 |  |
Park Deog-bae | Kim Kun-woo |
By Yi Whan-woo
Korea's card companies are facing calls to seek aggressive globalization strategies to find new revenue sources and overcome a slump in the domestic market, according to experts.
They said Korean card firms need to seek partnerships with global players such as Visa and Master Card to learn lessons.
They added that the firms ― mostly affiliates of financial services groups or conglomerates ― should take advantage of global sales networks of their parent firms to expand their presence abroad.
"Korean firms must secure sufficient investment to succeed outside Korea, but they can't," said Kim Kun-woo, a researcher at the LG Economic Research Institute. "In this regard, forming a partnership with Visa, MasterCard and other global players is strongly recommended for successful globalization."
Kim said Korean card firms have issued bonds to secure capital in won, with which they paid on behalf of their customers on credit. And they are suffering a decline because the amount of their non-performing loans has risen amid an increasing number of debt-ridden customers, who are unable to pay back their card balances, according to the LG Economic Research Institute analyst.
"Insufficient capital will prevent domestic firms from competing against giant rivals, and so forming an alliance with them will help solve this problem," Kim said.
Park Deog-bae, a senior research fellow at the Hyundai Research Institute, echoed a similar view, saying partnerships with multinational banks can also be a solution.
"Global business expansion is a demanding task for local credit card companies considering their competence against bigger firms abroad," Park said. "But issuing credit cards in partnership with commercial banks in the targeted countries can help them succeed globally."
A number of Korean credit card issuers ― KB Kookmin Card, Shinhan Card, Woori Card, Samsung Card, Hyundai Card and Lotte Card ― are affiliated with financial groups and conglomerates. Thus, it is important to make full use of global sales networks formed by their parent groups, according to Kim
He said Hyundai Card could be an example.
The credit card arm of Hyundai Motor Group has used sales networks of the world's fourth largest automaker to boost overseas sales.
"To go abroad, Hyundai Card targeted those who drive cars manufactured by Hyundai Motor Group," Kim said. "The firm provided financial benefits to those customers when they purchased cars manufactured by Hyundai Motor and Kia Motors, making them believe that it's essential to own a Hyundai Card."
Park said such a sales strategy could be crucial to success abroad. However, he said it will be limited to credit card issuers whose parent groups manufacture products for end-users.
"A number of people around the world are familiar with Hyundai Motor and Samsung Electronics as they use cars, mobile phones, and TVs under the two Korean brands," he said. "But for those credit card issuers whose mother companies do not make such end-user products, they need to come up with different strategies to promote their brands."
![[INTERVIEW] Virtual K-pop group MAVE: is more than just pretty pixels](https://img.koreatimes.co.kr/upload/thumbnailV2/bcc387606cf7451c94f51a5978960c9f.jpg/dims/resize/178/optimize)
