Money honey

Chinese villager Zhao Shanxiong can now enjoy life playing mahjong all day rather than working the fields, thanks to his children sending money from overseas.

Zhao is just one typical villager in Lianjiang in East China's Fujian province, which has a long history of people venturing overseas in search of new opportunities.

Almost every resident there has a family member that has migrated for employment, education or vocational training. Over the years, these villagers have sent back money to boost the local economy through United States-based Western Union's money transfer service.

The global money-transfer agent plays an important role in transferring small remittances with 365,000 agent locations in more than 200 countries and territories.

Different from large financial companies, Western Union is focused on scattered, small-amounts of money, but in large numbers. Overseas migrants consist of its main customers. It originally began as a telegraph message operator, but as communications advanced it focused its business on money transfers.

To save costs, the company usually opens locations in travel agencies, convenience stores, supermarkets and pharmacies in the US.

However, due to the foreign exchange policy in China during the past 13 years the company has cooperated with Postal Savings Bank of China, the Agricultural Bank of China and China Everbright Bank to build 25,000 agent locations across China.

Western Union posted revenue growth of 6 percent and transaction growth of 4 percent in China, the world's second-largest remittance recipient country, where money transaction reached $4.5 billion last year.

"Among 50 million overseas Chinese, about 7 million moved overseas 10 or 15 years ago and are our main customers for the Chinese market, " says Andrew Ong, regional vice president, Asia of Western Union.

He says some new migrants in the overseas countries have difficulty speaking foreign languages, so Western Union provides 450 agent locations with Chinese language service.

Christina Gold, president and CEO of Western Union says that the continued volatility and uncertainty in the global financial system will not deter Western Union's development plans in China.

But she also says the company sees the trend that the currency amounts of single transactions will decline in the face of the global economic downturn, but the number of transactions will increase.

"In Spain, because the property industry has been slack recently, there are fewer job opportunities in the industry, resulting in less money that migrants can send home," she says.

Western Union announced at the end of last month that it would eliminate some 200 jobs around the world.

The company didn't mention the locations, however it said that the mass dismissal would also touch some managing positions.

Western Union cited the global financial crisis as the reason, or "a challenging economic environment," as the company said in an announcement.

The cuts represent roughly 3.3 percent of Western Union's global workforce of more than 6,000 people.

The decision was unexpected especially since last month the company announced an 11 percent increase in profits.

Western Union is a company earning from "small money", Gold says. If a customer transfers money over $7,500, he or she has to provide more documents. Ninety percent of the company's business consists of money transactions below $7,500.

The reason that Western Union is so popular among overseas migrants is its convenience.

For example, Zhao doesn't need to have bank account and neither do his children in the US. He just goes to nearest Western Union agent location, and fills out the "Receive Money Form", then he can immediately receive money by showing his ID card and filling out a one page form.

It only takes a few minutes for his children to send money to Zhao.

Banks also offer money transfer services with lower transfer fees or even for free, but they only provide the service for people who have bank accounts.

That's why Western Union dominates the market in money transfers, with 17 percent of market share in the global market.

But thanks to limited policies, it's the only such company that can conduct overseas remittances in China.

China has 200 million migrant workers. If the country would open its domestic market to more foreign transfer agents, it is not hard to image how large the potential market is.

In the US, Western Union has expanded its services to walk-in cash bill payments and enabled its customers to pay their mobile phone, utility and recurring household bills. It also has been piloting mobile money transfers.

Western Union offers person-to-person money transfers, and also person-to-bank account money transfers from Singapore to China.

Gold says she hope China would catch up with these services soon with a more open foreign exchange policy.

(China Daily 12/08/2008 page6)