Citibank: Launching the credit card in Asia Pacific

1
Citibank Launching the credit card in Asia
Pacific

• Session 18

2
Golden rules for China

• Everything is possible
• Nothing is easy
• Western business logic does not apply
• It is a fun project as long as there are no
  deadlines
• You must persist things will eventually come
  your way
• Patience is the essence of success
• You dont know China means they disagree
• New regulation means they have found a new way
  to avoid doing something
• Internal regulation means they are mad at you
• Basically, no problem means big problem
• When youre optimistic, remember rule 2
• When youre pessimistic, remember rule 1

Source HBS Case
3
Nationalization, expropriation

• British energy companys (JKX) fight to prevent
  Ukrainian state agency from expropriating its
  assets
• Avoiding bottlenecks that may necessitate
  nationalization
• Hong Kongs National Information Infrastructure

4
Nissans foreign manager

• Carlos Ghosn, President, Nissan Motor Company
• Brazilian-born, French-educated and
  American-experienced
• Japans corporate hero outsiders to undertake
  reform
• Ignored a lot of advice, You cannot do this,
  because you are in Japan
• Using English, selling noncore assets, installing
  merit-based system, unwinding the keiretsu
  system, shutting down plants and laying off work
  force

5
Market intervention

• U.S. economic prescription
• Leave it to the market
• Spending billions to help airlines and
  considering help for insurance companies
• Intellectual property rights
• Patents for AIDS drugs should be sacrosanct in
  the developing world
• Threatening to cast aside Bayers patent for Cipro

6
Globalization A changed outlook

• Immigration flows
• Open borders transport and shipment of products
• World trade
• Global investment
• Cost of capital

7
Citibank

• Should Citibank launch the card product? Why or
  why not?
• Given its upscale market base, how should
  Citibank position its card, if it decides to
  launch it?
• Which countries should Citibank enter first?
  Which countries should it avoid?
• How should Rana Talwar convince his country
  managers and headquarters to accept the card
  product? What organizational mechanisms does he
  have in his control?
• If you choose not to introduce the card, what
  would you do to achieve the 100 million earnings
  target by 1990? What kind of branch banking
  products should the bank offer?

8
Credit card business

• Launch
• Credit card facilitates expansion
• Cross selling banking products
• Asia Pacific region growing
• Card penetration is low

• Dont launch
• Lacks local country manager and HQ support
• Countries in transition lack infrastructure
• Late arrival Amex Diners, local banks

9
Citibank

• 1989-90 Citibank launched its credit card
  business in Indonesia, Singapore, Taiwan,
  Thailand, Australia, India and Malaysia
• Market entry with highest priced product
• Multifaceted marketing program
• Direct mailers, advertising campaigns, take one,
  direct selling
• RCC in Singapore

10
Citibank

• 1991 Citibanks card launch in Asia Pacific, a
  phenomenal success
• In most markets, Citibank outpaced Amex
• 1992 Citibank issued over 1 million cards
  accounting for 225 million in revenue.
• Citibank repositions itself in Hong Kong to a
  premium position

11
Citibank
Entering so many markets in so short a time,
markets which were considered either saturated
or undoable for infrastructure reasons with a
premium priced product pitted against free local
cards and with American Express entrenched in
most markets this strategy called for courage
and resilience from the entire organization. We
used all the knowledge that was available in the
United States and adapted it to our local
environments and worked tirelessly to share
experiences successes, failures, frustrations,
setbacks and victories across all
countries. - Talwar