Research On The Motivation, Effect Of Foreign Banks In China And The Strategy Of China Fund Banks

As a fast developping country in the world,we have more influence on the world economy than before.Now our country not only has the largest foreign exchange store,but also absorbs the largest FDI in the world.It means that many countries are trying to explore our demestic market to develop themselves.The change of economic strategy undoubtedly lead to the innovation on financial strategy.Driven by the financial service liberalization in the world,our country have signed the financial service contract when enterring the WTO,at the same time,agree to loosen the financial resrticts gradually and open our demestic financial market in the five years.From then on,many foreign banks have entered our country,expecially after the year 2006,our country cancel the restrict policy on RMB management ,foreign banks began to accelerate the enterring pace and the number of foreign banks increased more than 100 just in one year.Occurently,foreign banks are extending in our country not only in the number of branches,but also in the capital investment and managing scale.Therefore,on one hand, knowing the purpose for the enter of foreign banks, China demestic banks should take this opportunity povitively and analyse the advantages and disadvantages of foreign banks carefully.In the advantages, China demestic banks should inforce the constr- uction of system and orgazation in order to improve the service quality and lower the risk.In the disadvantages,China demestic banks should cooperate with foreign banks povitively and bring in its technology and experience cautiously instead of complete copy.For example,foreign banks do better than China demestic banks in finance innovation and design more compositive investing products which have high risk and profit than the common investing products of China demestic banks.Therefore,China demestic banks should bring in the compositive products and in the demand of themselves,adjust the index and paying clause.On the other hand,towards China demestic banks,the world financial crisis is an opportutity,not a threat.The short history,low level of internationalization and the immediate government policy help the China demestic banks avoid great lost,on the contrary,foreign banks lose a lot and some even go bankrupt.China demestic banks can learn the lesson of foreign banks and adjust their unreasonable facter in time.At the same time,they can also merge with foreign banks through stock investment,and even control the foreign with the low price.The first part of this article introduce the international financial environment and organizational forms,capital amount,the number of managing department and man- aging scale of foreign banks in China.The second part introduce the theory basis of the entery of foreign banks including The Theory of Internalization, The Theory of International Production, Theory of comparative advantage, Theory of international capital flows and Product Cycle Theory .The third part analyse the enterring reason of foreign banks,finding that following the customer and seeking opportunity in the host country are mian reasons.On one hand,in spite of the short history, China demestic banks developed fast supporting by our country and have take up some profit from foreign.In order to provide better service for transcorporation in China and compete with China demestis banks fairly,foreign banks begin to enter China demestic mar- ket.Therefore,the scale of foreign banks has a colse connection with FDI pouring into our country,and this conclusion has been comfirmed by many scholars in and aboard China.On the other hand,althrough financial market developed fast,the whole com- petitiveness of China demestic baks is weaker than that of foreign banks,more- over,there is a lot of monopolistic profit in our demestic market.In order to take up the great profit,foreign banks begin to enter China.The fourth part make a contrast between China demestic banks and foreign banks on business,management and scale,we find that China demestic banks have advantages on RMB business,capital investment and managing scale and have disadvantages on foreign exchange business,financial innovation,management and human capital.On the contrary,foreign banks have advantage on foreign exchange business,financial innovation,management and human capital,and have disadvantages on RMB business,capital investment and managing scale.The fifth part analyse the influence on our financial industry .Finding that the entery of foreign banks make our financial industry more stable,help the China demestic banks improve their managing level,accelerate the business inno- vation pace of China demestic banks,help other chinese fund companies listed aboard and solve the fund problem of middle and small chinese fund companies directly.In the negative aspect,it aggravate the double dual constructure of our fianacial indu- stry.The sixth part analyse the different strategys between China demestic banks and foreign banks through math model,and find that the profit of both China demestic banks and foreign banks is just affected by the maximum of market capacity,the market control power and service cost,therefore,Ch- ina demestic banks should make effort on enhancing the market control power,incre- asing R&D and improving the internal management,instead of enlarging the mar- ket.Finally,on the basis of all the research result above,we make some advice for Chi- na demestic banks.One one hand, China demestic banks should make full use of the advantages on RMB business and strengthen the monopolization on it.One the other hand,China demestic banks should cooperate with foreign banks positively,strengthen demestic collaboration,system establishment,finance innovation,and improve the de- mestic management so as to improve their core competitiveness.