Includes recommendations for banking in China Essay
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The bank is progressively upgrading its services and is attempting to match the best practices in the banking industry. This is evident from its Factoring programme for businesses. This enables business people to assign receivables to Bank of China and in turn they are provided with all facilities for collection, finance of trade, risk control and ledger sales management.
In addition there is easy finance on production of delivery of goods, provision of capital at low cost, protection of credit to the seller despite any financial difficulty of the buyer, thus in some cases it will be the buyer also who will be benefiting along with the seller in case Factoring is undertaken.
The Factoring services include export and import factoring as well export and domestic invoice discounting and domestic full factoring. Being the first and the largest factoring services provider in China’s banking sector, it has build extensive experience in this field and therefore will provide assured services.
(Factoring, 2006). BOC has developed partnerships with large state held Chinese corporations such as the oil and petroleum company China National Petroleum Corporation. This will add value to its global business and create partnerships for growth. Security and risk management in Bank of China is dependent on its corporate governance policy. This is determined and controlled by the board of directors which oversees the overall operation and administration.
As per standard norms of banks, committees are appointed to supervise various banking functions which include those for strategic planning, audit, risk management, personnel and remuneration and transaction controls. (Governance, 2006). The various stake holders in the bank include apart from the state government, the share holders, a board of directors, in which the posts of Chairman and President are said to be separate, a board o f supervisors and senior management. (Governance, 2006). The large quantum of non performing assets and a state control however does not immediately contribute to confidence in this area.
The Bank is prone to provide for areas which are determined by the Central government and to that extent its policies are not ruled by the needs of ensuring profitability and efficiency. The picture in China is however continuously changing and greater progress in this sphere is anticipated in the future. HSBC exploits it legacy of banking in China to effect as it has been present in the Middle Kingdom since 1865. (HSBC China, 2006). The Bank provides the customers the advantage of being a single banker for domestic as well as foreign banking services thereby providing it convenience, speed, security and assurance.
(HSBC China, 2006). HSBC is seen to operate at an entirely different level. The products, services and processes for the customers have been well established by the bank. It is now marketing these facilities to provide growth both in the personal and business banking sectors. Modern banking as practiced by HSBC is not only creating facilities such as automated teller and cash machines but actually recognizing the benefits of customers using these. This leads banks as HSBC to sponsor various gift schemes for users who use cash machines or pay their bills online.
This indicates that services are not mere conveniences but offers which enable the bank to actually increase its efficiency. Then there are services such as money managers for the business, high interest deposit bonds, money market account and clients deposit account which enables pooling of money in a single account. HSBC also manages pensions of employers for a business as well for individuals. For business there are other factilities that are being provided such as business internet banking as well as HSBCnet which provides larger companies with a complete range of services on the internet, invoice finance,
Against the internal growth outlook of Bank of China, HSBC is seeking more challenges externally as the Worlds local bank and is investing in many developing countries such as Vietnam, Saudi Arabia and even Iraq. (Schuman, 2006). The low penetration of modern banking systems services for example credit cards in China which for a 1. 3 billion population has only 10 million card holders has promised greater possibility and scope for banks such as HSBC.
While HSBC sees itself as the Worlds local bank, the BOC wants to seek primacy in Chinese banking by providing assistance in doing business globally. Thus there is a difference in the focus of both the banks. This also underlines an essential difference in the states of the Chinese banking industry vis a vis global banking conglomerates as HSBC. The Chinese banking industry is still in its nascence and thus sees itself as a provider of financial services to its domestic clientele be it personal or corporate to operate internationally.
On the other hand HSBC sees itself as a bank for global banking regardless of the nationality of its clients. The Bank of China will have to face these challenges in the future in a very cohesive manner. Bank of China is well established domestically as well as globally. It can conduct sustained operations as it has adequate experience and exposure to varied political, economic and financial regimes. The global orientation of the bank is particularly favorable for its sustained growth and expansion in the future. It can thus provide the lead to other banks in China.