“The rural banking sector is under-banked, so we are seeing strong demand for the right product and for the right services. There is strong untapped demand in that market,” said HSBC Bank (China) CEO Yorke. HSBC’s oldest rural bank is just over two years old, he said, adding that the rural outlets will likely start breaking even at the three-year mark. 81 The bank is also working toward being one of mainland China’s first foreign-listed companies to tap into the country’s liquidity and to raise its overall profile there. In addition, HSBC is seeking regulatory approval to set up a credit-card joint venture with Bank of Communications and is seeking licenses to access China’s securities business. Foreign banks have been allowed to issue credit cards in China since 2004 in conjunction with their local partners. Since then HSBC and Bank of Communications have issued over 20 million co-branded credit cards in China. 82 HSBC’s China experience has been one of steady and consistent expansion and success. While there have been some setbacks, its overall approach, emphasizing close collaboration with the Chinese government and local partners, reliance on local staff and talent, and its overall shift in global strategy from developed to emerging markets, has served it well.
1. How has HSBC adapted its global strategy to operate in China, both before and after China’s WTO accession?
2. Discuss HSBC’s strategy for entering and operating in other emerging markets. Where has it found success, and where has it faced setbacks? Why?
3. What are the pros and cons of HSBC’s “Managing for Growth” strategy?
4. How did HSBC withstand the world economic crisis? Was HSBC’s position weakened or strengthened as result of the crisis? What were the results of HSBC group strategy in 2009? What regions were identified as new global opportunities?
5. What is the core of HSBC’s current “Organic Growth Strategy” in China? Why did HSBC decide to expand its financial services in China’s rural areas? What are the pros and cons of the rural expansion?