Foreign-funded Banks: A Grip on Their Holy Grail?

ON December 11, 2006, China honored its WTO commitment to open its Renminbi business to foreign banks. Since that date, both locally incorporated foreign-funded banks and joint venture financial institutions are licensed to offer RMB services. Non-incorporated branches may also accept time deposits from Chinese citizens within the territory of China of no less than RMB 1 million for each time. It seems foreign banks at last have one hand on their holy grail - China’s 1.3 billion customers. But their grip is so far a weak one. China Youth Daily carried out a survey, and of the 3,384 respondents, 85.2 percent said that they paid close attention to the development. As regards their impression of foreign banks, 66.7 percent said their main advantage was a better service. Just 10.8 percent said they would open an account in a foreign bank, and 16.4 percent said they would wait and see what happens. What lies ahead for foreign banks in China, and how will the phenomenon impact domestic banks in the Chinese mainland?