China UnionPay: The World's Largest Payment Card Company

Case Code: BSTR546
Case Length: 20 Pages
Period: 2002-2017
Pub Date: 2018
Teaching Note: Available

Price: Rs.500
Organization: China UnionPay
Industry: Payment Card Industry
Countries: China
Themes: Strategic Management, International Management, International Marketing

Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

This case is about Chinese payment card giant, China UnionPay (CUP), which expanded from a domestic monopoly to become the largest payment card company in the world. Founded in 2002, CUP was the only interbank network in China offering bank card services, including credit and debit cards, and mobile and online payments to various banks, credit unions, merchants, and end-user consumers in China. While enjoying a monopoly in China, the company began to expand its international footprint in 2004. By 2012, UnionPay International (UPI) was well-positioned to focus on the company’s global business. The case addresses the strategy the company followed to establish itself in various international markets. By offering tailored services and through its many partnerships, UPI had not only become the preferred payment brand for outbound Chinese travelers, but was also used by a large number of overseas cardholders. In partnership with more than 1,700 institutions worldwide, UPI had enabled card acceptance in 162 countries and regions with issuance in 42 countries and regions, as of 2017.

Going forward, UPI had to defend its long-term monopoly in China’s bank card clearing market following the decision of the State Council of the People’s Republic of China to open up the Chinese credit card clearing market to foreign players like Visa and Mastercard. Moreover, with the growing interest in Real Time Payments across the globe and its potential to emerge as a viable alternative to card networks, UPI needed to reinvent itself to measure up to the challenge. The challenge before Cai Jianbo (Jianbo), CEO of UPI, was to sustain the international success of the company going forward and remain relevant in a market where consumers could soon be leaving card-based payments behind entirely. How can Jianbo help CUP to retain its dominant market position in China’s Payments Market? How can the company navigate the opportunities and threats posed by the rise in Real Time Payments? How can it retain its position as the world’s largest payment card company?

Issues

The case is structured to achieve the following teaching objectives:

Understand the drivers of globalization and why companies go international
Understand how firms internationalize by exploiting the home base advantage
Evaluate the competitive advantage that CUP generated in the Chinese payments card market across the years and which of these can be extended into international markets
Identify the challenges facing UPI in its efforts to retain its position as the world’s largest payment card company
Develop strategies that CUP should use to reposition itself against its competitors and to maintain its dominant position in the Chinese payment card market in the long run

Introduction

Background Note

Monopoly in China

International Expansion

UnionPay International

Globalization Strategy of UPI