Multinational Banking in China

Multinational Banking in China

Theory and Practice

New Horizons in International Business series

Chen Meng

Multinational Banking in China examines key issues in the market entry and development of foreign banks in the People’s Republic of China using data collected from 37 in-depth interviews and questionnaire surveys.

Chapter 4: Strategic Motives and Market Entry

Chen Meng

Subjects: asian studies, asian business, business and management, asia business, international business


INTRODUCTION Casson (1990) argues that economic theory of the MNB is a special case of a general approach to economic theory in which the emphasis is on the selection, through competition and rational evaluation of alternatives, of the most efficient organizational form for coordinating a division of labor between related activities. This approach helps to identify a small number of possible motivations for multinational banking which are analogous to similar motivations operating in manufacturing but which manifest themselves differently due to the different nature of the banking industry. This chapter examines strategic motivations of foreign banks as well as their entry mode choice, and how motives and entry mode evolve over time given the change of the Chinese banking market conditions. The rest of the chapter is set out in the following way: literature relating to market entry of MNBs and research questions are discussed in the following section. Section 3 discusses the research methods. Section 4 presents a discussion of the findings. Conclusions are in the final section. LITERATURE REVIEW AND DEVELOPMENT OF RESEARCH QUESTIONS Strategic Motives Drawn from manufacturing MNEs, existing research has identified many strategic motives for FDI (see, for example, Dunning, 1988, 1993a; Young et al., 1989). These motives include: 1. 2. 3. 4. 5. 6. Market seeking Efficiency seeking Strategic asset seeking Natural resource seeking Risk diversification Coalitions 44 Strategic motives and market entry 45 7. 8. Collaborations Co-partnerships. The nature of banking products determines that strategic motives pursued...

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