A Study of Taiwan Banking Industry Investment in China

• Main Authors: HUANG LING I, 黃令怡
• Other Authors: PO-CHIH LEE
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/78204479044737221969

碩士 === 國立高雄大學 === 亞太工商管理學系碩士班 === 100 === The Taiwan economy has been grown rapidly in recent years, and thus the Gross Domestic Product has increased substantially. The expansion of the economy has resulted in an increase in the size of the financial sector. Due to the financial sector reform, the banking industry has been transformed from an oligopoly into a highly competitive market, so the interest rate spread has been gradually reduced. In contrast, the interest rate spread for the China banking industry has been quite stable. In the meantime, both the return of assets (ROA) and the return of equity (ROE) for the Taiwan banking industry are also lower than that of international large banks, indicating that the Taiwan banking industry is in a low return stage. The financial sectors in cross-strait seldom exchange in the past due to political reason. However, the situation has entered a new era after signings of Memorandum of Understand (MOU) and the Economic Cooperation Framework Agreement (ECFA). At this moment, there are six commercial banks from Taiwan setting up branches in mainland China, including Cathy United Bank, First Commercial Bank, Chang Hwa Commercial Bank, Cooperative Bank, Land Bank, and Hua Nan Commercial Bank. Of these Banks, First Commercial Bank also sets up second branch in Chengdu, which has been approve by the Taiwan Financial Service Commission and is expected to operate for business in June 2012. Meanwhile, there are four Chinese counterparts setting up offices in Taiwan, including Bank of Communication, Bank of China, China Merchants Bank, and China Construction Bank. Of these Banks, Bank of Communication and Bank of China have already applied for setting up branches and are expected to open for business in the first quarter of 2012. This will result in a competitive situation for both financial sectors in cross-strait. The main purpose of this study is to investigate the Chinese financial sector operations and foreign banks management strategies in China by using the methods of five-force analysis, SWOT analysis, historical review. and expert interview. The major findings of this study will serve as references for those Taiwanese banks planning to undertake investment in banking in China in the near future. Major suggestions derived from this study are : First, regarding government policies it should (1) establish a sound cross-strait financial supervisory mechanism, (2) establish a cross-strait currency settlement agreement, and (3) develop ways and means in response to China banking industry entering Taiwan financial market. Secondly, for bankers in Taiwan they should (1) jointly set up a company entering the China financial market, (2) set up an exchange platform for those Taiwanese banks in China, and (3) carefully evaluate operational risks in the China financial market.