Motivation of Chinese Commercial Banks for Foreign Venturing

Wang, Guanhua
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ABSTRACT Over the past few years, the Chinese banking industry has been recording tremendous growth. As a result, many scholars have focused on topics that explain the growth of commercial banks in China. The main aim of this study is to explore the motivation of Chinese commercial banks for foreign investment (cross-border expansion). There are three objectives of the study which include establishing the major success factors in terms of the globalisation strategy of leading international banks, such as HSBC and CITI, determining the major differences in terms of the motivation and operations for the ‘going overseas’ strategy between leading multinational banks and top Chinese banks, and assessing likely methods for and the direction of Chinese banks’ overseas operation. The set of drivers of banking institutions in obtaining a share of the market overseas are one of the areas that was examined in the literature review. Some of the drivers include the blending of Chinese and international cultures, especially the Western culture. Relevant government policies which are in favour of foreign investment are also drivers for commercial banks’ investment overseas. Success factors of leading international banks are also covered in detail. The literature review of the study entails the various strategies that Chinese commercial banks have adopted for their success in international businesses as well as the challenges and differences of international and Chinese banks. The theories that underpinned this study are internalisation theory and eclectic paradigm. The study adopted a mixed method to collect information from the sampled population. 100 respondents’ inputs were used for the quantitative analysis while the qualitative analysis relied on 20 respondents who were selected from the employees of international banks for detailed interrogation. The study concludes that the growth of Chinese commercial banks has increased, as well as their venture in the international markets. It was concluded iii that mergers and acquisitions, organisational restructuring and increased government support are some of the drivers of Chinese commercial banks towards venturing abroad. The study also concluded that key challenges Chinese banks faced in international markets are communication barriers and increases in restrictions in the developed countries. The recommendations made on the way forward include an increase in training for the management in terms of international bank management prerequisites and reduced government interference with commercial bank operations. This study recommends conducting a study which utilises secondary information and the inclusion of more Chinese commercial banks as a case study.
MBA Thesis
Banks and banking -- China. Investments, Foreign -- China