Citibank in Asia - Launching the Credit Card in Asia Pacific

Questions Citibank: Launching the Credit Card in Asia Pacific

1. Should Citibank launch the card product? Why or why not?

Citibank should definitely launch the card product in the Asia Pacific region. The opportunities presented are very clear. Specifically:

• There is a huge potential market, talking in terms of volume of people and potential card holders. This market is also growing
• They are all countries that are economically developing at a fast pace and with strong projections on its average growth rate (See Exhibit 4). This have attracted many international banks, so Citibank must launch the product as soon as possible to have a good market penetration
• Financial infrastructure and systems are being developed, which will ease the introduction of credit card
• Citibank is known worldwide as a prestigious bank, which could drive consumers to choose their card instead of the competitor’s

Of course, there are also some threats or problems in the environment, like the very strict regulations over foreign banks that exist in some countries or the existence of saturated markets, but these also present opportunities for the company to develop innovative distribution channels and to choose wisely the markets which they are going to enter in order to succeed.

1. Given its upscale customer base, how should Citibank position its card, should it decide to launch it?

Even though some of these countries have scarce credit experience, several profiles show that they value outstanding service and see credit cards as a prestige, so Citibank should guide by those standards, but paying attention to the particular values in each country. According to this, Citibank should segment the market: middle-income households and high-income households, and offer different products for these two segments. This would be an effort to provide products adapted to consumers’ needs and to what they value, delivering diverse value propositions. Also, depending on other variables, they could do further segmentation based on other tendencies like consumer behavior or psychological characteristics. For example in countries like India or Malaysia they should emphasize status, since there is a little base of consumers than can afford credit cards. While in countries like Australia and Hong Kong, they should use mass-marketing strategies, because these countries are much more developed and there is fierce competition within the banking industry.    

1. Which countries should Citibank enter first?  Which countries should it avoid?

Assessing the legal environment and market potential of the countries through the information given in the case, I would suggest that Citibank avoid Korea. The reasons for this are that they already had a bad experience with the card business there. Also, there are highly strict foreign exchange control measures and nothing suggests that the situation could change in the near future.

Citibank should enter first in countries like Australia and Hong Kong, since they are countries very well developed (westernized) and have a strong credit card marketplace, allowing Citibank to compete and fight for capturing the market.