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Internationalizations Opportunities Financial Services Sector In China

2678 words - 11 pages

1.0 IntroductionGreater China has been one of the most dynamic areas in the world economy. With the entry of the China into the World Trade Organization, China's financial markets emerge on the frontier of economic reform and openness. Financial services also provide the most exciting foreign business opportunities in China. However, the recent Asian financial crisis illuminates the problems in China's state-run enterprises and an ill-functioning banking system.This paper is looking for the business opportunity of financial services industry in China. It will begin from the review of the emerging economies to explain why the specific region was chose. The research of this paper also include business analysis in China, a review of profitable industry, the business entry strategy and its functional areas operate in China. At the end, the future strategy and the recommendations will be simply discussed for the further steps in this investment.2.0 A review of the emerging economies2.1 The selected regionFrom the mid 1970s, many firms, especially multinational enterprises (MNEs) began to reduce their costs by utilizing cheaper developing country labor in their production processes. This resulted in the transfer of some manufacturing production to developing countries such as Mexico, Tunisia and Singapore. The transfer which intensified as developing countries, especially those in East Asia, MNEs were increasingly locating manufacturing facilities, improved the quality of local infrastructure and the skills of their workforce. East Asia has now emerged as a major economic region.For the last 30 years East Asian economies have grown more than twice as fast as the average of rate for the rest of the world. East Asia's amazing economic transformation in the last few decades has been real.However, the major problems in the region's instability has been recognized since 1997's Asia crisis. Heavy foreign investment combined with weak financial system to allow lenders in many Southeast Asian countries to rapidly expand credit, often to risky borrowers, making the financial system more vulnerable. And lack of corporate governance result in ineffective boards of directors, weak internal control, poor audits and lax legal enforcement in many Asian countries.2.2 Selection of ChinaChina's role in the region is unrivaled. First, its economy is large in absolute terms - constituting half the economy of Asia, according to measures of purchasing power. Second, China has rapidly expanded its trade, almost tripling its share of global exports and more than doubling its share of global imports over the period 1990-2002 and absorbing a fast-growing share of exports from east Asia over the last decade. Third, though its capital account is not fully convertible, China is important both as an investment destination and as a lender in global capital markets. It is the world's largest host country for foreign direct investment (FDI). China's WTO accession and deeper...

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