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Foreign Investment in Chinese Banking Sector: Hr Challenges

In: Business and Management

Submitted By dasilnp
Words 595
Pages 3
Case Overview

• China’s rapid economic growth offered many opportunities as well as many challenges for foreign firms trying to integrate themselves into the Chinese banking sector.
• Despite having extremely conservative guidelines, the Chinese government managed to attract significant foreign interest and investment.
• However, while most of the developing nations adopted trends set by the global banking giants, China made its own norms and forced those banking giants to comply with it.
• Instead of the traditional mergers and acquisitions practiced in most foreign direct investments, China offered strategic partnerships to a maximum permissible limit of 20%, while total foreign ownership in any bank was capped at 25%.
• The global banks developed customized lending policies, banks cards, and asset management products to cater to the huge retail banking market.
• The partnership between the foreign partner and the Chinese bank not only needed to be a strategic fit and complementary in nature, but it also had to be in line with Chinese culture and value system and had to gradually modify the system to make it more beneficial for both parties.
• Biggest challenge for the strategic alliances came from the alignment of the critical human resource management (HRM) functions such as HR planning, staffing, appraisal, training and development, employee retention, etc., with Chinese culture.
Key Issues

Differences in Business Cultures

• The differences in culture, labor markets, and employments systems between China and other countries created challenges for multinational companies operating in China.
• Chinese management style was based on relationship building and development of trust. There was strong overlap between personal and business life.
• Chinese businesses also differed greatly from international business in regards to female

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