Citibank: Launching the
Credit Card in Asia Pacific
Erica Baumann
Paul Davis
Nathan Hahn
Rebecca Leeds
Lauren Lettieri
Overview:
Geography of Asia Pacific
The Nature Conservancy: http://nature.org/wherewework/asiapacific/
Overview:
The Pacific Ocean’s Eleven
 Hong Kong (1902)
 Taiwan (1964)
 Australia (1965)
 The Philippines (1902)
 Guam (1969)
 Singapore (1902)
 India (1902)
 Malaysia (1904)
 Indonesia (1918)
 Thailand (1967)
 Korea (1967)
Overview:
Citibank’s Mission Statement
Citibank’s mission in the Asia Pacific
region was to be the most profitable
provider of a wide array of financial
services to an increasingly affluent and
middle-income market, and to reach
the rapidly growing middle-income
households in this region.
Overview:
Citibank in Asia Pacific
1978-1989
1981: First foreign bank to
enter the local trade finance
market in Taiwan
1978: Citibank’s
Asia Pacific
Consumer Bank
had established
its consumer
business in Asia
1983: Citibank enters
the credit card market
in Hong Kong
1982: Acquired
Diners Club in
Thailand
1989: Talwar
reintroduces the idea of
a credit card launch in
Asia-Pacific
1986: Begins a
period of growth
in Thailand and
the Philippines
1989: Malaysia
and Australia have
saturated credit
card market
Overview:
Keys Questions in Asia Pacific
Should Citibank launch a credit card in
the Asia Pacific region, and in which
countries?
How should the particular card
launches be tailored to each specific
country?
Business Problems
 Citibank wondered whether they could adopt a
mass-market positioning to acquire enough credit
card customers and still maintain its up-market
positioning with the current upscale branch banking
customers
 Pricing the card too low would conflict with
Citibank’s stated positioning however pricing it too
high might mean low customer acceptance
 Citibank’s management were concerned that
consumers’ attitudes and credit card usage patterns
differed by country
SWOT Analysis:
Strengths
 Undisputed leader of the marketplace
 Australia: customers see the credit card as an “important
shopping tool”
 Hong Kong: people are used to credit cards- relatively
affluent population
 India: strong economic development in late 80’s
 Malaysia: large successful business population
 Singapore: “one of the world’s largest center of
traditional trade and services”
 Thailand: rapidly growing nation (foreign investment)
SWOT Analysis:
Weaknesses
 India: consumers do not like to use revolving credit
 Indonesia: relatively poor country with small upper class;
not many qualified for membership
 Australia/Singapore: saturated market
 Taiwan: before 1989, laws restricted credit card business
 Taiwan: culturally not acceptable to owe people money
 Korea: financial problems in credit card business coupled
with stringent local restrictions
SWOT Analysis:
Opportunities
 Australia: credit card in conjunction with their banking
services
 Hong Kong: want to target customers outside branch business
 India: credit card penetration is low
 Indonesia: upper class growing fast
 Malaysia: culturally acceptable to revolve credit
 Philippines: credit card penetration very low
 Singapore: society prides on innovation and technology and
see credit card as convenient
 Taiwan: most wealthy and best educated country in region
 Thailand: strong economy = consumer spending
SWOT Analysis:
Threats
 Australia: AMEX and Diner’s Club seen as symbol of
status
 Malaysia: many other options to choose from in 1989
(MasterCard and Visa)
 Singapore: “high-tech mecca” has attracted many
multinational corporations
 Taiwan: restrictive laws prohibited thus industry is in
early stages
 Taiwan: AMEX and Diner’s Club worldwide respected
reputation
 Citibank’s undifferentiated view of one marketplace
Most Likely Case Scenario
 Citibank will enter the market
– ''Sometimes, when an economy is under the
most stress, you get presented with the biggest
opportunities,'' says Citigroup Vice-Chairman
William R. Rhodes
 Cross selling products
 Market will accept new credit card
penetration (except for few countries)
 Targeting growing upper class market
Most Likely Case Scenario
Citibank’s credit cards as symbols of
status
Citibank’s customer base in Asia Pacific
region will increase and expand
Customers will use their cards for a
wide variety of purchases
Most Likely Case Scenario
 Australia: More services will be offered to
maximize financial management
 Hong Kong: Reach customers outside
business segment by cross selling
 India: Increase merchant acceptance
 Indonesia: Incentives and higher credit
limits opportunities
 Malaysia: Build up credit for future uses
Most Likely Case Scenario
 The Philippines: Market program geared
towards gaining acceptance
 Singapore: Highlight convenience’s of
Citibank
 Taiwan: Promote awareness of the emerging
credit card industry
 Thailand: Two card approach to attract all
customer bases
 Korea: Will not enter due to government
regulations
Worst Case Scenario
 Established competition beats Citibank
 Population too poor to qualify (Indonesia)
 Government regulation and culture limits
acceptance
 Failure of customers to fulfill payments- large debt
 Different countries not accepting of consistent
multinational strategy
 Rejection due to national pride and culture (Taiwan)
 Saturated markets not accepting of another credit
card (Singapore)
Best Case Scenario
 Citibank adjusts strategy for specific countries’
needs (including options)
 OR All countries accept Citibank’s multinational plan
 Become a penetration leader (Philippines)
 Utilize Singapore for latest technology
 Government law changes opens doors (Taiwan)
 Take advantage of some countries’ growing
economy and affluence
 Make money off of late payments and interest
Strategy: Market Entry
Greenfield Market Development
Direct marketing program
– Direct mail
– Take-ones
– Direct sales force
– Bind-ins
Strategy: Pricing
Low joining fee to induce more
customers
Higher annual fee to provide a steady
recurring revenue
Premium pricing for the Citigold card
to attract affluent cardholders
Strategy: Options
$USD as standard currency for all
cards
Regional Card Center
– Lower costs because of economies of
scale
– Capability to do quick work product
launches in Asia Pacific
Strategy: Business
Segments
 Non-Resident Indian Business (NRI)
– Special offering for Indian customers who
did not reside in India
 International Personal Banking (IPB)
– To service the growing group of affluent
Asian clients with global financial needs
Strategy: Core Products
 Citi-One
 Mortgage Power
Auto loans
 Ready Credit
 Citigold
 CitiPhone
ATMs
Go Decisions:
Taiwan, India, Indonesia, Malaysia, the
Philippines, Singapore and Thailand
 Reasons
– Countries growing along with infrastructure
– Rapidly growing upper and middle class
 Recommendations:
– Two card approach- middle class and upscale
customers targeted individually
– Create status for credit card
Go Decisions:
Australia and Hong Kong
 Reasons:
–
–
–
–
Most developed Westernized nations
Strong credit card and financial infrastructure
On average, 2 cards per person
Wide variety of usages – shopping  travel
 Recommendations:
– Two card approach
No Go Decision: Korea
 Reasons:
– Regulations do not allow banks to issue cards
with revolving credit
– Only local currency credit cards allowed
– Poor diplomatic relations
– Infrastructure and legislation are not conducive
to credit card usage
 Recommendations:
– To risky to enter the market
Population Breakdown by
Income: Asia Pacific
Countries
% of Population
% of Cards
# of People
# of Cards
Cards Per Capita
Population
# of Cards
Above 25000 12500-25000
2%
27%
23,757,500
3,929,250
0.165
4%
35%
42,145,000
5,011,250
0.119
1,145,300,000
14,460,000
6000-12500
5%
31%
58,157,500
4,498,000
0.077
2000-6000
8%
7%
88,000,000
1,021,500
0.012
< 2000
81%
0%
933,240,000
0
0.000
Break Even: Asia Pacific
Advertising Budget
Overhead
Direct Costs
$ 2,500,000.00
$ 61,000,000.00
$ 22,500,000.00
TOTAL COSTS
$ 86,000,000.00
# of Cards
Average Annual Fee
Average Joining Fee
$
$
Revenue
$ 86,292,000.00
900,000
56.13
39.75
Population Breakdown by
Income: Malaysia
Malaysia
% of Population
% of Cards
# of People
# of Cards
Cards Per Capita
Population
# of Credit Cards
Above 25000 12500-25000 6000-12500 2000-6000 < 2000
5%
10%
20%
45%
20%
10%
45%
45%
0%
0%
850,000
1,700,000
3,400,000 7,650,000 3,400,000
38,000
171,000
171,000
0
0
0.045
0.101
0.050
0.000
0.000
17,000,000
380,000
Break Even: Malaysia
Advertising Budget
Overhead
Direct Costs
$ 2,500,000.00
$ 61,000,000.00
$ 22,500,000.00
TOTAL
$ 86,000,000.00
# of Cards
Average Annual Fee
Average Joining Fee
$
$
Revenue
$ 88,200,000.00
900,000
64.00
34.00
ANY QUESTIONS?