Foreign Bank's Development Strategy in China Market
Abstract
This paper is mainly a research into foreign bank’s development strategies in China market from perspectives of the advantages and disadvantages of foreign banks' entry into China’s market, particularly foreign stakes, in Chinese banks. The paper begins with economic theories of foreign stake acquisition. Then it analyses the current conditions of China banking industry, from perspectives of structure and development overview, structure of China banking assets and problems confronting domestic banks. Opportunities and challenges facing Chinese banking industry after China's WTO entry are summarized in the next part from perspectives of specific commitments in China banking sector, new situations of Chinese banking industry, problems of China's banking industry and impact of foreign banks on Chinese banking industry. The paper suggests that Chinese banks should bring in foreign strategic investors. A great number of examples have been collected and analyzed to show the tendency and feasibility of foreign stake acquisition. Three key points in the acquisition process have been carefully studied. The paper proposes ways to solve the problems arising from such foreign banks’ entry. Foreign stakes, while encouraged, should be viewed with caution by both Chinese and foreign participants.
Key word: foreign banks, development, China’s financial market