Associated Press

Beijing, March 30:

American Express Co has signed a deal with China’s largest state-run bank in hopes of tapping into the country’s new but rapidly expanding market for foreign-branded credit cards.

American Express and Industrial & Commercial Bank of China expect to issue more than four million credit cards within the next decade, ICBC president Jiang Jianqing said on Tuesday.

China’s consumer credit market is still in its infancy, with a lack of risk management and customer credit profiles within the state-dominated local banking industry hampering growth in credit card issuance.

Local banks have preferred instead to use debit cards that allow transactions to be deducted from a savings account rather than using credit limits and monthly minimum payments.

Burgeoning ranks of newly affluent Chinese, however, are shaping up to be a lucrative consumer market that companies are eager to explore. In a similar move last month, Citibank announced a credit card partnership with Shanghai Pudong Development Bank Co.

“Credit cards (in China) are growing very rapidly,” American Express Group president David House said. “They doubled last year and they will double again this year.” The deal allows ICBC to not only tap American Express’s global network, but also receive guidance on risk management in consumer credit.

In turn, American Express, blocked from issuing cards directly to customers in China due to strict foreign investment laws, gains entry into the market through ICBC’s branch network, the country’s largest.

ICBC will issue the cards, authorize transactions, extend credit, service the debt and bear the risk of the outstanding loans.The new card will be called the ICBC American Express Credit Card - Peony Express in Chinese. The name is derived from ICBC’s existing Peony Card.

Holders of ICBC American Express will be able to use them at companies accepting American Express worldwide, as well as the 30,000 merchants that accept foreign American Express cards in China.