Potential Strategies for Hsbc’s Entry Into China’s Rural Banking Sector

1947 Words8 Pages
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
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Firstly, the quantity of trade of local enterprises has often been limited by farmers who are not being able to raise their manufacture size and quality of produces. Therefore, HSBC has to develop financial services which are suitable for reaping cycles and supply chain to sustain agricultural loan. Secondly, to stabilize the demands and supply relationship of farmers and local business, HSBC should help them to establish a long term and creditworthy supply chain. For example, HSBC could offer farmers revolving fund immediately and it would then enhance the output of farming production and stimulate the yielding supply to local enterprises.
4.1.2 Individual lending
China’s domestic banks, generally, prefer to provide lending to good-sized enterprises than to small enterprises or personal customers. Furthermore, under Chinese laws, smaller companies and farmers have no property to access financial support. Zhao (2010) observes that, compared to developed east part of China, where farmers can obtain lending by valuable and large agricultural tools such as tractors, poor western rural areas are more difficult for farmers to access financial support. Before foreign banks develop rural financial market, people usually access financing support from relatives or friends. To resolve this problem, HSBC needs to

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