Comparative Research On The Competitiveness Between Local And Foreign Commercial Banks In China

It has been six years since China financial industry fully opened up. Foreign banksestablished representative offices to collect market information, opened branches tooperate foreign currency deposit and loan business, and then build subsidiary to operateRMB business. In a word, they developed fast both in their form of organization and inthe area of their operations. At the same time, China property commercial banksconsistently advanced market-oriented reform to improve their operating mechanismsthus raising their competitiveness. This paper focuses on the competitiveness of bothlocal and foreign commercial banks in China and tries to analyze the source of theirrespective competitiveness. So that China property commercial banks can have a correctattitude towards their advantages and a clear awareness of what to learn from theirforeign competitors.This paper builds a quota system and then uses the Factor Analytic method toevaluate the competitiveness of twelve China property commercial banks and fourforeign property commercial banks. By means of comparison this paper draws theconclusions as follows. From an overall view, China property commercial banks have astronger competitiveness than foreign property commercial banks. The competitivenessof foreign property commercial banks is quite close to that of China city commercialbanks. In the aspect of scale factor, profit-making factor and safety factor, China propertycommercial banks have a much better performance but when it comes to thediversification factor China property commercial banks show a poorer performance thanforeign property commercial banks. Further analysis reveals that those difference stemfrom their respective competitive advantages. China property banks have local advantageand reform advantage. While foreign property commercial banks have strong innovativeability and sound market-oriented management mechanism. At last, this paper advicesChina property banks reforming their operating mechanism and enlarging intermediarybusiness so as to enhance their competitiveness.