Credit-Card Companies Battle in China

The Ms. Magic credit card from China Citic Bank is dotted with Swarovski crystals and offers free beauty treatments and health insurance. Huaxia Bank’s Pretty Lady card, co-issued with Deutsche Bank, entices women with triple points for cosmetic purchases and fitness club memberships. Citigroup, which last year became the first U.S. bank allowed to issue its own solo logo cards in China, offers to waive its first-year annual fee of 300 yuan ($49) for Rewards cardholders applying before March or spending more than 20,000 yuan by the end of December.

They’re all part of a battle for affluent consumers in the world’s fastest-growing market for plastic, even as delinquencies have tripled in the past five years and profits remain elusive. “Credit cards are the ultimate growth area and also the battlefield for banks in China,” says Rainy Yuan, an analyst in Shanghai for Taipei-based Masterlink Securities. “Some may never earn a profit out of it, but they have to join the fight, as that’s the most efficient way of grabbing deposits and cross-selling other financial services.”