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Foreign Banks Set Up Shop in China |
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At the end of 2006, China will finally welcome foreign banks into their
country. Similar to the gold rush, banks are tripping over each
other to be the first into the country to take over what is assumed to
be a quickly growing, financial market.
Professional financial analysts think that China may turn out to be
“fools gold” in the game of banking, however. China’s regulatory
environment is stormy, the lending environment is usually seen as
unstable, and the price to enter China and do business is
enormous. Still, companies are seeing dollar signs and a promise
of riches. China has seen an average of 9% growth annually for
several years in a row. With a population more than four times
the United States population, doing business in China would open doors
to growth and expansion in a market of over 1.3 billion people.
How can banks not rush to be among the first to operate in the country?
According to William Gamble of Emerging Markets Strategy, the banking
activities in China are not what most financial institutions are used
to. He goes as far as saying that because the Chinese banking
environment is owned by government, influence and political connections
are the main requirements to receive lending. Additionally, while
the United States has several credit bureau’s in place to determine
credit worthiness, there is none in place in China in order to insure
that money that is loaned would be paid back to the bank.
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Learn About Credit Cards > Credit Card News > Foreign Banks Set Up Shop in China
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