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Business in China difficult for foreign banks: local banker

2010/06/11 22:37:21

Taipei, June 11 (CNA) A senior Taiwanese executive at China'sFirst Sino Bank said Friday that despite the vast Chinese market, itis very difficult for foreign banks to do business in China.

Steve H. Y. Hsieh, who has served as CEO and president of thebank since 2006, said at a forum in Taipei that Taiwanese banksshould not be overly optimistic about venturing into China.

Noting that the market share held by foreign banks is less than 2percent, Hsieh said that although many Taiwanese financial holdingcompanies think China offers tremendous opportunities, based on hisfour years of work experience in China, he feels business there isvery difficult for foreign banks.

Hsieh said that as China has lifted banking restrictions onlygradually, foreign banks in China have limited access to China'sfinancial services market.

Despite acknowledging the difficulties, Hung Hsin-shih, vicepresident of Taiwan's First Financial Holding Co., said that Taiwan'sfinancial institutions and banks still need to tap into China'smarket because Taiwan is saturated.

Taiwan's financial services sector hopes to be included in the"early harvest" list of a proposed economic cooperation frameworkagreement (ECFA) that will give it better access to the Chinesemarket.

The "early harvest" list refers to merchandise and services that will be granted tariff concessions or more liberal market accessimmediately after the ECFA is signed.

Victor Kung, president of Fubon Financial Holding Co., saidearlier this year that the company hopes to set up 200 outlets inChina within five to 10 years.

Taiwan's government began accepting applications in late May fromChinese banks wishing to set up offices in Taiwan or purchase stakesin domestic banks.

Shen Chung-hua, a professor at National Taiwan University'sDepartment of Finance, said Chinese banks' investment in Taiwan isaimed at attracting Taiwanese clients operating large companies inChina, rather than local customers in Taiwan or China-based small andmedium-sized enterprises. They will also target Chinese businesseswith investments in Taiwan, Shen said.

By investing in Taiwan, Chinese banks could also acquireknowledge of financial services and hire local talent to set upfootholds, Shen said. They will be able to gather credit informationabout Taiwanese businesses in China and use it to expand mortgagelending to those companies.

Chinese banks can also collaborate with foreign banks that haveoperated in Taiwan for years by gaining stakes or forming strategicalliances in order to gain access to more potential customers, Shensaid.

(By Cheng Yun-hsuan and Y.L. Kao)