Case Analysis of Citigroup

1140 WordsOct 29, 20055 Pages
Citigroup Case Analysis The purpose of this paper is to debate the pros and cons of Citigroup's entry into the Chinese financial market and their ability to adapt to this foreign culture. Team B debated both sides of the case with strong arguments for and against Citigroup's ability to adapt. The paper will present both sides and conclude with Team B's final agreement on Citigroup's success or failure to adapt in the Chinese financial market. Historical Operations Citibank has operated in China for more than a century and has a long history of goodwill in the country. The company began operating in China in 1902, and by 1930 was one of the country's largest and most important banks. Citibank had branches in nine cities, but the…show more content…
Had Citibank been willing to accommodate the joint venture proposals, they would have created a dominant market share due to their history and experience in China. Change of Strategy In the beginning, Citibank avoided joint ventures with any Chinese domestic partners. Due to the extremely slow growth of expansion of their banking branches, the bank's 2001 annual report announced a change in their strategy. The report stated "Our goal is to grow our market share over the next five years through our embedded bank strategy. By "embedded bank" we mean a bank that has roots in the country as deep as any local indigenous bank, building a broad customer base, offering diverse products, actively participating in the community and recruiting staff and senior management from the local population. Our long history in these regions positions us as a genuinely local bank." (www.citibank.com) To obtain this goal, Citibank bought a 5% stake in a domestic Chinese bank called Shanghai Pudong Development Bank (SPDB) for $67 million. The two banks will establish a 50/50 joint venture company to manage a credit card business as soon as Chinese law will allow. The question arises, when will this occur? Citibank is well-known for their credit card business and should have put top priority into this venture earlier. Citibank has also entered the market for China's non-performing loans. In December 2004, it purchased a substantial share of
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