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Source: by personal collected. S = strength, W= weakness

The domestic and foreign banks have the strength and weakness. (see table 21) the domestic banks have the long history, so they have the many exist consumers, and gain the high market share, set up the extensive networks in China. Compare with the foreign banks, their governance and risk management, services standards and products were more weakness than foreign banks. In addition, in the past year, the government intervene make the domestic banks especially the SOCBs have heavy burden, such as tax, NPLs. 

7.4.2 Opportunity

 Domestic banks

After China’s WTO accession, the large number of foreign banks entry into China, these give the domestic banks many opportunities. Firstly, it can improve the governance standard of domestic banks. After compare between the CCB and HSBC, it can know the foreign banks have advanced governance and risk management experienced. Foreign banks’ entry is means they bring the strong competition pressure to the domestic banks, they also can push the domestic banks increase their competition ability, study foreign operation and management modes, it is benefit for push domestic banks’ reform and modernization.

Secondly, increase the external funds. After foreign banks entry to China, it bring the foreign capitals. These can good for the enterprises in China, especially, the foreign investment industries. Because before only the SOCBs can provide their financing services, the huge financial need force on the SOCBs, make the SOCBs have high risk. After foreign banks’ entry, they can help enterprises increase capital, simultaneity, they can reduce the lending pressure for the SOCBs.

Thirdly, they are advantageous to domestic banks to expand oversea business. Base on WTO principle of reciprocity, at the time of allowing the great number of the foreign banks into China, the domestic banks entry to oversea financial market will reduce the restriction. This create the good condition to domestic banks, in other words, some good operation commercial banks have extensive existence space on the international financial market, to expand their business.

Fourthly, the equal tax level. Before China supports the foreign investment, so the government give the foreign financial institutions some tax special discount, such as they can enjoy reducing business tax, income tax or no-tax in China. Under the different tax level, domestic banks’ competition ability was weakened. However, after China joined WTO, the government canceled the tax special discount. The domestic banks and foreign banks have the equal tax level, the domestic banks can equal to competition. 

 Foreign banks

According to the WTO accession commitment, China opened its financial market to foreign financial institutions. This can give the foreign banks some opportunities to expand the business in China. Foreign banks enjoy national treatment, they allow foreign banks to operate all over the China, and open the RMB business for all the clients and enterprises. The foreign banks can use their product and good services to attract clients, to expand the business in China. Some areas allowed the foreign banks expand, for example, the RMB business, foreign exchange, settlement business, wholesale, and retail business. The foreign banks also can rapidly expansion in China.

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