Doing business in China: The Citibanks way
- Citibank's market penetration
- The insurance market
- Joint venture agreements with the Chinese partners
- Porter's 5 forces to analyze the market
Citibank is known for its innovative approach in developing markets. Citibank has always been at the forefront of exploring opportunities in markets where level playing field was absent. This calculated-risk approach has been the reason for development of efficient banking at Citibank. On sensing the vast potential of Chinese market, Citibank became the first foreign bank to set-up operations in the country which later was known as Asian Tiger.
Thus the Bank developed its recognition in China not only with the foreign companies but also with government itself. Regarding the professionalism for example, the managers of the PBOC implemented the Citibank audit procedures to the institution so that China could have a top of the art process of audit for its financial institution. The collaboration with the Chinese authorities should even go further since the bank with its long term policy is becoming a key player in the Chinese banking system.
[...] The specific importance of guanxi in China is another argument in favor of this agreement since a joint venture can help acquiring these connections. On the other hand a joint venture can help making a positive impression on the POBC since it shows that the company wants to build relationships within the country and that it is here to last and to implement in the long- term. A joint venture can also help providing staff from local population more easily. [...]
[...] Does the experience of Citibank can be useful for implementing any other activities of Citigroup in China? The future privatization of the SOEs will create a huge pool of opportunities for many foreign financial services. A fully developed network like the one Citibank is currently creating therefore would be useful for the all activities of the group. An opportunity would be in the insurance market. Indeed, the Chinese government tries to catch up with the international standards (process, marketing ) to create Chinese leaders in this field. [...]
[...] Wait the best moment to act, being patient, moving step by step following and respecting local way of doing business are qualities that not everybody has, and that can be the secret weapon to be successful in the Chinese market. (L. Li, A. Young, D. Conklin, ?Citibank NA in China?, Richard Ivey School of Business, case #9A97G016, 1997) A command economy is the one in which all dimensions of economic activity are determined by a central government plan. It is opposite to the Market Economy, in which resources are allocated and controlled by consumers. [...]