The Chinese banking sector is controlled by the central bank, the China Banking and Regulatory Commission (CBRC) and the People’s Bank of China (PBC), this two regulatory bodies are eventually supervised by the State Council (that is, the cabinet) (Case 5, 2016). The People’s Bank of China has the overall responsibility of the monetary policies and the liquidity of the entire financial structure, while CBRC has the overall responsibility over the monitoring and supervisory operations (Case 5, 2016). The banking system in China comprises of four State-Owned Commercial Banks (SOCBs), three policy loaning banks, and a huge number of other commercial banks, financial establishments and credit companies (Case 5, 2016).
Foreign Investment in Chinese Banking Sector: HR Challenges
Generally, the Chinese government appears to dwell more in foreign involvement which of course is well-matched with the government’s general control over the banks and as a possibly valued source of support in:
- Supporting bank streamlining.
- Improving banking skills thru business support and collaboration.
- Enhancing equity capital, short of any recourse to the financial budget.
- Improving the status of Chinese financial bodies both in the local and foreign capital markets.
It is important to note the fact that the Chinese government has been fairly effective especially in drawing foreign investment, in spite of holding to traditional attitudes and values such as, FDI (foreign direct investment) rules (Case 5, 2016). However, the actual challenge remains in the fruitful execution of Human Resource (HR) guidelines in such global strategic associations. Any partnership does not only need to be strategic and compatible in nature, but it should also be in line with the Chinese beliefs and value structure (Case 5, 2016).
Foreign Investment in Chinese Banks
Globally, the banking sector was undergoing a procedure of reorientation and rearrangement, equally at the operational and administrative levels. The phenomenon of unions and purchases, globalization and localization of products and services, and the eventual changes in administrative systems became a universal trend especially in the developing nations (Case 5, 2016). While the Chinese banking sector was not an exact exception to this occurrence, basically there was a difference in their transformation procedure from that of other emerging markets (Case 5, 2016).
Many of the emerging countries had to assume the general direction set up by the international banking power houses. However, China came up with its own standards and thus forced the banking giants to conform to their standards (Case 5, 2016). The international banks established tailored lending guidelines, bank cards, and asset managing products in order to accommodate the enormous retail banking market (Case 5, 2016). Additionally, the Chinese banks had been reorganized in such a way that they were in a position to guarantee an upgrade of their risk management guidelines, information technology and universal treasury services (Case 5, 2016).
In China’s banking system, the SOCBs are an attractive investment prospect since the SOCBs have a countrywide presence which is characteristically a good investment for investors because it is a way of cementing their position in China thru a single investment. However, purchasing such a major stake is a very costly venture as well as proof difficult to have any effect over the running due their large government ownership.
Since China joined the WTO in 2001 it is evident that its banking sector has experienced some challenges. However, it has also realized tremendous improvements in terms of banking and the sector is now ready to compete in the global markets. Therefore, foreign partners might want to have access to the huge market capacity in the world’s leading emerging economy.
Case 5, (2016), Foreign Investment in Chinese banking sector. Accessed on 29th March 2016.