Analysis On Business Strategy Of Foreign Banks In China

With the foreign banks in China become more and more widespread in regional distribution, have more and more branches, and develop their business more and more rapidly, the business strategy of foreign banks becomes a hot academic issue, which is also the first thing to consider when Chinese banks compete with foreign banks. This thesis has five sections to introduce and analyze the business strategy of foreign banks, as the background of the process of opening up China's banking industry.In the first part of thesis (that is introduction), the relevant research of the operation of transnational banks, China's banking industry opening up and the market strategy and business development strategy of foreign banks of scholars from home and abroad is outlined, the theoretical and practical significance of this subject is introduced. The main viewpoints and research method are also given.PartⅡreviews the history of opening up China's banking industry. From the first foreign banks entered China in 1979, to the WTO transition period ended in 2006, and China entered a period of the banking industry fully opened, the process can be divided into four stages, as follows: the initial stage from 1979 to 1993, the rapid development stage from 1994 to 2001, the 5-year transition period from 2002 to 2006, the fully open stage from 2007 to now. Overall, in the whole history, the quantity of foreign banks increase, the scale of their assets grows, they have gradually adapted to China market, and know the financial needs of Chinese clients. At the end of this part, this thesis discusses the corporate-guided policy of foreign banks which China's financial supervision department carries out positively right now. This policy not only gets foreign banks supervision in our country into line with international norms, but also protects the interests of Chinese depositors for blocking the international financial risks. It also has an important significance to maintain China financial security.PartⅢanalyses the business strategy of foreign banks in China in detail. There are three aspects, market strategy, region development strategy and business development strategy. In the market strategy, the foreign banks have two ways, greenfield investment and cross-border merger. Greenfield investment can be divided into four forms, representative offices, branches and joint venture banks, independent subsidiaries. When foreign banks want to set up a branch, they should consider local economy and customer needs and their own conditions. When foreign banks enter China market through buying stocks of Chinese banks, that is cross-border merger. Through this way, foreign banks can avoid temporary restrictions on region and business and understand China market and clients earlier than others. The most prominent feature of cross-border merger between foreign banks and Chinese banks is that holding shares instead of controlling corporation. Internationally, one bank buys some of another bank's stocks usually with the purpose of control. While in China foreign banks can not control any Chinese banks because of restrictions by the relevant laws and regulations. In addition, the targets of foreign banks increase fast, now including city commercial banks and rural cooperative banks. In the region development strategy, the first areas foreign banks entered was eastern coast, where economy and financial market developed fast, per capita income was higher, and a lot of potential clients lived in. With the capacity of foreign banks in China grows rapidly, as well as related guide policies, more and more foreign banks set up branch in the West and Northeast. This thesis also analyzes the development of foreign banks in some representative cities. The state of business of foreign banks in these cities can totally show the development trend of foreign banks in the future in some areas. In business development strategy, the foreign banks accelerate to develop RMB business, keep the advantages of foreign exchange business, and concentratedly develop the core products. Foreign banks' core products include personal financial services, housing mortgage loans, credit card and the QFII business. We can see the big advantage of foreign banks in these products, such as rich experience of overseas markets, network all over the world, advanced technology equipment and marketing means, as well as famous brand. All the core products are middleman business. While in the traditional deposit and loan business, foreign banks avoid Chinese banks' advantage field, and select SME loan, who has a great demand of financial services but supply is small.PartⅣdiscusses the influence of foreign banks entering China market from three levels. At the macro-level, from the point of view of finance industry, foreign banks has increased the difficulty of China's finance supervision, and challenged the mode of China's finance separate supervision. At the micro-level, from the point of view of Chinese banks, they will compete with foreign banks for business, especially in the middleman business. Foreign banks have clear target clients, excellence service concept and mature corporate culture. While Chinese banks exist obvious insufficient in these aspects.On the basis of analyzing the influence of foreign banks, partⅤdiscusses what should Chinese banks do to face these challenges, and the corresponding policy recommendations include perfecting financial laws and regulations of China's financial system, paying attention to the supervision of financial derivatives, strengthening the cooperation between Chinese banks, accelerating the development of SME and rural finance, implementing customer strategy, improving service levels.