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Secondly, increase the high-quality clients. After the Chinese opened then financial market, the foreign banks have the chance to gain high-quality clients. These clients have the high education, know about the financial and banks knowledge, high salary and high reputation. The number of the clients in the foreign banks have less than domestic banks, moreover, they difficult to exceed the domestic banks. If the foreign banks use their high technology product and services to attract the high-quality clients, they also can bring the considerable profits to foreign banks.

Thirdly, the floating RMB exchange rate. Since Chinese government announced that RMB became float and no longer to peg the dollars again, the RMB market will become more vigorous and complex. This mean is the demand of the financial hedge will go up as long as the increase of international trade. the foreign banks are good for the technology, and management, so the floating RMB exchange rate create more opportunities for their treasury departments.

7.4.3 Threat

 Domestic banks

After China’s WTO accession, the China’s banking system is going to face the fierce competition from foreign banks. Most of them are world famous banks, they have good operation, management, assets and adequacy capital. The domestic banks face some threat.

Firstly, the market shares and high-quality clients. China opened wholly financial market to foreign financial institutions with China’s WTO agreement. Foreign banks can do the RMB business to clients. Some foreign banks have good reputation, the clients can free choice the banks. The domestic banks’ market share for the RMB saving services, foreign currencies saving services were reduce, if the domestic banks no suitable strategy. It also will reduce some number of the high-quality clients.

Secondly, reduce the profitability. Accompany with the decrease the market share and high-quality clients. The SOCBs will loss some benefit business and district. The domestic banks especially the SOCBs have the long history, when they opened or expand new business, they must be considering nation’s benefits. Therefore, these factors will seriously influence the profitability of the domestic banks.

Thirdly, increase the difficulty for macro-adjustment. The foreign banks utilize gain capital from the international financial market to boycott the influence of monetary policy, moreover, when the foreign banks entry into Chinese currency market, they aggrandizement wave conduct of the international financial market, make the Chinese Central banks hard to adjustment. After China opened the wholly financial market, the foreign banks provide the financing services to each kind of Chinese enterprise, this mean RMB currency and foreign currency were commixed, the international capital flow will more frequent, the Chinese central bank also hard to control the risk of capital flow.

 Foreign banks

Some threats of foreign banks need to face:

Firstly, the competition with the domestic banks and international banks. Even some people are not satisfied with some Chinese banks’ services; the domestic banks still have considerable strength in Chinese market. For example, the SOBCs have already had more than half of the market share, networks over the China. After China’s domestic banks reform, the domestic banks improve their technology; improve their services to meet the need of increase the market competition. so domestic banks stronger than before. So the foreign banks have not ignore the strength of domestic banks. Furthermore, the competition exists within foreign banks. For example, the Citibank and HSBC also have the long history in China as most well know foreign banks in China. They also want to gain more market share in China, so in the foreign banks, they also have the challenge for compete with other foreign banks. However, for the foreign banks, they also have the good condition for advanced services system and management methods, under the Chinese financial market opened, their competition will becoming intensification.

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