In a speech delivered today at the China Development Forum in Beijing, Ajay Banga, President and CEO of MasterCard (NYSE: MA), shared his views on how innovation can help drive economic growth. Banga noted that China’s current wave of industrialization – which has resulted in unprecedented growth based on low-cost labor – is challenged and the country needs a new model centered around continuous innovation.
“China needs to focus on the right areas to enhance its innovation ecosystem – an effort which will be instrumental in advancing China’s Small and Medium Enterprise (SME) segment,” said Banga.
Bringing to bear MasterCard’s analysis and global experience in payments innovation before more than 500 audience members consisting of global CEOs, world leaders, and renowned scholars, Banga recommended four key imperatives in order for China to move forward in creating an economic environment more favourable for SMEs and future growth:
- Create a more level playing field for SMEs by removing the significant structural advantages that State-Owned Enterprises have over SMEs;
- Reform the interest rate regime, so that China’s banks will increase their focus on SME lending in order to preserve good interest margins;
- Harness a local banking model with right mix of global banks, large national banks and smaller regional / local banks to create efficiency in financing and serving SMEs; and
- Develop Electronic Payment Innovations that meet SMEs’ unique needs.
At the event, MasterCard released a White Paper titled New Wave of Growth in China - Innovation through Developing SMEs to provide insights on how SMEs will drive innovation and help China sustain its growth in the current global economic environment.MasterCard was the first international payments organization to enter the Chinese market, having established the MasterCard Beijing Representative Office in 1987 after receiving approval from the People’s Bank of China. Over the past 25 years, MasterCard has established deep roots in China and contributed to the development of the country’s electronic payments industry by working closely with financial institutions and domestic payment technology firms to make payments within and outside China more reliable, efficient and secure.