Dissertation - Fdi Impact on Chinese Banks

10017 WordsAug 1, 201141 Pages
Key Words: FDI, Chinese retail banks, Chinese banks strategy, emerging countries, banking market share, Revenue and Profits, impact. Introduction In contemporary social and with the world econo006Dy expand. It has produced a great number of multinational banks, those banks in order to achieve more profit, they expand and develop to emerging countries, which is called foreign direct investment (FDI). So, in this report, in order to much better understand some information about FDI, especially FDI impact of foreign retail banking investment in China on the commercial performance Chinese retail banks. Besides, by using Chinese bank industry as a example. In this research, these can be broken down into four broad categories: one is reasons…show more content…
Those are, joint ventures, foreign strategic investment, foreign bank branch and wholly owned foreign banks. Foreign banks branches grown up very rapidly, the first one was built in 1981 in Shenzhen. Seventy four foreign banks from 22 different countries made 209 foreign bank branches with sub branches of 79 in 25 Chinese cities at the end of 2006 (Xu, 2011). Reasons for foreign retail banks to come to emerging countries such as China: China acquired the third position across the world evolving largest banking market after USA and Japan (Heijes, 2008). The Bank of America entered first time into Chinese market in 1981. Their aim was to build a strong brand name in Chinese market. In 2003, China declared that its economic growth rate had been at the highest level of 9.1% in the last seven years. Although some economist predicted that this growth rate will come down in the second half of 2004 but it remained the same. These economic growths along with eminent national saving rates and vast population of china provided a golden opportunity to the foreign banks to invest in Chinese market. In late 2001, when china agreed with WTO, it committed to evenly open the banking industry to foreign investment banks over a period of five years. The approach was to make it fully liberal at the end of 2006. On the other side, foreign banks were anxiously waiting to avail this great opportunity of obtaining Chinese market access during
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