, the transaction volume of UnionPay merchants in South Korea is increasing at an annual rate of 100%. In addition, more than half of the ATMs in South Korea allow KRW cash withdrawal with UnionPay cards.
Carlson Li, General Manager of UnionPay International Hong Kong, said “To become an international card brand, solid foundation is a must. Our foundation originates from the high-speed growth of the Chinese economy in the past 30 years and the rapid growth of Chinese people’s income.”
Hong Kong and Macao were the first destinations in UnionPay International’s efforts to expand to the overseas markets and have now become one of the most rapidly developing regions outside the Chinese mainland market for UnionPay.
Thanks to the huge overseas spending scale of Chinese tourists, UnionPay International is have more say in negotiating with overseas merchants and enjoys more preferential policies than other bank card organizations. Moreover, more and more overseas residents are attracted to apply for UnionPay cards due to the exemption of currency conversion fees for using UnionPay cards outside China and the privileges provided by various merchants. For instance, 10 million UnionPay cards have been issued in South Korea and nearly 20 million UnionPay cards have been issued in Hong Kong and Macao.
Apart from improving card using environment in hot tourist destinations for Chinese tourists, UnionPay International also assisted some less developed countries and regions with the infrastructure construction of their bank card system, providing them payment technology and standards in order to weave a stronger UnionPay global network. In the Mongolian region which is not a hot destination for Chinese tourists, UnionPay has occupied half of the market share.
At the end of November, China UnionPay, China Development Bank and the Bank of Lao P.D.R (BOL) entered into an agreement in respect of the launching the construction of the state bank card payment system in Laos in January next year. UnionPay will participate in the project construction as a technical support provider, with an aim to provide support on construction of payment system facilities, provision of operation and maintenance services, and share the technology and experience in the development of China’s bank card industry.
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