On April 2, 2007, HSBC Bank (China) Co., Ltd., which was transformed into a foreign-funded corporate bank, officially opened in Shanghai. On the same day, with the official approval of the China Banking Regulatory Commission, four foreign banks, including HSBC, Standard Chartered, Citigroup and East Asia, also opened more than 100 outlets in the Mainland to provide comprehensive RMB services to local residents. It officially kicked off the competition between Chinese and foreign banks on the same stage.
First of all, foreign banks' evaluation of China banks.
According to PwC's survey on the development of foreign banks in Chinese mainland in 2007 (the report's findings are based on interviews with 40 foreign banks. These 40 banks represent 74 foreign banks in 22 countries/regions active in China banking market. The results show that foreign banks' evaluation of mainland banks in China is still quite high, among which 29 foreign banks interviewed gave a high score of at least 8 points (out of 65,438+00 points). However, they also pointed out the problems existing in mainland banks in China, such as domestic loan market (risk control, disposal of non-performing assets, accuracy of loan rating system, dependence on mortgage), corporate governance (management information system, independence of directors, overlapping front/middle/back office functions) and market operation mode (interest rate control, high-risk and low-profit loan concentration, fee/commission control, etc.).
Second, the development strategy analysis of foreign banks in China
With the deepening of economic reform and rapid economic development in China, 90% of foreign investors believe that the investment environment has been improved or greatly improved, which also shows that foreign banks are full of confidence in the development prospects of China market. In the past 20 years, China's banking system has been gradually opened, especially at the end of 2006, China approved foreign banks to provide RMB services to local corporate customers and individual customers, which further expanded the customer base that foreign banks can face and further opened the China market, which greatly promoted the development of foreign banks in China.
At present, there are many foreign banks in China market, but their market share is actually very small. According to statistics, the market share of foreign banks is 1.7 1%, and both loan and deposit products are around 1.7%. A recent national financial survey showed that after foreign banks entered China, 10.8% made it clear that they would choose foreign banks, 72.7% were still willing to choose domestic banks, and 16.4% held a wait-and-see attitude. At the same time, the survey shows that the biggest advantage of foreign banks is "good service level and high efficiency", accounting for 66. 7%. Indeed, excellent service, good reputation and high efficiency have become the image orientation of foreign banks.
China has a huge population market of nearly 654.38+0.3 billion, which is the market that foreign banks want to explore. The headquarters of foreign banks promised to support the business of their China institutions more than the business development in other markets. Then, how can foreign banks give full play to their advantages, gain a foothold in the China market and compete with giants like mainland banks in China? The author summarizes three development strategies of foreign banks:
(1) Actively seize the retail business market.
The rapid expansion of foreign banks in China has put sufficient pressure on domestic banks. We found that the important weapon for foreign banks to expand in China is their best personal retail business. Personal retail business is a variety of financial services such as personal remittance, settlement, agency business, investment business, consultation and evaluation, family finance, credit guarantee and commitment based on deposits, and it is an important channel for commercial banks to achieve profitability. Citigroup, HSBC, Holland, East Asia and other big foreign banks have been dormant in China for many years, and all of them take retail business as a breakthrough to seize the market. At the end of 2006, led by Citigroup, a consortium composed of China Life Insurance, Guodian Group and CITIC Trust defeated domestic and foreign competitors and successfully acquired 85% of the shares of Guangdong Development Bank. After the acquisition, Citibank owns 20% of Guangdong Development Bank. According to industry insiders, Citibank with foreign investment background can establish a bank for all consumers and open the window of retail banking.
For domestic banks, wholesale business has always been a theme business, usually accounting for more than 80% of the total business income, while retail business has always been ignored by everyone, not only accounting for a small proportion, but also the types of products and services are quite single. As the whole financial industry has realized the importance of personal retail business, this situation has changed in recent years, but the degree of attention is still insufficient.
After years of development, the financial industry chain has undergone structural changes, and the demand for loans in retail business is increasing, from real estate loans, credit card overdrafts to auto loans. At present, American personal loans have accounted for more than 40% of all loans. In China, although corporate loans still account for 90% of the total loans, personal loan business has also grown rapidly in recent years. During the four years from 200/kloc-0 to the end of 2005, the compound annual growth rate of RMB personal loan business in China reached 3.3 1%, of which personal real estate loans increased from 560 billion yuan at the end of 2000 to 8 trillion yuan at the end of 2005. The number of credit cards has also increased from zero to 40 million. In the future, with the increase in the number of card issuers and the gradual improvement of the personal credit system, the number and proportion of personal loan business will increase substantially. At the same time, the demand for corporate loans is declining. In the United States, the proportion of traditional loan business in corporate finance business department has become smaller and smaller. Investment banking, securities trading and other businesses serving the direct financing market are replacing loan business as the mainstream of corporate financing business, and these businesses have a strong nature of intermediary business, which makes the capital expenditure of the entire corporate financing department decline.
The sustained economic growth in China has brought great wealth and savings to residents, which has provided a solid foundation for the development of bank retail business. Foreign banks are keenly aware of this huge potential market and actively take actions to compete for this field. According to the forecast of the National Bureau of Statistics, by 20 10, 25% urban families in China will enter the middle class, which will be the main customers of retail banks, especially high-end customer wealth management markets, and will also be the focus of foreign banks.
(2) Actively use marketing means to advocate humanized service.
Foreign banks have always attached great importance to the use of various marketing methods and actively advocated the concept of humanized service. At this time, we can take the development of "structured deposits" by foreign banks as an example for analysis.
Structured deposit is a kind of structured product. It is a business product that embeds some financial derivatives (mainly various options) on the basis of ordinary deposits, and enables depositors to obtain higher returns on the basis of taking certain risks by linking them with fluctuations in interest rates, exchange rates and indexes. Or associated with the credit status of the entity. As the product of financial innovation, structured deposits developed rapidly in 1990s and were introduced to China in 2003. Because its yield is obviously higher than the interest rate of bank deposits in the same period, it has been warmly welcomed by investors and plays an increasingly important role in the field of financial management. At present, there are many kinds of structured deposits, and the competition among banks is fierce, and foreign banks are in a leading position in this field. Let's analyze the reasons why foreign banks can lead:
1. Market segmentation to meet the needs of different customers. The success of a product's marketing depends on whether it meets the needs of investors. Foreign banks design different products for different customers to meet different needs. The attraction of structured deposits is that they can be used to invest in other products, especially when China's current capital account is not freely convertible. Structured deposits can help investors invest in areas that individuals could not invest in the past. From this point of view, foreign banks can choose a variety of ways to link with the rich investment varieties in the world, which can meet the different needs of investors and attract investors' investment interest. The requirement of foreign banks for structured deposits is not quantity, but quality. The so-called "fine" means that each product is aimed at the investment needs of a class of customers and meets the investment needs of investors in a certain aspect. For example, Citibank's "Woori Account" is aimed at investors with short-term foreign exchange investment needs. For example, the interest rate index of Bank of East Asia is linked to capital preservation investment products, which has different yields for VI P customers and ordinary customers, thus attracting more high-end customers.
2. Explore customer psychology and treat quality customers with care. Foreign banks attach great importance to the study of customer psychology and develop products with great demand on this basis. For example, in view of the characteristics of high-end customers' strong risk tolerance and low risk aversion, foreign banks mainly launch some high-risk and high-yield products. For some high-quality customers, foreign banks will provide products with higher returns, which will make these customers feel honored and establish long-term relationships. Moreover, foreign banks pay attention to tapping demand. For example, ABN amro's "Van Gogh VIP Financial Global Allocation Bond Fund Basket Linked to Structured Deposits" introduced global bond funds as the linked target. Although few people in China have a deep understanding of this field, its rich expected rate of return has attracted many investors to buy it.
3. Product positioning fosters strengths and avoids weaknesses. Although foreign banks are trying to develop structured deposit business, the emphasis is different. For example, ABN Amro is mainly positioned as a 3-5-year medium-and long-term product linked to various indexes, while Standard Chartered is mainly a 3 -3-year medium-and short-term product. The products of Hang Seng Bank and HSBC, both members of HSBC Group, are highly mobile, while Bank of East Asia has adopted a flexible overweight and early redemption mechanism similar to that of funds for its newly launched products. Every bank strives to launch corresponding products in its best field and give play to its comparative advantages, so as to be in a favorable position in the competition.
4. Make full use of existing resources and effectively reduce costs. The initial purpose of financial innovation is to break through the existing legal provisions, gain benefits in taxation and reduce costs. At present, there are few provisions on structured deposits in China's laws, and their nature has not been confirmed. In this case, structured deposits can break through some legal restrictions and bring more investment opportunities to investors. Foreign banks have a keen eye in this regard. For example, since 2005, structured deposits developed by foreign banks have been linked to overseas indexes, such as? Jones index, Hang Seng index, international commodity futures index, etc. All of them have broken through the rule that only QDII can invest in overseas markets in China, bringing more investment opportunities to investors, and naturally reducing their own costs while increasing product demand.
5. Grasp the essence of financial innovation and create a better combination. The essence of financial innovation is to use cutting-edge technology to strip and decompose existing income risks and create new income-risk relationships through reorganization or recombination. The most important point of structured deposit design is to choose suitable embedded derivatives. Foreign banks are good at matching different types of options, such as using early termination rights. Therefore, foreign banks can better control costs and create profits.
(3) Strive to win in cooperation and competition.
As far as competition is concerned, foreign banks hope to compete through cooperation, rather than pure competition, that is, foreign banks hope to compete with local banks in a complementary way, rather than directly face-to-face competition with local banks. Standard Chartered Bank is a typical representative in this respect. The most important reason for Standard Chartered Bank to enter the China market is to follow its customers' footsteps and come to China. 80% of the areas covered by Standard Chartered Bank outlets are active areas for foreign investors, which not only firmly grasps the economically developed coastal areas, but also extends its reach to some western regions such as Chongqing and Chengdu. Many foreign banks have a long-term development attitude. They entered the China market in the hope of long-term strategic cooperation, especially in some areas, and can achieve long-term development with local banks. HSBC and Citigroup have similar cooperation in Pudong. It should be noted that foreign banks come to China not only to compete, but to supplement what already exists in China. For example, Standard Chartered has launched some products, hoping to encourage local banks to launch similar products. In this case, each partner wins in the market. At present, the highest shareholding ratio of a single foreign bank is 20%, and the total shareholding ratio of foreign banks is 25%. For example, Bohai Bank is a brand-new bank established by Standard Chartered and a successful example of foreign banks actively expanding their share.
In short, foreign banks want to implement an organic growth strategy. Organic growth means having more talents and its own management team, and it should continue to grow and develop. I hope this investment strategy can achieve a win-win situation, benefit investment banks and benefit customers and consumers in China.
Third, the conclusion
To sum up, the whole strategic framework of foreign banks in China can be summarized as "four modernizations", that is, broadening, deepening, strengthening and optimizing. Guanghua: Foreign banks hope to expand their branches, pay more attention to their core customers, support the development of local economy and develop more networks and customers. Deepening: Global network is the advantage of foreign banks, but not only in China. It is difficult to win by relying on foreign banks' branches in China to compete with mainland banks in China, but it can bring international development of this market and different products and solutions to customers. Strengthening: It is easier to get more benefits from an existing customer than to get a new one. Foreign banks hope to gain more shares by strengthening customer relations. Optimization: Foreign banks hope to provide customers with good services. Only through such optimization can foreign banks be different from other banks.