China last year became the world’s second largest ATM market, passing Japan, according to Retail Banking Research, a London-based strategic marketing firm.
China’s installed ATM base reached 208,000 machines at the end of last year; Japan’s base totaled 187,123 ATMs, Mark Glover, a Retail Banking Research associate, tells PaymentsSource. Banks and other companies deploy between 400,000 and 440,000 ATMs in the U.S.
China’s state-owned banks–Bank of China, Agriculture Bank of China, China Construction Bank and Industrial Commercial Bank of China–are driving ATM installations by transforming their combined 66,000 branches to service outlets from facilities that handled basic transactions.
Chinese banks in total operate a combined 195,000 branches throughout the country, but when compared with China’s population of 1.3 billion in 2008, the ratio is relatively low, leaving room for further expansion, Glover says.
“Many of the branches are self-service, deploying several ATMs that accept deposits and dispense cash,” says Glover, who spent five months in China surveying the ATM market.
Last year, Chinese banks installed 42,000 ATMs, up 16.7% from 36,000 the previous year. The installed base in 2008 grew 80%, from 20,000 machines in 2007.
ATM manufacturers NCR Corp. and Diebold Inc. of the U.S., Chinese ATM manufacturer GRG, and Germany’s Wincor Nixdorf AG control China’s ATM market, Glover says.
Chinese banks buy the same high-end, full-function ATMs as U.S. banks do, says Gil Luria, a Wedbush Securities analyst in Los Angeles. “China sees itself as a developing economy with central planning, unlike India and Brazil–also fast-growing ATM markets–that purchase low-end ATMs for the current market,” Luria says. Chinese banks also buy cash-recycling ATMs because China is still a “cash-intensive” society, he says.
Diebold, which is based in North Canton, Ohio, operates a sales and services office in Beijing and a manufacturing plant in Shanghai, says Mike Jacobsen, Diebold spokesperson. Diebold also operates smaller offices throughout the country.
“We have a real strong focus on China, and in terms of growth it is one our key markets,” Jacobsen says. “That is why we are spending a lot of time and resources there.”
Diebold recorded an increase in Chinese bank ATM orders leading up to the 2008 Beijing Summer Olympics. After the Olympics, China’s ATM demand remained strong, Thomas Swidarski, Diebold’s president and CEO, told analysts during a first-quarter conference call in May 2009.
That is because China’s domestic retail market took off, Glover says. “The retail market is growing beyond belief,” he says.
