Citibank In China

?Introduction: China was closed economy in the sense that it had never opened its doors to any foreign investment firm to do operations in china. There was a lot of pessimism that china entertained in allowing foreign banks to enter the country. The reasons though not very clear, the message to the western world and to the capitalists was very clear and that was not to look at china as a favored destination. One thing was that, the banking scenario in china was a well guarded secret and all banking operations were controlled by the central bank of china.

There was nothing further known to this and foreign banks were waiting for china t o allow the entry of banks into the PROC. The communist government and the closed economy with no idea of free market enterprise were the reasons why foreign banks were not allowed to do operations in china. The reasons for China to open banking to? foreign banks China’s reason for opening entry to foreign banks was very strategically opted for. The banks in china were owned by the government and were in very bad shape.

The inefficiency of operations and the lackadaisical approach to expansion and efficiency were visibly lacking in all banking operations. The feeling that the government owned the banks hence it was no cause of worry if the banks did not make profits made the top officers rather indifferent to productivity and profitability. The banks were controlled by the beaucrats and were in an appalling state of bad debts and almost near bankruptcy. The mismanagement of banks was a concern to the government and there needed to be some effort from somewhere to bulldoze the bank operations into starting something new.

The imitative to working efficiently was needed. The beauracracy had to be shaken up to bring in a new stream of blood and all this could be possible only if these banks were exposed to competition . 2. What are Citibank’s competitive advantages in? foreign markets? Citibank worldwide was the first bank to be operating in 98countries over 3400 locations. the greatest competitive advantage for Citibank was that it had been in the foreign market for over 100 years and was very much attuned to how foreign countries especially each country and legislations worked.

They were the first movers in the international market as got all the advantages that a first mover got. The first organization to set foot in any emerging market of China was the Citibank. They had the necessary expertise and experience in dealing with very volatile and unknown markets, while other banks did not know how to match these concepts, Citibank by virtue of its operational excellence was able to match these conditions. They hired local staff who were committed to the concept of growth and career advancement.

it tied up very closely to the central bank of the country and worked very closely the central bank of the country and with great commitment too. the comprehensive banking solution provided by Citibank ranging from general banking function to debt and merchant banking services including debt instruments was indeed the greatest competitive advantage because no other bank was able to offer this range of services. 3. What is Citibank’s worldwide strategy?

The strategy as defined by reed was to build on what the bank was good at and what was already profitable and strengthen this base to bring in more expansion and integration and build profitable working relationships . 4. Describe Citibank’s Global Relationship Banking? strategy. Citibank was already in the global market and so its strategy was to serve the global market globally. Citi bank concentrated on low risk activities of day to day banking and custodial instead of looking at high risk banking operations.

The GRB franchisees were very important part of the GRB strategies of Citi bank and they served the local community by hiring locally and developing relationships with the regulators and authorities to serve aggressively growing local companies as well as many western multinationals. The GRB was based on franchises of Citi bank. Furthermore Citibank offered a range of retail banking products to suit the local needs and the temperaments of the country that they served. 5. Describe Citibank’s Global Consumer Finance strategy.

The global financial strategy for Citibank was aimed at providing consumers with a one stop shopping retail banking solution. Consumers would get the advantages of uniform services from Citibank wherever they went and the convenience and reliability of the banking services that they received from Citibank was probably the greatest strength of building customer relationship. They provided premium services and charged exclusive charges for the excellent services provided. All customers knew that they would get the level of service that they were looking for and so it turned out to be a premium banking sector.

6. What is Citibank’s preferred legal structure when? operating in foreign countries, and what was the? opinion of the Bank’s executives in China concerning? Citibank’s possible acquisition of a local financial? institution? The foreign branches and franchisees of citi bank operated as branches of the parent and not as subsidiaries. The acquisition of a local bank will depend on the partnership that Citi bank has with the local bank and the circumstances under which it will acquire the local bank. 7.

Describe the evolution of Citibank’s presence in China? after 1940. Citibank entered China to serve the corporate sector that was stationed there. Slowly as word spread round that Citi bank was offering retail banking services many people stated looking at this bank for their banking needs. Though initially the authorities did not allow Citi bank to serve the local population. The need for china to become a member of the WTO facilitated CITI bank to open its doors to locals too. Though the PCOB t was very strict in its licensing for foreign banks .

Citi bank was able to channelize local support though licensing agreements Citibank entered china today Citibank is the most sought after feign bank in china and has almost taken away a large chunk of the Chinese market from the Chinese banks. 8. What was Citibank allowed to do in China in 1997? After 1997 Citibank was allowed to open more branches as franchisees of the parent in china. They fostered local ties and started hiring locally. 9. In December 23, 1996 the People’s Republic of China? Central Bank (PBOC) granted Citibank permission to? do local business, but subject to certain?

restrictions. What were those restrictions? It was licensed to provide only corporate banking services and only to foreign invested enterprises. It was allowed to operate only in 3 out of the 24 cities that were open to foreign banking services. 10. What is the government of China’s concern with? credit cards? 11. Situate yourself in 1997 to answer this question: Is? any possibility that the Chinese government will? allow Citibank to issue credit cards in China? 12. How could Citibank’s executives ensure that Citibank? will maintain its “first mover” advantage?

Citibank’s executives would make sure that the presence of Citibank in the retail banking sector and services of retail banking remained the strongest . the first mover advantage made it certain that the strange new market could be studied very well analyzed and then strategies developed. 13. How could Citibank’s executives ensure that Citibank? would be among the first foreign banks to enter the? domestic market? The PCOB wanted joint ventures with Citibank to enter the domestic market. Citibank was averse to entering china through the medium of joint ventures unless they were forced to.

Hence they were the first ones to enter the chine market. 14. If the PBOC were to decide to open China’s retail? market to other foreign banks before granting? licenses to Citibank, how could Citibank establish its? dominant position in this market? Since it was the first bank to set up retail operations in china the first mover advantage together with good relationship with customers and local regulators would allow citi bank to remain dominant and hold its position it helped to maintain its position by creating very strong brand equity in China.