HSBC Bank (China) is one of the first foreign banks to incorporate locally in mainland. As a foreign-owned bank, HSBC has the largest services network among foreign banks, targeting the middle-class individuals and business-oriented individuals in China. With the globalization, China is seen as the biggest market in the world. The general environment will bring great effect to the future development of the HSBC (China). The specific analysis is as follow.
1. Demographic Environment
China has the largest population in the globe that the number has already reached 1.
4 billion. Most of the people are living in the east and middle areas. In other words, the middle and above-middle-class people assemble in these two areas with the demand of bank service. (National Bureau of Statistic of China, 2011) As the societal pressure growing heavier, less people are willing to give birth to baby so that the problem of population aging arises. According to the reform and opening policies, the east and south areas are better developed than the central and the west.
People in the coastal region have higher average income than others. As a result, HSBC (China) mostly build its banking network in the east and south areas, which are so called first-tier cities. Meanwhile, it has also expanded branches in some second-tier cities in the central area of China.
2. Economic Environment
As an emerging market, China is developing at a very fast speed with continually growing Gross Domestic Product as well as high export surplus. However, in terms of global environment, the world still not recovers from the economic recession. The financial market in mainland has been impacted that the exchange rate of RMB has gone higher and higher, which has been result in the inflation. To better control the financial market, the interest rate has been increased to limit the cash flow in the market and personal saving rate goes up that people are encouraged to save money in banks rather than investing. Another economic factor putting effect on HBCS in China is the unemployment rate. China government devotes into keeping the unemployment rate low and stable, because once the rate rises sharply, this will destroy the harmony of the society. Consequently, HSBC (China) should take this factor into account to obtain trust and support from the local government.
3. Political Environment
In China, banks are supervised by the China Banking Regulatory Commission. There are many barriers setting in front of those foreign banks in China, such as foreign banks are not permitted to establish a business of any scale in the mainland, since the Chinese legislations limit on how many local banking operations can lean on foreign banks. On the other hand, the new parties have held the power, which means new policies and new reform may come into being. Different policies and reform will significantly affect the existence of HSBC in China.
With the improvement of the capital market, the financial environment will be deregulated and gain a more loosening environment. Moreover, foreign banks in China have to be charged tax, which will increase the cost and lower the profits of HSBC in mainland. As the compulsory education popularizing, more and more people think highly of the banking service. They become to have good knowledge to the banking items and are tied closely to those services.
4. Socio-cultural Environment
Banks serve for people’s demand and need. People’s attitude towards banks is influenced by the social-cultural environment. In China, customers are more conservative that they prefer saving money. Therefore, more emphasis should be put on the retail banking services in mainland. Recent years, with the impact of financial crisis, people are less trusting banks. Banks are seen as greedy organizations by the public, which was result from arbitrary banking charges.
5. Technological Environment
Technological change can bring new style of business to organizations. It can change both the product and business way. Since the constant improvement of the Internet, HSBC has launched its online banking services in China. People can have an electronic account to check user’s balances and transactions, make transfer as well as pay bills. Simultaneously, doing business through the Internet not only save the time for customers, but also simplify the business process for HSBC so that they can cut large amount of cost.
Furthermore, the development of the mobile phone also benefits the banking services. People can easily access to their account through the mobile Internet. Secondly, particular applications have been invented for mobile users to manipulate their banking service. For example, HSBC has its own applications which can be used for IOS (iphone) and Android operating systems. These applications are convenient to use and also help HSBC to saving labor as well as time cost.
6. Global Environment
The global environment is somewhat cannot be controlled by the organizations itself. The global economy stays in a recession for a period of time and seems to be difficult to recover from it. The subsequent influences of the financial crisis affect the economy in China. HSBC (China) has earned less profit these years. Although the macro environment is not so optimistic, China is still the hugest potential market around the world. Besides China, there are still many emerging countries appear in the world, like India. In the future, HSBC (China) should pay attention to create more advantage competitiveness than those HSBC banks in other international regions.
Eternity in an hour. (2009). Environmental Analysis-HSBC(A Marketing Perspective). Available from: http://cloudchronicler.net/2009/10/14/environmental-analysis-hsbc-draft-copy/ HSBC Bank (China) Company Limited Fact Sheet. (2013). Available from: http://www.hsbc.com.cn/1/PA_1_083Q9FFKG80E20RA9Q00000000/content/china/about/docs/factsheeten.pdf HSBC Bank (China). (2013).
About HSBC (China). Available from: http://www.hsbc.com.cn/1/2/hsbc-china-cn
Sina News. (2012). The War of the Interest Rate. Available from: http://news.dichan.sina.com.cn/2012/08/02/539030.html Studymode. (2012). A PEST Analysis Report of HSBC. Available from: http://www.studymode.com/essays/Pest-Analysis-Hsbc-Holding-Plc-1206636.html The Wall Street Journal. (2011). In China, Foreign Banks Still Lag Behind. Available from:http://online.wsj.com/article/SB10001424053111904491704576574281790473152.html