Potential Strategies for Hsbc’s Entry Into China’s Rural Banking Sector
Potential Strategies for HSBC’S Entry into China’s Rural Banking Sector
TABLE of Contents
1. Introduction 1
2. Foreign banks’ investment opportunities in rural China 2
3.Existing Problems for HSBC in China 3
3.1 Limitations in farming lending 3
3.2Rural Banking Lack of Talented Persons and IT infrastructure 3
4. Potential Strategies for HSBC 4
4.1 Developing tailored lending products 4
4.1.1 Loans for enterprises and farmers 4-5
4.1.2 Individual lending 5
4.2 Cultivating talented employees 6
4.3 Improving IT infrastructure 6
5. Evaluation of strategies 7
6. Conclusion 8
Bibliography 9-10
1. Introduction
Compared to the deterioration of America and Europe economic situation due to the financial crisis in 2008, China’s domestic demand has grown dramatically in recent times. China has replaced Japan as the secondary largest economy so multinational companies are fighting to enter China’s market to obtain the dominant position. According to Yung (2011), in retail banking, foreign lenders are optimistic about China since the investment industry of Chinese market has remained open for them. Furthermore, farming is the main industry of China, with a vast rural population, but most foreign lenders focus on the big cities of China, ignoring the rural provinces. This could be the next emerging and developing financial markets. Indeed, HSBC, who has the biggest branch network and 162 outlets on the mainland, was the first multinational bank to take part in China’s rural monetary innovation in 2007 (The Economist, 2011). It has already gone ahead to expand rural banking network in China. Although even the Chinese rural financial market apparently shows great potential, there are still many challenges. Providing tailored financial products to satisfy the demands of China’s rural areas is the solution to these challenges. This project will first demonstrate the problems in HSBC’s entering the provinces of China. It will then determine which strategies could
TABLE of Contents
1. Introduction 1
2. Foreign banks’ investment opportunities in rural China 2
3.Existing Problems for HSBC in China 3
3.1 Limitations in farming lending 3
3.2Rural Banking Lack of Talented Persons and IT infrastructure 3
4. Potential Strategies for HSBC 4
4.1 Developing tailored lending products 4
4.1.1 Loans for enterprises and farmers 4-5
4.1.2 Individual lending 5
4.2 Cultivating talented employees 6
4.3 Improving IT infrastructure 6
5. Evaluation of strategies 7
6. Conclusion 8
Bibliography 9-10
1. Introduction
Compared to the deterioration of America and Europe economic situation due to the financial crisis in 2008, China’s domestic demand has grown dramatically in recent times. China has replaced Japan as the secondary largest economy so multinational companies are fighting to enter China’s market to obtain the dominant position. According to Yung (2011), in retail banking, foreign lenders are optimistic about China since the investment industry of Chinese market has remained open for them. Furthermore, farming is the main industry of China, with a vast rural population, but most foreign lenders focus on the big cities of China, ignoring the rural provinces. This could be the next emerging and developing financial markets. Indeed, HSBC, who has the biggest branch network and 162 outlets on the mainland, was the first multinational bank to take part in China’s rural monetary innovation in 2007 (The Economist, 2011). It has already gone ahead to expand rural banking network in China. Although even the Chinese rural financial market apparently shows great potential, there are still many challenges. Providing tailored financial products to satisfy the demands of China’s rural areas is the solution to these challenges. This project will first demonstrate the problems in HSBC’s entering the provinces of China. It will then determine which strategies could
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