Multinational banking in China after WTO accession: a survey
| DOI | https://doi.org/10.1108/13581980910934027 |
| Published date | 20 February 2009 |
| Date | 20 February 2009 |
| Pages | 29-40 |
| Author | Chen Meng |
| Subject Matter | Accounting & finance |
Multinational banking in China
after WTO accession: a survey
Chen Meng
Centre for International Business, University of Leeds, Leeds, UK and
University of International Business and Economics,
Beijing, People’s Republic of China
Abstract
Purpose – The purpose of this paper is to understand the market entry dynamics of foreign banks in
China.
Design/methodology/approach – The paper employs multi-method approaches combining both
questionnaires survey data and qualitative interviews. Also, integration of internalization theory (at
the macro level) and strategy literature (at firm level).
Findings – The paper clarifies why and how foreign banks enter the Chinese market, and strategies
adopted to cope with local market dynamics; also, the paper identifies major trends and key
competitive advantages of foreign banks.
Practical implications – Major advantages and weaknesses have been identified, which will help
foreign entrants to make greater inroads into the domestic banking market. The paper shows how to
manage risks and make governance structure more efficient and transparent, which are urgent tasks
for policy makers.
Originality/value – The paper utilizes the first nation-based dataset to investigate the Chinese
market, and offers practical implications for local regulators and policy makers and bankers.
Keywords Multinationalcompanies, Banks, China, Market entry,Emerging markets
Paper type Research paper
Introduction
Banking services share most of services nature of being intangible, non-storable
and untransportable, and cannot be traded without requiring the providers or
receivers to physically relocate. Multinational banks do not implicitly differ from the
manufacturing firms, therefore theories derived from manufacturing MNEs are likely
to be applied to explain banking internationalization. Existing research of
multinational banking focuses on developed countries (Goldberg and Saunders,
1980; Goldberg and Johnson, 1990; Fuentelsaz et al., 2002), little light has been shed on
developing countries. The market entry and development of foreign banks in China is a
phenomenon that demands greater attention from both academics and practitioners as
China’s economic status further strengthens. It is believed that the banking secto r in
China provides grounds for generalizing the identified results to other financial service
institutes. Firstly, banking is an important sub-sector of the services industry and
shares most of the service features in general. Secondly, the banking sector has been
used in prior studies to analyze trends in the financial service industry.
The mainstream international business literature focuses on the analysis of the
nature of the banking industry. Finally, the opening up of the regulatory environment
in China makes it attractive for financial institutions to invest. Hence, the findings we
propose on internationalization drivers, evolutionary entry strategies and competitive
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
Multinational
banking in China
29
Journal of Financial Regulation and
Compliance
Vol. 17 No. 1, 2009
pp. 29-40
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581980910934027
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