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ICBC Case group1 final
1. The document discusses ICBC's strategy for international expansion based on its competitive advantages in the Chinese domestic banking market. 2. ICBC's main competitive advantages include its large scale and full suite of financial services, extensive network coverage, strong customer relationships, robust IT infrastructure, and risk management capabilities. 3. Leveraging these competitive advantages, ICBC aims to expand internationally by focusing on trade finance and serving Chinese companies going global, as well as developing its offshore RMB business and presence in emerging markets.
ICBC Case group1 final
- 1. 1 CORPORATE EXPENSE MANAGEMENT SOLUTIONS DRIVESAVINGS | BENEFIT EMPLOYEES | MANAGE GLOBALLY | MAXIMISE CONTROL | DRIVE SAVINGS | BENEFIT EMPLOYEES | MANAGE GLOBALLY | REAL BUSINESS. REAL SOLUTIONS.SM HKUST – SZ PT MBA ICBC International expansion Strategy Group 1 Feb 2014
- 2. Agenda • ICBC Businessintroduction. • Challenge on China Banking Market and opportunity in international. • ICBC current Competitive advantage and industry KSF. • How competitive advantage can help to international expansion. • Conclusion. 2
- 3. Overview 3 1984 Industrial andCommercial Bank of China Limited, formerly known as Industrial and Commercial Bank of China, was established. 2005 Wholly restructured to a joint-stock limited company 2006 Listed on SSE and SSHK 2007 Ranked as No. 1 Bank in Stock Value
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- 5. Challenges from DomesticBanking Market Interests rate Labialization New Market entrance, incl bank with foreign capital 5 0 2 4 6 8 Deposite ( 1Y benchmark) Load(1~3Y benchmark) The bloom of Internet Finance: Estimated almost 800b RMB out flow from bank deposit to internet finance It raised the carrying cost of bank’s deposit, and also cannibalize the capital fund. Net interest Margin ICBC about 2.6% Big 5 2%~2.6% TW 1% Japan 1%~1.2%
- 6. Size of priceof international Market Spurred needs for migration, education and tourism. China Copr go outside. China High net worth client Investment RMB offshore business Emerging market opportunity . 2003-2006 2007-2011 State owned company Private company China Annual Value of FDI Unit: Million $ $774.7 $2048.3 $580.8 $51.3 11% 9% 11% 7% 9% 0% 5% 10% 15% Bratain Germany Singapore Italy US % Enterprises use RMB as settlement currency • In Feb 2013, ICBC Singapore branch become the 1st RMB clearing bank outside China • In the whole 2013, ICBC Singapore branch have completed 38,000 clearing settlements, the total amount arrived to 2.6 trillion RMB. • Up to 2013, The number of Chinese emigrants has reached 934.3 million • Up to 2012, Chinese students studying abroad reached 1,136,900 • In 2013 China's outbound tourism reached 98 million passengers • 60% contribution to global economy • Closed trade with China market • Low barriers to entry
- 7. Top 10 RankingBank has International Expansion
- 8. Good coverage in alltiers cities High sales turnover Highest numbers of ATMs in country Good return and low risk products Capability to cope with different Customer profiles Diversified investment Matured operations Secured security system Focused talent development Motivated employees Leadership in finance solutions providers Account management High Quality Of Services Great corporate relationship Trusty brand image Capital risk management Strong IT operations in Internet and Mobile Apps Staff trainings Network coverage Cross sale capability Full Finance Solutions Win Customers’ Trust Efficient Transactions ICBC’s ACTIVITY MAP
- 9. ICBC competitive advantagesin Domestic Full finance solutions Good network coverage (outlet, Internet and Mobile Apps) Account management/customer relationship Strong IT and operations Capital risk management
- 10. How competitive advantagecan help to ICBC International Expansion? Key Success factor for International banking Competitive advantage support Global Network and expert • Strong profit to support international expand investment. • Can focus on China related market: Import/export related Trade finance market. China Corp global expansion. Strong IT and Operation • IT and operation advantage can expand on global service. Global capital Risk management • Need to build up Cross sale capability in global account • Scale Full Finance Solution capability
- 11. Recommendation: International Expansion DomesticMarket expansion: Interest income International expansion International expansion SizeofPrice Competitive advantage Strong Weak Strong Domestic Market expansion: Non Interest income Current In 5 Year
- 12. ICBC Global BankingStrategy
- 13. International Expansion Result:Good Progress
- 14. International Expansion Result:Good Progress 1.5 2 2.5 3 3.5 4 2007 2008 2009 2010 2011 2012 International Operational Income % international income
- 15. ICBC: Pride ofChina
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- 18. International Expansion Result:Good Progress 30%
- 19. International Expansion Result:Good Progress