March 14, 2008 30th Efma Convention: Leadership in retail finance13 p.m. & 14 March 2008 - Paris

Xu LuodeXu LuodePresidentChina UnionPay

1

China UnionPay

March 14, 2008

March 14, 2008

Welcome to HUAWEI TechnologiesChina Unionpay Brings Opportunities

presentationp y g pp

toEuropean Retail Finance IndustryEuropean Retail Finance Industry

XU Luode, President and CEO of China Unionpay

March 14, 2008

Table of Contents

Part I. CUP, growing with China’s economy

Part II. Visions of CUP

P t III CUP d E t il fi I d tPart III. CUP and European retail finance Industry

3

March 14, 2008

Part I CUP, growing with China’s economy

1. Development stages of China’s bankcard Industry

2 CUP meeting market needs2. CUP, meeting market needs

3. CUP’s five major achievementsj

4

March 14, 2008

Development stages of China’s bankcard Industry

• Cards could not be used in different banks’ terminals or in different regions

• Inter-bank transactions started in big cities

• Cross-region transactions started in big cities

5

March 14, 2008

CUP, meeting market needs

• Strong market needs

– To support inter-bank cross-region usage of cardsTo support inter bank, cross region usage of cards

– To improve the transaction success rate

• The establishment of China Unionpay

– Date：March 26, 2002

Shareholders：over 70 domestic commercial banks– Shareholders：over 70 domestic commercial banks

– Headquarters：Shanghai

6

q g

March 14, 2008

CUP’s five major achievements

1. Cultivating and developing domestic acceptance market

2 Promoting bankcards with CUP BINs2. Promoting bankcards with CUP BINs

3. Strengthening cooperation with overseas partnersg g p p

4. Actively promoting the innovation of payment products and iservices

5. Cooperating with domestic banks to educate cardholders5. Cooperating with domestic banks to educate cardholders

7

March 14, 2008

Achievement 1 - Cultivating and developing domestic acceptance marketacceptance market

By the end of 2007,

• 740 000 domestic merchants• 740,000 domestic merchants

• 1,180,000 domestic POS terminals

• 123,000 domestic ATMs

8

March 14, 2008

Achievement 2 - Promoting bankcards with CUP BINs

• In 2003, obtained the ISO BINs for CUP cards

• By end of 2007 530 million cards issued with CUP BINs• By end of 2007, 530 million cards issued with CUP BINs, including 16.5 million credit cards

• In 2007, CUP system switched 4 billion inter-bank transactions, with a total amount of 438 billion USD.

9

March 14, 2008

Achievement 3 - Strengthening cooperation with overseas tpartners

• win-win cooperation with overseas partners

• competitive pricing and effective promotions to Chinese• competitive pricing and effective promotions to Chinese outbound travelers

• By the end of 2007, CUP’s overseas network include:

125 th d h t 174 th d POS t i l– 125 thousand merchants, 174 thousand POS terminals

– 366 thousand ATMs366 thousand ATMs

10

March 14, 2008

CUP network covers 26 countries and regions

• Asia Pacific: Hong Kong, Macau, Singapore, Japan, Korea, Malaysia, Th il d A t li N Z l d tThailand, Australia, New Zealand, etc.

• Europe: France, Germany, Italy, Switzerland, Netherlands, Austria, Spain, Belgium Luxemburg TurkeyBelgium, Luxemburg, Turkey

• North America: the United States

11• Africa: Egypt

March 14, 2008

Achievement 4 - Actively promoting the innovation of payment products and servicespayment products and services

• Mobile payment

• Internet payment• Internet payment

• Fixed-line phone paymentp p y

• Inter-bank fund transfer

• Cross-border remittance

12

March 14, 2008

Achievement 5 - Cooperating with domestic banks to educate cardholderseducate cardholders.

• Solution to the strong preference of cash

Initiated various trainings to promote usage of bankcards– Initiated various trainings to promote usage of bankcards

– Enhanced the domestic recognition of bankcard payment g p y

• Bankcards become a preferable payment tool by urban ChiChinese

13

March 14, 2008

Part II Visions of CUP

1. China’s golden opportunities

2 CUP’s five major targets2. CUP s five major targets

14

March 14, 2008

China’s golden opportunities

• Two big events

– Beijing Olympics in 2008– Beijing Olympics in 2008

– Shanghai World Expo in 2010

15

March 14, 2008

Rapid increase of GDP and Foreign Trade

GDP Foreign Trade

5.06

USD tng

4.55USD tn

3.4

5 0

4

5

3

4

3

2

3 2.22

3

1

2

1

0

2007 20120

2007 2012

16

March 14, 2008

Rapid increase of Retail Consumption and Inbound/outbound TravelersInbound/outbound Travelers

Inbound/outbound travelersTotal Retail Consumption

250250million

2.02

USD tn

173200

1.21.5

100

1501.2

1

50

00

0.5

02007 2012

0

2007 2012

17

March 14, 2008

CUP’s five major targets

1. To build a more extensive acceptance network both in and outside China

2. To forge an international bankcard brand with wide influence

3. To set up a large-scale payment technology center

4 T i i lit i li ith i t ti l t d d4. To improve service quality in line with international standard

5. To establish a risk control system with advanced technology,5. To establish a risk control system with advanced technology, full coverage and effective monitoring

18

March 14, 2008

Part III CUP and European retail finance industry

1. The increasing trade and tourism between China and EU

2 CUP a new option to European Retail finance industry2. CUP, a new option to European Retail finance industry

19

March 14, 2008

The increasing trade and tourism between China and EU

• 2003 - 2007, trade between China and Europe from 162 billion USD to 448 billion USD, annual growth rate 44%

• In 2006, China’s investment in EU exceeded 2 billion euros.

• Currently, over 30 European countries enjoyed ADS (Approved Destination Status)

20

March 14, 2008

CUP, a new option to European Retail finance industry

• To further develop acceptance network in Europe

• To encourage Chinese travelers to use CUP cards• To encourage Chinese travelers to use CUP cards

• To continuously improve the domestic markety p

• To provide more efficient and convenient payment services for E i itEuropean visitors

21

March 14, 2008

Common Cause, Same Goal and Mutual Benefit

• To follow China’s steady steps towards the world

• To bring China opportunities to Europe• To bring China opportunities to Europe

• To achieve mutual success with European retail finance pindustry

22

March 14, 2008

THANK YOUTHANK YOU

23