Jan 12, 2018 in Analysis

Citibank’s Co-operative Strategy in China: The Renminbi Debit Card

Problem/Issue Analysis

This case studies the launch of Citibank (China) Co. Ltd’s Renminbi debit card. Through a signed tactical collaboration agreement with China’s ‘CUP’ UnionPay, its debit cardholders were initiated to a new and easier convenience of accessing the latter’s immense network. The latest achievement, the bank’s strategy of establishing its presence, proved to be fruitful in a rapidly growing emerging Chinese market. It has been able to do so through a succession of planned alliances. The central issue in this case is the bank’s cooperative alliance with a perceived competitor in the banking sector. This gave the competitive aspect involved in the banking industry. Did advantages outstrip risks in the co-operative strategy and its launch of a joint product?


Stakeholders in this case are: customers – everyone that has a banking account and enjoys the privileges of banking within the Chinese market, specifically in this case are those who hold debit cards in Citibank (China) Co. Ltd. It also includes all potential account holders who prefer the use of debit cards in China. Shareholders – all those individuals and organizations that have vested interests in the company’s growth and realization of profit margins. This includes the mother company of Citibank located in the United States. Rival competitors – these include all other banking agencies that have a vested interest in the banking population of China. It involves CUP (aforementioned) which is also a player in the debit card-banking sector.

Citibank’s Co-operative strategy in China through utility of the Renminbi Debit Card

Citibank, through a strategic maneuvering, has evolved over time being influenced majorly by the changing business and political atmosphere in China. Through the country’s venture into the WTO in 2001 (World Trade Organization) and initiation of measures in opening up its banking sector, the country started a path of formal banking because of its growing population. Citibank, an international banking corporation, had favored the setting up of branches instead of subsidiaries. Realizing its slow pace in growth, the bank decided to review its strategy through the entry into the marked as a locally embedded bank. It did this through buying the stakes in different banking entities within China.

The year 2005 entailed the announcement of an alliance enabling CUP cardholders to access the bank’s (Citibank) worldwide network of ATMs. Vis-à-vis Citi’s global cardholders were gaining access to foreign-enabled CUP ATMs. Reforms within the Chinese nation entailed the reformation of its banking sector. Through its entry into the WTO, China undertook a series of measures including liberalizing its affairs through opening itself to foreign-based businesses and refocussing on its markets by integrating into the global economic arena.

Through its removal of restrictions based on geographical location, foreign banks were allowed to undertake individual Renminbi transactions. This proved to be the turning point as major foreign banking giants transformed their interest in the nation. Local integration gave the bank a prospect of extending its outreach through its expansion of available products/ services, thus enabling a closer engagement with local Chinese clients.

The above closer outreach enabled the bank to launch its Renminbi services to the local population. Prior to 2001, China’s banking arena was quite restrictive, thus limiting Citibank’s growth. However, with its inclusion into the WTO, the banking environment was perceived as a growing and competitive market. Thus, foreign firms would be able to bring in their marketing competences into the Chinese market. The need for domestic currency loans to growing Chinese industries aided the bank’s realization of funds through the equity and debt markets within the republic.

In my opinion, due to the huge competition with domestic banks, which offered cheaper loans and were rooted in cheaper retail deposits that enabled lower funding costs, Citibank agreed to participate in joint ventures/ alliances. This strategy was to enable its exploitation of strong commercial ties and presence in China aided by its experience (in budding markets), and the enormous resources that its proceeds and size offered.

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