Reform Of China's Banking System And Localization Strategies Of Korean Banks In China

China joined the WTO in December 2001,forcing adjustments upon domestic industries,especially the banking sector.Banking in China is the dominant section of the finance industry as throughout the period of reform banks have provided the financial stimulus to the development of SOEs under the government's economic plan.The development of the banking sector began in 1979 alongside other major economic reforms,but it wasn't until the 1990's that significant changes to the system were made.First of all,to grasp thoroughly opportunity and threat to make advance,be fully aware of the environment where in will be operating is the most important.In this prospect,in this thesis I reviewed the significant reform policies and decisions that have affected the banking sector.Details have been given of the impact of accession to the WTO,general reform and opening policies,regulatory and legal changes,and how these have all had a significant impact on the development and integration of foreign banks into the Chinese market.In relation to the development of foreign banking in China,I have assessed both the challenges and advantages that foreign companies have faced when trying to gain a foothold in the Chinese market.Specific focus has been given to legal,regulatory, geographic,financial,currency,and business scope restrictions.Advantages include the massive earning potential in the Chinese banking market and the fact that the majority of this earning will come from areas that foreign companies have access to,such as the major cities along the east coast.The thesis has also shown how the loosening of regulatory restrictions has also more recently begun to assist in the integration of foreign banks into China.In the following section I utilize the preceding assessment of the situation facing foreign banks in order to make some suggestions as to how foreign banks,especially Korean banks,can exploit the current and future banking environment in China in order to gain market share,provide competition to Chinese banks,increase the level and type of products and services available,and assist in the development of a healthy banking system.The full impact of the most recent reforms will become clear only in several years. Therefore,these issues should be revisited in future research.