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Case Title:

Foreign Investment in Chinese Banking Sector: HR Challenges

Publication Year : 2010

Authors: S Chaudhuri

Industry: Banking, Insurance and Financial Services

Region:China

Case Code: HRM0073IRC

Teaching Note: Not Available

Structured Assignment:  Not Available

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Abstract:
The phenomena of mergers and acquisitions, globalisation and internationalisation of products and services and changes in organisational structures became a global trend in the developing countries. Although the Chinese banking industry was not an exception to it, there was a basic difference in their reform process to that of the other developing economies. While most of the developing nations had to adopt the trend set by the global banking giants, China had made its own norms and forced those banking giants to comply with it. Mergers and acquisitions had been replaced by strategic partnership to a maximum permissible limit of 20%, while the total foreign ownership in any bank was capped at 25%. The universal banks developed customised lending policies, bank cards and asset management products to cater to the huge retail banking market. But to appropriately manage the human resources, such international strategic alliances had to develop an understanding of stakeholder interests, aspirations and needs. Successful implementation of international joint ventures was thus a huge challenge for all the banks. The foreign partner not only needed to be strategically fit and complementary to the Chinese bank, but also had to adopt the Chinese culture and value system, and had to gradually modify the system to make it more beneficial.

Pedagogical Objectives:

  • To have a brief understanding of the Chinese banking sector and foreign investment in that sector.
  • To understand the role of strategic fit, cultural fit and core competency in the context of foreign strategic partnerships.
  • To understand the human resource management problems in international strategic alliances.
  • To have a brief understanding of the convergence

Keywords :  Investment, Banking, China, Human resource management, Foreign direct investment (FDI), Reforms, Non-performing loans (NPLs), WTO (World Trade Organisation), Basel, Strategic investment, Strategic alliances, Cross-vergence, Convergence, China Banking Regulatory Commission (CBRC), People?s Bank of China (PBC)

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