Foreign Banking in China: A Study of 279 Branch Units in 32 Cities

Abstract

Two China-based geographers examine the gradual relaxation of restrictions on the activity of foreign banks in China as a prelude to a more focused investigation of the concentrated locational pattern of foreign banking in that country. The study, which embraces 32 Chinese cities, emphasizes the factors that have attracted foreign banks to particular cities and regions of China, including the existence of special banking opportunities, the so-called "follow-the customer" strategy, externalities associated with major financial centers such as Beijing and Shanghai, relaxed banking regimes in particular urban centers and special economic zones, and exposure to international trade and to a variety of foreign business enterprises. The locational preferences of foreign banks in relation to their countries of origin are addressed in some detail.

What attracts foreign direct investment in China’s real estate development?

“…Such location factors mainly include market size and potential, labor costs and quality, agglomeration economies, regional governance, institutional quality, governmental policies, transportation infrastructure (Wei et al 1999;Cheng and Kwan 2000;Cheng and Stough 2006;Cheng 2006;Du et al 2008;He 2002He , 2003He , 2006Sun et al 2002). Locations of service FDI in China remain rather under-researched although there are some studies examining foreign investment in banking and insurance, and logistics industries (Wu and Strange 2000;Hong 2007;He and Fu 2008). Services are inherently non-storable unless embodied in goods, and their production and consumption have to occur in the same place and at the same time.…”

Spatial inequality and dynamics of foreign hypermarket retailers in China

“…Since 2005, provincial foreign hypermarket distribution has shown statistically significant clustering in the Yangtze River Delta. When compared with service TNCs in other sectors-such as banking and real estate, foreign hypermarket retailers share an expansion pattern similar to them: initially starting from the special economic zones and major cities in the eastern coastal region and subsequently diffusing to the interior region (He & Fu, 2008;He & Zhu, 2010).^Without doubt, gradual deregulation and liberalisation policies played an important role in the spatial expansion of all service TNCs in China.…”

The changing geographies of financial centres in China: The case of commercial banking

“…Wu et al (2007) point out that, in the early stages of opening up, foreign banks were only concentrated in first-and second-tier cities, especially trade-oriented cities and cities where the People's Bank of China (PBOC) was present because of the significance of informational externalities and first-mover advantages. Subsequent reforms and deregulation in China, in contrast, guided the pace of the spatial expansion of foreign banks (He & Fu, 2008. He and Yeung (2011) also compare the location choices made by foreign banks and conclude that the effects of agglomeration and economies of scale outweighed the first-mover advantage as a determinant factor for spatial distribution and locational choice of foreign banks.…”