Prospectus of Foreign Banks in China after permission to undertake RMB busines

Discussion in 'Economics' started by BinYang, May 6, 2007.

  1. BinYang


    In 1970s, the foreign banks were only got the permission to open representative offices in the mainland China, after following 20 years, owing to the ¡°Open door policy¡±, the foreign banks were gradually being deregulated to set up the operational branches in those costal cities, amount to 23 ones, especially in Economic Zone, Hong Kong and Shanghai. In 1996, the prospectuses of foreign banks in China witnessed the newly breakthrough that the authorities declared to permit foreign banks to undertake the renminbi business in Shanghai without precedent in history. Moreover, with China¡¯s entering to WTO, it is more likely for foreign banks to operate a great numbers of transactions referred to foreign currency businesses in China, in such a case, on December 11 2006, the foreign banks eventually could be free access to the local currency market across the China because of the cancellation of geographic restriction on banking activities, according to the agreement between Chinese government and those members in WTO.

    The fresh milestone in banking activities has begun in China, with the rapid path of economy development, both the domestic and foreign banks encounter with the opportunities and risks. For domestic banks, there are no more existence of monopolies and less protection policies in the banking industries, they should be prepare to response to the potential challenges caused by foreign banks, particular in the business of foreign currencies. On the other hand, even though the restriction has been lifted absolutely, foreign banks need patience and opportunities to be absolutely accepted and adopted by the residents in China, especially in launching the properly products based on national conditions. Technically, it is not easy for both sides to conquer and occupy the whole market, in the area of foreign currencies business, the foreign banks should be capable of more attractive because of outstanding service and well understanding in relevant business, nevertheless, the domestic banks is likely to position advantageous in RMB business contribution to some factors such as convenience, lower threshold and quick procedures. In this circumstance, the whole banking industries will be staying in a healthily intensive competition including learning and cooperation each other.

    After almost 35 years, the Chinese banking market is gradually taking off its confidential veils. Getting permission to RMB business is an incentive to accelerate foreign banks to pay further attention to this east lands. They could encounter with different types of difficulties when operating business in China, but the history has witnessed that so many banking giant, HSBC, Citi-bank, East-Asian, to establish branches in PRC, none of them would imprudently neglect the huge potential Chinese market, instead, they are always looking forwards to opportunities to place their products and service in front of the Chinese banking market. As more deregulation to foreign banks, banking in China would become another focus to whole world.