(Yicai) July 9 -- American Express will continue to increase its investment in China because there is still a lot of room for growth in the market, according to the chief executive officer of the Chinese joint venture of the US credit card issuer.

American Express has a long-term perspective and will keep supporting the development of Express Hangzhou Technology Services even though the JV is still unprofitable despite having the Chinese bank card clearing business license for four years, Zhu Yaming told Yicai in an interview.

Express Hangzhou became the first foreign-backed JV to receive a network clearing license from the People’s Bank of China in August 2020. American Express holds a 55 percent stake in the company, while Chinese third-party payment service provider Lianlian DigiTech holds the remaining 45 percent stake.

The reason Express Hangzhou has not yet turned profitable is the need for continuous heavy upfront investment in infrastructures, Zhu noted, adding that the company’s earnings results are improving.

Express Hangzhou’s comprehensive loss shrank 19 percent to CNY1.3 billion (USD178.9 billion) last year from the previous one, according to the Hong Kong-listed Lianlian’s 2023 financial report released in April. Revenue more than tripled to CNY329 million (USD45.3 million) in the period.

As the credit card market is becoming saturated and the economy is entering a downward cycle, Chinese credit card firms relying heavily on installment interests will face great challenges, so adjusting their strategies to the annual fee mode, which is American Express’ specialty, is likely the main survival path, Zhu explained.

Despite paying annual fees, American Express global credit cardholders enjoy various value-added benefits, which result in high renewal rates and low overdue and bad debt rates, Zhu said.

Express Hangzhou has partnered with 22 card issuers and 31 acquirers in the Chinese mainland. Its cards are accepted by point-of-sale machines at tens of millions of merchants and supported for card-binding transactions on six major Chinese mobile payment platforms, helping cardholders complete online payments on overseas and domestic e-commerce platforms, offline quick-response code payment, and cashier payment.

Editors: Tang Shihua, Futura Costaglione