| In the deepening process of commercializing reform of banks, and along with the emergence of a large amount of newly established commercial banks as well as with the quickening pace of foreign banks'entry into China, the original monopolistic structure of Chinese banking system is gradually broken, customers are regrouped and market is re-segmented between every commercial banks. The competition in this field suddenly becomes intense. Moreover, in the present circumstance of economic globalization and integration, the changes in financial monitoring environment and the continuous innovation of business operating modes make every bank go under the position of confronting a number of existing and potential competitors. And it has become the significant question for Chinese commercial banks how to properly get positioned and directed, and how to grasp opportunities and face challenges in order to get efficiently involved in the market competition aiming to obtain the advantages of it. This article discusses, based on the basic theoretical analysis and environmental analysis of strategy, the modes of competition strategy among commercial banks, and divides commercial banks, from the view of market positioning, into three major categories: market leaders, market challengers and market followers, and demonstrates the strategic measures of these three kinds of banks to gain competitive advantages, and analyzes the developing trend of competition strategy of commercial banks. This article consists of seven chapters. The structure, basic content and main viewpoints are as follows: Chapter One discusses the fundamental theories of competition strategies of commercial banks, including theory of enterprise strategy, financial monitoring strategy and theory of life cycle. In the discussion on theory of enterprise strategy, it demonstrates the contents of strategy, the transformation of strategy theory, elements of strategy as well as strategy echelon. In the study of main points of different theoretical schools such as the Design School, the Planning School, the Positioning School, the Core Competence School, the Resources School as well as the demonstration on the concept of strategy by different scholars such as K.Andrews, J.B.Quinn, H.I.Ansoff, H.Mintzberg, the author considers that strategy is the combination of its performing forms and its essential contents. From the point of performing forms, strategy is a long-term general design on the enterprise's business scope, direction of growth, competition measures and allocation of resources, which represents the characteristics of strategy taking into account of overall situation, far-reached plan, orientation, reality, competitiveness, risks, innovation and comparative stability. From the point of essentials, strategy is a culture, the core of which is a task based on the value orientation and a promise of value advocacy; the operating method of which is consensus, sharing and common behavior of members of enterprise; the carrier and tool of which are the products and service provided by the enterprise. In the discussion on financial monitoring theory, it demonstrates the motive of financial monitoring, the evolution of financial monitoring theory, and analyzes the modes of financial monitoring. Researches show that objective inevitability of existence of financial monitoring is represented in several different parts such as external factors of financial system, incomplete and unbalanced information, and paradox on free competition among financial institutions. The evolution of financial monitoring theory fully shows the strong ties of financial monitoring activities with practice and history, which had been impacted by mainstream thoughts and theories of economics, and the practices and ideas in the financial field at that time. After 20 years development, financial monitoring modes of operation and management by different sectors have been gradually formed in China. But there still exist many problems such as comparatively backward methods andmeasures, weakness of monitoring information supporting system, excessive emphasis on control which leads to restraint of financial innovation. From the point of world financial development, mixed operation and monitoring by different sectors has become a trend. This requires commercial banks to make appropriate relations with monitors, to study the developing status of financial monitoring in an effort to fit themselves in a nice situation for sustaining development as well as to consciously adjust their strategies to the changes of monitoring policies. In the part of theory of life cycle, it discusses life cycle of enterprise and the basic theoretical problems of product's life cycle, and analyzes how the enterprise's strategy is conditioned and impacted in different stages of life cycle. Researches show that theory of life cycle presents a thought on dynamic management that provides a new perspective for consideration on enterprise's strategy. Different stages of development and different scales of enterprises require different types of management. At each turning point of strategies, opportunity and crisis co-exist. If an enterprise is clearly sure of what stage of life cycle they are at, so as to grasp the opportunity of change from quantity to quality and adopt new method and measure of management in order to make breakthroughs and to survive crisis, it can surely make achievements continuously and grow healthily. Commercial banks, as financial enterprises, need to set their own competition strategy and product strategy at different stages of development according to the theory of life cycle. Chapter Two gives an environmental analysis on competition strategy of commercial banks. First, it illustrates the systematic transformation and developing pattern of Chinese banking sector. By analysis of history, it illustrates the developing process of Chinese banking system, from the comprehensive system of "Supply System"style, to specialized system, and finally to commercial banking system. It synoptically demonstrates the overall pattern of Chinese banking system consisting of People's Bank of China as the central bank,four State-owned independent commercial banks as the mainstays, and three policy-oriented banks as well as many other equity commercial banks, urban commercial banks and credit unions, and foreign-funded banks. Second, it analyzes the opportunities and challenges to commercial banks brought by the changes of macro economic environment from five aspects such as economic integration and globalization, credit crisis and debt discharge, adjustment of economic structure, financial monitoring, and market-oriented interest rate. Finally, it illustrates the competition status of Chinese financial sector from three aspects such as competition between banks and non-banking financial institutions, competition between newly established equity banks and state-owned banks, competition between domestic and foreign banks. It discovers, by researches, that 20-year-long reform of Chinese banking system has made great achievements, but at the same time has brought the issues and problems on systematic arrangements, which are further considered to be inevitable under many restrictions in the process of Chinese banking system reform. Severe changes of economic environment require commercial banks to look on the issues of survival and development from a strategic height. Facing the intensive competition in this sector, commercial banks must carefully consider the situation to gain the competitive advantages relying on strategic management. Chapter Three demonstrates the modes of competition strategy of commercial banks. First, it illustrates the basic models of commercial banks'competition strategy from three aspects: strategic goal, strategic positioning and core competence. It comments, through the study on economic theories like new classic economics, contract economics, that maximization of enterprise value is the most reasonable target function in the up-to-date enterprise theories, which functions to lead enterprise on the path of long-term development. Because they form their fund resource mainly through absorbing public deposit of money,commercial banks must concentrate all their business management on realizing the value maximization under the prerequisite of bank's fluidity. From the aspect of strategic positioning, it discusses the issues of sector positioning and market positioning of commercial banks, starting from the theory of sector's competition structure by Michael E. Porter, and further presents analytical model of market positioning, and thus defines market leader, market challenger and market follower among Chinese commercial banks. It is considered after researches that the four major state-owned commercial banks of China can generally be called market leaders among national and local banks; and eleven newly established equity commercial banks nationwide has become challengers to the state-owned banks in certain business fields or in a certain local area; while one hundred and twelve urban commercial banks and newly established branches of each commercial bank stay at the position of market followers. In the aspect of core competence, the author thinks that every potential factors of success owned by banks must be effectively integrated through management. Core competence is just the capability of competition that is used to measure the entire enterprise from the point of transformation trend of productivity's contents under market economy circumstance. Core competence bears the characteristics of uniqueness, dynamic, inseparability and inimitability. Human resource is the key factor of enterprise's core competence. The system of fostering and improving core competence and further transforming it into competition advantages is mainly the enterprise's organization structure and flow system. Second, it divides, according to the difference of market positioning, the ranking competition strategies into competition strategy of market leaders, competition strategy of market challengers and competition strategy of market followers. It also depicts mode traits of different entities of market competition from several aspects such as action goals, strategic focus, strategic methods and strategic measures. The main action goals for market leaders in making choice of competition strategyare to ensure the structure of market competition to be at balanced and stable status, and to keep the distance with the market challengers, but to adopt tolerable policies to the market followers in order to contain the market challengers from the development of market followers. The priorities of strategy of market leaders are to take the leading task of the sector, to keep healthy development, and to obstruct and defend challengers, and to force follower to willingly submit. Its strategic methods ought to be expansion of the overall market demands, protection and increase of market shares. The competition strategy of market challengers is mainly presented in aggressiveness including straight attack, flank attack, multidirectional attack, outflank attack and guerrilla attack. Its choice of strategy ought to be considered from two aspects: calling a truce to market leaders when enterprise resource reaches its limit; trying to discover new marketplaces in which it becomes a new leader, and to challenge the market leader when getting fully prepared with conditions and opportunities. The competition strategy of market followers is not focused in the competition for ranking, but on co-existence with market leaders in a stable market. Existence and development are the fundamental concerns of market followers. It must find out a path of growth straying away from competitive retaliation. The key points for the success of market followers are actively finding market niches for themselves, concentrating on their own market, effectively making R&D, aiming at profits instead of market shares. By imitating or improving the new products publicized by innovators, market followers ought to largely expand their market sales. The banks, as the market followers, can choose among three types of strategy methods: closely following, tracing from a certain distance, and selectively following. Chapter Four, Chapter Five and Chapter Six demonstrate the strategic competition means and measures for market leaders, market challengers and market followers. Focusing on market leader's leading task in this sector andtheir strategic views on sustaining present market shares as well as forcing followers to willingly submit, it demonstrates relevant innovation strategy, complete marketing strategy and Sumo strategy. Focusing on differentiation of challenging targets market challengers must deal with, it illustrates CS strategy (customer satisfaction strategy) used for dealing with market leaders, differentiation strategy used for dealing with equal rivals, and CI strategy (corporation identity strategy) used for dealing with market followers. Focusing on core issues market followers are concerned about, it respectively demonstrates Niche strategy concentrated on concerns of existence and Judo strategy concentrated on concerns of development. What needs to be emphasized is that all these kinds of strategies are not only limited to one certain competition entity. A certain competition entity may also adopt mixture of several different competition strategies according to specific circumstances. In the demonstration, the author selects some of classic cases in Chinese banking sector, combined with practice of these strategies used in author's real works to come to the points of this article. Chapter Seven discusses the developing trend of commercial banks'competition strategy, emphatically demonstrates operating strategy of mixed sectors, internationalization strategy and strategic alliance. This is the choice of modern commercial banks being made in fitting themselves in the trends of international economic development and world economic integration. It, after making analysis on basic conditions of operation of mixed sectors, internationalized operation and establishment of strategic alliance by commercial banks, gives out suggestions on strategies and tactics that ought to be adopted by Chinese commercial banks.
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