Lee Koon, Teo
(2010)
Banking Strategy
COmpetitive Landscape for China Banking Industry.
[Dissertation (University of Nottingham only)]
(Unpublished)
Abstract
China is one of the most exciting countries for global bankers, the large population and strong economic growth signify amber of business opportunities, but more importantly, it’s increasingly influence on the world economy means no one can neglect the market potential. Given its huge market potential, global bankers, have been constantly seeking market entry and development opportunities in the China’s banking sector.
Nonetheless, banking industry is highly regulated, with their product and service offerings, markets, and operations heavily controlled by each country’s regulators. The restriction is particularly severe in China under its socialism political structure. Hence, how global banker, in this case, Standard Chartered Bank (SCB), differentiates itself from the rest of market players, in such a restrictive environment, represent the foremost challenge.
The study looks at the competitive forces that govern the banking industry and the strategic interactions between the market players. Opportunities and threats are highlighted in tandem with the analysis of the roles of “complementors” and government, which then serve as an input for SCB’s strategic propositioning in China.
Four trends emerge strongly from the study:
- The banking sector is experiencing structural change towards more efficient and competitive environment, which, to some extent, put foreign bank at greater disadvantages.
- Banking sector lacks the differentiation, but innovation in product features alone, may not work. Service is the best differentiators.
- Building up solid government relations is the key factor in doing business in China.
- Localisation and adaptation are important, as cultures are always the key barrier.
However, the industry is undergoing rapid evolution and SCB has to continually scan the environment, to be on top of every opportunities and threats. More importantly, for any trends that emerge from the banking study, its implications need to be considered within the global strategy framework, as any decisions derived therein, will have spill over effect onto its other market, hence global profitability.
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