Potential Strategies for Hsbc’s Entry Into China’s Rural Banking Sector

1938 Words Nov 20th, 2011 8 Pages
Potential Strategies for HSBC’S Entry into China’s Rural Banking Sector

TABLE of Contents

1. Introduction 1
2. Foreign banks’ investment opportunities in rural China 2
3.Existing Problems for HSBC in China 3
3.1 Limitations in farming lending 3
3.2Rural Banking Lack of Talented Persons and IT infrastructure 3
4. Potential Strategies for HSBC 4
4.1 Developing tailored lending products 4
4.1.1 Loans for enterprises and farmers 4-5
4.1.2 Individual lending 5
4.2 Cultivating talented employees 6
4.3 Improving IT infrastructure 6
5. Evaluation of strategies 7
6. Conclusion 8
Bibliography 9-10
1. Introduction
Compared to the deterioration of America and Europe economic situation due to the financial crisis in 2008, China’s
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It causes foreign banks which are opening outlets in countryside to miss qualified employees. Moreover, rural areas also lack advanced technology in banking infrastructure and system.

4. Potential Strategies for HSBC
HSBC has been strengthening its rural branches in the west of China, in the middle, northern and eastern regions, with providing tailored lending products to match the demands of rural enterprises and residents, who were viewed as harder to obtain lending and credits than urban citizens (Business China, 2010).
4.1 Developing tailored lending products
Based on Chinese law, Chinese people is generally difficult to apply for any loans since they cannot own any land; therefore, Chinese domestic banks have not been attracted to needy rural districts. However, HSBC has tried to satisfy the lending needs of China's rural provinces by tailored financial products, offering loan services to local businesses and farmers according to their cash-flow analysis and the estimation of borrowers' repayment capability (Xinhua News Agency, 2009).
HSBC’s strategies support rural firms and farmers, who may lack mortgage to access loan opportunities, to settle their financial problems. Furthermore, the supply chain in rural industry is generally unstable and weakness and this factor increase the lending risks for banks so HSBC’s rural banks should play the role to intensify the collaboration of supply chain in

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