Pestel Analysis - Banking in China Essay

1108 Words Feb 21st, 2009 5 Pages
Using PESTEL analysis to understand the macro-environment that impacts the Banking Industry in China.

Political Factors • China has a socialist political system • China has entered into the WTO and as part of the commitment to open up the banking industry, has issued the Rules for Implementing the Regulations Governing Foreign Financial Institutions in the People’s Republic of China , which allows Foreign financial institutions to provide foreign currency services to Chinese enterprises and individuals, provide local currency business to all Chinese clients and they can now conduct RMB denominated business in 9 cities, namely, Shanghai, Shenzhen, Tianjin, Dalian, Guangzhou, Zhuhai, Qingdao, Nanjing and Wuhan. • Foreign
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• The skill sets of Government bureaucrats have to be transformed if they were to run private sector corporations

Technological Factors

• China’s leaders (Hu Jintao, Wen Jaibao, Jiang Zemin & Zhu Rongji) have been described as technocrats as they were all trained as engineers, therefore scientific and technological modernisation has been given a high priority. • Increased in the use of banking cards, China has issued 714 million banking cards between 1985 to 2006. • Approximately 480,000 POS machines and 64,000 ATMs as at June 2004, low population vs POS/ATM ratio compared to developed markets. • The China Association of Banks promoted the inter-bank card network. • Fast take up of internet with roughly 20% p.a. growth since 2000. • 210,000,000 internet users as at June 07 , a 15.9% penetration and the second largest internet user after the US, which provides huge opportunities in the area of internet banking

Environmental Factors

• Not applicable to the banking industry ? • Rapid industrial development since the 1980s has increased pollution and degraded natural resources. • Environmental problems have posed a threat to the sustainable development of the

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