The Asian Century
The Asian Century
by Team H (Shiffy, Sophary, James, Guy, Jade)
It is hard to dispute the view that this is the Asian century. Every company on the planet seems to be fighting for position in China, and banks are no different.
There are over 180 foreign banks in China, but their combined market share is less than 2%. The restrictive Chinese banking environment has left them with little prospect of increasing their exposure or ever gaining control of a local lender.
However, NAB, the world’s third biggest agri-bank, is well placed to cash in on Australia and New Zealand’s next potential boom in food and beverage products.
By focusing on supporting the trade and investment needs of its domestic customers NAB is implementing a sustainable growth strategy.
But the Chinese market is challenging. A lack of local infrastructure in some areas and an inability to understand the subtlety of spoken language, body language and culture are just some of the reasons why foreign business fail in China.
Yet cultural missteps are not usually considered terminal, so long as business is conducted in an atmosphere of openness and respect.
That said, dealings with Chinese regulators can be opaque and sometimes impossible to decipher without an experienced Chinese hand as a guide.
Targeting the wealth management needs of a growing middle class and rapidly aging population is a key opportunity for all banks in China.
It is most likely China’s big banks will seek to acquire the intellectual property and talent from others to improve their wealth capability.
The experience and resilience of Australian banks make them attractive strategic options – watch this space! In a country full of early adopters who are obsessed with social media, new products, trading up and the status conferred by luxury brands, the opportunities are great.
The only thing more attractive than shares in an Australian bank are shares in China UnionPay (China's credit card supplier)!
As more of China’s wealth is distributed outside the major cities online trading seems like the next key battleground.