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E*Trade In China International Financial Management Class

1608 words - 6 pages

The decision for E*Trade to expand into China is a crucial and challenging process. There are many factors to be calculated into the decision in order for E*Trade and China to benefit from it. E*Trade has proven for over a decade that it is extremely successful and has been tremendously valued by it's users. It has done so by not only being an entrepreneur in the United States creating the most affluent online banking system, but it has also done so by expanding into many countries around the world. Japan, Germany, Sweden, the U.K., Australia, Denmark, and Canada and even Hong Kong are benefiting from E*Trade's sophisticated and convenient service, which has all taken place within just over ten years. The major question now is whether or not they should expand into main land China; since by doing so they face major risks and very large hurdles.Since 1992, China has been taking very large steps in the effort to encourage foreign investment from other countries. With this amendment to their political system, China has been able to flourish into one of the fastest growing economies in the world, and currently is the fastest growing economy in East Asian countries.China's high-tech industry is also growing rapidly. They are in the process of transforming from an agricultural society to a much more industrialized society. In doing so, E*Trade will have to enter into the adoption of a high-tech industry in China immediately in order to gain advantages over competition flirting with the idea of entering China.With the increase of a global economy, China has been forced to change their legal policies towards favoring foreign investment and issue new laws to attract economic development. In doing so, they have completely revised their patent laws, and are in the process of amending their trademark and copyright laws in scope of attracting and protecting any potential foreign investors.Although steps have been taken towards refining their laws, China still remains weak in protecting Intellectual Property Rights. China's laws and regulations tend to be far more general than in most countries, and with the lack of legal training China faces with their court judges, their court system lacks effectiveness.China still has strong restrictions on foreign owned banks in their country, which tend to deter the entrance of these banks. China will only consider foreign banks to enter their country if they are financially strong, with minimum assets equaling US$10 billion. Along with that, these banks must be familiar with the Chinese market and must operate a representative office in China for two years before conducting full operations. Along with this heavy restraint, China also insists that foreign banks must wait twelve months to obtain a new branch license after opening its first branch. The banks will also have to exhibit two consecutive years of profit before it can obtain a license to engage in the business of renminbi. On top of that, each branch will have to...

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