Development Motivation And Development Models Of Foreign Banks In China

China has experienced an expeditious economic development since the nineteenninties. Nowadays, the Chinese economic market is filled with livingness andopportunities. In light of the large scale of market capacity, stable political environment,advancing international status and inexpensive yet effective labor force, a growingnumbers of foreign enterprises and foreign banks are indicative of keen interest ininvesting at mainland China.In late2011, the number of foreign-funded banks reached387with an approximateRMB2100billion in terms of total assets. In another word, the gigantic principle hasalready reached1.93%of the asset summation of Chinese Financial institution inbanking industry area. In mathematically speaking, the ratio is only occupied a very tinyproportion, however foreign banks maintain their significant market position in manyemerging markets such as Latin America, the Middle East, Asia, and Eastern Europe,especially for the low income countries. Multiple aspects indicate that the proportion offoreign banks among the total banking industry has increased from18.72%to41.65%since1995to2000. Moreover, take the global economic integration and financialglobalization into consideration, foreign banks will take an added importance in localbanking industry. Consequently，there is significant meaning in both theory and practicefor foreign banks to better fit into China’s economy to study their motive of developingbusiness in China, development model, strengths, weaknesses, opportunities and threats.In line with the integral pattern of that develops in Chinese economy, foreign bankshas important place. In this paper, three development models along with a methodologyhas been designed and target to analyze the motivation and the business scope of foreignbanks which are planned to tap into the Chinese market. SWOT analysis has beenapplied to study the three models while advantages, disadvantages, the opportunitiesand threats will be the key aspects in the study. The paper provides a layout of howcould foreign banks to seize the opportunities, eliminate the threats, develop theadvantage, and avoid the weakness in Chinese economy market by taking Bank of EastAsia as an example. By studying the weakness and threats which foreign banks mayexperience during the investment in China, a series of countermeasures and suggestionshas been concluded. The conclusion of this paper is, foreign banks have creative business ideas andadvanced management experience. The increasing number of foreign banks trigger theimprovement of the service level of domestic bank as well as the development ofproducts innovation. Furthermore, with a view to the fierce completion in Chinesemarket, foreign banks are also encouraged to utilize their own predominance along witha rational consideration of Chinese economic development to discover the best cut-inpoint of fitting into the Chinese market.