Strangers at the Gate: International Competition for China`s Banks

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30 July 2003


Tokyo, Japan July 30, 2003

China's Banks Face International Competition

The WTO timetable stipulates that foreign banks will have full access to the domestic market by 2006. Are China's banks ready for this competitive challenge?

With China痴 admittance to the World Trade Organization (WTO) in 2001, China will not only benefit from the international trade advantages that come with being a member, but will also be required to pay back in kind by opening its markets to foreign entrants. One of the most crucial sectors to be affected will be China's banking industry, not least because the banking sector is one of the weakest industries in China, saddled by bad debt and under-performing assets. In a new report, Strangers at the Gate:Foreign Competition for China痴 Banks, Celent Communications outlines issues that China痴 banks will need to address in order to maintain competitiveness as some of the world痴 leading banks enter the domestic market.

"It is not a given that China痴 banks will be able to hold their own once new participants are allowed to operate in the market," comments

Neil Katkov, author of the report. "Indeed, the Big Four banks have lost 20 percent market share to smaller players over the last 15 years. There is every reason to believe the foreign entrants will pose at least as formidable a threat."

The report recommends a three-pronged approach to China痴 banks: providing enhanced retail services, building world-class corporate banking capabilities, and developing a unified information technology infrastructure.

A is available online.

of Celent Communications' Retail Banking and Wholesale Banking research services can download the report electronically by clicking on the icon to the left. Non-members should contact for more information.

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