The Root Of Homogeneity Competition And Strategy Of Differentiation Development For China Banking

During the recent20years, the China bank industry develops very quickly. Thecommercial banks keep taking the initiative to upgrade their products, services or operationmodels so as to improve their capability to satisfy the various demands of their customers.However, we should see the fact that due to the late starting reform process of China bankingindustry and unmatched financial facilities associated with the quick economic development,most products, market orientation and development strategy are very similar between eachbank. Also, the homogenous tendency becomes more serious and differentiation betweeneach bank is obviously deficient. Regarding the homogeneity competition issue of China bankindustry, this paper will perform in-depth study from four perspectives as follows. Firstly, wewill summarize the external appearances of the homogeneity competition through datacollection, field investigation and comparison analysis. We will map the appearances ofhomogeneity to eight aspects including product, operation model, marketing tools, operationmechanism, market positioning, network layout of bank branches, management structure anddevelopment path. Secondly, this paper analyses the deeper reason for such appearances.The author is of the view that there are external and internal reasons for such homogeneitycompetition. The external reason includes both macro economic and financial controlmechanism, while the internal reason includes the natural homogeneity of the bank business,easily imitation of product innovation, quick personnel turnover, similar performanceassessment and strategic direction as well as the history of business operation. Thirdly, thispaper analyzes the negative consequences of the homogeneity competition. Suchconsequences not only include the already happened price war, single financial service andunbalance resource distribution, but also some other potential and long-term adverse effects,e.g. system risk increases; the bank cannot keep the continuous development in the future andcannot adapt to the economic situation changes. Fourthly, this paper explores the possiblestrategy to bring about the differentiation operation for China bank industry. This paper willput forward the possible strategy from the angles of the product innovation, brand marketing,innovation speed, innovation system and strategic orientation in order to contribute the ideasfor the long term health development of China’s banking industry.