Give Them Credit

Before GE could reach out to Chinese consumers, it had to learn to work with Chinese banks.

Last January, Michael Barrett stood before a group of more than 20 Chinese bank employees in a Guangzhou conference room. Barrett, the CEO of GE Money China, was there to direct what GE calls a “workout session” — the lively brainstorming meetings the company holds to wring inefficiencies out of processes. In October 2006, GE Money had just launched a credit card with Wal-Mart and Shenzhen Development Bank (SDB), a Chinese bank in which GE has agreed to invest $100 million — a 7 percent stake. Chinese financial institutions aren’t known for speedy customer service — it generally takes them more than a month to put a new credit card into a customer’s hands — and GE was eager to get these cards out faster.

The session got off to a slow start. Bank employees weren’t accustomed to GE’s interactive style, which calls for employees to step up, share stories, and scrawl their thoughts on flip charts. But Barrett, a New York native with the build of a linebacker and the confidence of someone who has risen quickly through GE’s ranks, threw himself into the task, jotting down ideas and posting them on the wall.

The Chinese participants, it turned out, had plenty to say. The bank’s system for credit-card approvals frustrated them. Application forms were cumbersome. When one shift finished its work and the next began, delays were the rule. “After an hour, people got very excited,” says Barrett. “That’s what we want.” By day’s end, the group had a list of steps for tightening the process, from streamlining application forms to assigning every pending application to a particular agent.

No Time to Lose

GE Money’s eagerness to press ahead in the face of uncertainty should come as no surprise. This year, China swings open the doors to its financial-services market and in anticipation, global banks such as Citibank, Standard Chartered, HSBC, and Bank of America, along with nonbank players such as GE Money, have been buying stakes in China’s banks.

None of them will have an easy time. China’s banking sector is weighed down with bad loans, bloated payrolls, and unhappy customers. But the companies that can make their Chinese partnerships work win a tantalizing prize: a chance to tap into potentially the world’s biggest consumer-finance market.

The consumer-finance arm of GE, GE Money is one of its fastest-growing divisions, with businesses in 57 countries and markets. Over the course of hundreds of acquisitions and partnerships (many of them in Asia), GE Money has earned a reputation as a savvy and adroit dealmaker. In particular, the company is admired for its ability to cross cultural barriers and integrate its operations with those of its partners, even in tricky markets such as Japan and Latin America.

If GE’s integrate-and-grow model works in China, one of the most daunting markets for multinationals, its approach is bound to be imitated. If it doesn’t work, the prospects for other financial institutions to work with China’s rickety banks may be called into question.

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