Is China big enough?

Standard Chartered Bank will extend its private banking business into Shanghai to woo China's growing number of millionaires.

The bank targets clients who have a net worth above US$1 million that could be invested in private banking services. This service was first launched in Beijing in late June.

According to Elaine Lai, the head of wealth management of Standard Chartered Bank China, almost 70 percent of its personal banking clients are Chinese mainland residents. The bank also plans to target the credit card market.

Standard Chartered is one of two foreign banks that have applied to conduct their own brand credit card business in mainland China. The other is the Hong Kong based Bank of East Asia.

Mainland China has 345,000 millionaires with a net worth of US$1 million in 2006, a jump from 320,000 in 2005. The UK bank is also keen to enter the trading scheme which allows private investors to trade Hong Kong shares directly using their mainland bank accounts,

Currently only Bank of China in Tianjin runs trial program that allows private investors to trade Hong Kong shares directly via mainland accounts. It is unclear whether overseas banks will be able to tap into the business.

While overseas banks, banking on their long established expertise and worldwide network are winning over the millionaires in mainland China, many more foreign banks have also arrived, eager to sink their teeth into the pie. Would the heated competition just push down rates, or is the market big enough for everyone?