Merchant bank operation practice

Author: Tao Chang
Publisher:
Publish Date: 2003-09-01
Features: Preface With the continuous deepening and expansion of reform and opening-up policies and the introduction of foreign investment, China's financial industry has gradually formed a diversified system over the past few years. Foreign-funded financial institutions have been continuously entering the market, expanding from special economic zones to major coastal port cities and even key inland cities. The foreign-funded financial institutions entering China include wholly foreign-owned banks and financial companies, joint venture banks and financial companies, as well as financing-oriented joint venture leasing companies, among others. Their diversity has become an important component of China's financial system and has played a positive role. The Chinese financial market has presented a prosperous. After 15 years of long and arduous negotiations for entry into the World Trade Organization (WTO), our country has finally successfully joined it. Entering the WTO means we will break away from outdated systems and integrate into the global economy. For the financial industry, it will bring more opportunities but also more severe challenges. According to the provisions of the "WTO Agreement" and the "Financial Services Agreement," during the 2-5 year transition period after entry into the WTO, foreign-funded financial institutions operating in China will be gradually approved to conduct RMB business and personal business, and geographical and customer restrictions will be lifted. More foreign-funded financial institutions will enter the Chinese financial market and enjoy national treatment. After their entry, they will participate more actively in China's economic construction and financial development, which is beneficial for increasing the inflow of international financial capital, introducing modern and international business models and management systems, as well as new types of business. At the same time, it will further enhance the level of financial services openness. They will also engage in fierce competition with the existing financial system in terms of high-quality customer service, outstanding talent, new business and new technologies. Due to the imperfections in the self-disciplined and self-developing operational mechanisms of China's financial enterprises and the relatively weak financial infrastructure, especially the lack of familiarity with internationally accepted management and operational practices, there are certain disadvantages. To meet the challenges of entering the WTO, we must face our weaknesses and further accelerate our pace to regulate and improve financial laws, regulations, and operational mechanisms in line with international practices, intensify the training of financial management talents, vigorously improve the technical level of financial management, and perfect the financial market. This has become an urgent task. The author has been engaged in bank foreign exchange work for over forty years. Fortunately, he had the opportunity to represent the Chinese side in jointly establishing China's first joint venture financial company specializing in merchant banking—the China International Financial Company (Shenzhen)—with well-known Japanese Mitsui & Co., Ltd., Japanese Nomura Securities, U.S. Security Pacific Bank, and Hong Kong East Asia Bank. He personally experienced the entire process from preparation to establishment to operation and served in senior management positions for 16 years. Through years of practice in cooperation with foreign shareholders, the author has learned a great deal of modern and international banking management experience, significantly improving his English proficiency and his ability to familiarize himself with and apply international practices and norms in business management. The author is willing to share these insights and achievements with the dedicated contribution of the WTO. This book is dedicated to the peers of the financial industry, especially the senior management of Chinese banks, the faculty and students of international finance departments, world economy and foreign-related economy departments in universities, as well as Chinese employees working in foreign-funded financial institutions, as supplementary reading or reference materials to meet the new challenges that will arise after entering the WTO. This is the purpose of writing this book. During the writing process, the author was provided with materials and suggestions for revision by relevant parties. The author sincerely expresses his gratitude for their selfless assistance. Due to limitations in business experience and writing skills, it may be difficult to fully convey the original meaning, and there will undoubtedly be errors and omissions. The author sincerely invites the readers, especially the predecessors and experts in the financial industry, to criticize and correct these shortcomings, so that we can work together to contribute to the reform and development of China's financial market. Tao Chang January 2002