China UnionPay is a limited joint-stock company founded by more than eighty domestic financial institutes, under the approval of the People’s Bank of China. Its business scope includes 1) the development and operation of a nationally unified, inter-bank bankcard information exchange network, 2) the formulation of operational regulations and technical standards for inter-bank bankcard transactions, and 3) the management and operation of the “UnionPay” brand. China UnionPay was founded in March of 2002, with a registered capital of 1.65 billion RMB and about 1500 employees. China UnionPay’s headquarter is in Shanghai.
As China’s one and only bankcard organization, China UnionPay proposed to build China’s own bankcard brand in order to improve service capabilities and compete with global bankcard companies like Visa and MasterCard. In extensively issuing UnionPay Standard Cards, China UnionPay expects to 1) develop its network both at home and overseas, 2) build an internationalized bankcard brand through a series of measures, including accelerating UnionPay Card product, technology and service innovation, and 3) realize the vision of “Wherever there are Chinese people, there are UnionPay Cards”. Consequently, the independent and united development of China’s own bankcard industry will be accelerated.

The background before Balanced Scorecard is introduced:
China UnionPay decided it wanted to make a fundamental strategy change, from being perceived as a “provider of network services” to a well-known brand in the banking card field. Their new vision became: “Wherever there are Chinese people, there are UnionPay Cards”. From a tactical standpoint, they began to issue UnionPay branded cards and to develop UnionPay Cards’ overseas service spots. The challenges are:
     1.How to make sure that everyone truly understands the strategy
     2.How to translate strategy into operational terms
     3.How to link department and employee’s performance with new strategy
     4.How to measure strategy execution
     5.How to build organizational structure and operational process to match new strategy

The Balanced Scorecard was introduced at China UnionPay, toward the end of 2004, during a process of evaluating and adopting business performance evaluation tools. Through a public bidding process, eGate was chosen as the sole consultancy to help China UnionPay implement a BSC project. As the project moved on, UnionPay gradually realized that BSC was not just a tool that could give new meaning to business performance evaluation, but also could be used for strategy management – indeed, that BSC is primarily a strategy management and execution tool. Jianhua Wan, president of the company, took the lead of the project. A special project team was formed, mainly of Human Resource professionals and staff from the Strategy & Development Department. The team also included leaders and key staff from the Business Management Dept. and Finance Dept., among others.

In the BSC project kick off meeting, Jianhua Wan mobilized the team-members by emphasizing that the implementation of BSC is a great management innovation for China UnionPay, that BSC would help to build China’s own brand, and that the strategy execution benefits of BSC would help UnionPay to face challenges and to improve service capabilities.

Achievements:
Financial performance
In 2006, Financial income increased by more than 66%, domestic transaction volume increased by more than 150%, overseas transaction volume increased by more than 500%, card issue volume increased by 22 times. In sum, the company more than achieved productivity targets set at the beginning of the year.
Non-financial performance:
     1.Brand: Results show that the rate of cardholder satisfaction increased to 71% from 61.6%, the rate of         merchant satisfaction increased to 68% from 65.4%, and the rate of member bank overall satisfaction         reached 90.2%.
     2.Influence on customers: the company’s relationship with member banks, large merchants in industries         such as telecommunications, and business associations (global partners such as Citibank, Discover, etc.),         was measurably stronger.
     3.Performance: China UnionPay’s transaction success rate keeps increasing.

Through the implementation of BSC, the company has improved its concept of strategy implementation, developed capability for improved decision making in support of strategy implementation, and developed the means to track system status and make necessary adjustments. At the same time, the company also optimized its organization structure and overall management process. In fact, the company set up a special project team solely dedicated to fine-tune organization structures and processes. The processes of the company’s marketing function were standardized, and the relationship between front and back offices was improved. Other improved processes included product innovation and the process for evaluating and accepting new member institutes. On the whole, China UnionPay became more scientific, normative and precise in strategy implementation through those efforts. The culture of strategy implementation has also become a well-established feature of organizational life.

After two years’ implementation and application, the Balanced Scorecard approach has effectively driven strategy and performance management in China UnionPay. BSC has improved internal management efficiency and helped to create new management processes, has improved external market service, and has fostered a corporate culture in support of UnionPay card branding.

The BSC process is straightforward. First, the Balanced Scorecard translates ‘strategy thinking’ into ‘strategy visualizations’ through the use of Strategy Maps – a one page picture, if you will, which makes it intuitively easy to grasp how the company intends to achieve its business goals. Subordinate maps can be developed to create strategy flow-down and alignment for all levels of the organization from the corporate level, to group, to the most basic work unit. This methodology brings greater clarity of understanding to all management and staff. Then, BSC helps to set appropriate strategy targets, measures, and initiatives. Through these steps, hypotheticals take on concrete and actionable reality. Then, Balanced Scorecard begins to have its influence on organizational structure, operational process, and performance management, which renovates and upgrades overall management ability. Lastly, Balanced Scorecard builds a periodic review and analysis system for strategy execution which standardizes decision making and lowers decision risk.

In the most recent two years, China UnionPay has made rapid progress in revenue, transaction volume, card issue volume, and new ATM/POS volume. The company has established and maintained peak network system efficiency. The company is gaining much deeper understanding of the international market. Existing products, technology and business processes are being upgraded and renovated. Most importantly, UnionPay’s strategy to become a well-known brand is being achieved for both our external customers and our internal organizational culture.”