'Content Standard Chartered is regarded as a premier international bank, particularly in establishing itself in developing markets. The bank's plans to incorporate in order to become a 'local bank' in China and develop a credit card business next year clearly fit its international growth strategy.
Standard Chartered set up its business in China in 1858 and now has over 1,800 staff in over 11 branches, seven of which provide full banking services to corporate clients. However, its current banking license does not allow it to issue credit cards to the Chinese population. Like all other foreign banks, it must wait until China's accession to the World Trade Organization.
Chinese banking officials have been criticized of late because of the additional regulations they have added to ward off heightened foreign bank activity. For example, in August 2006, Chinese banking regulators said foreign banks would be allowed to issue cards, if they agreed to incorporate locally by paying one billion yuan ($125 million).
Standard Chartered has announced that it would pay this amount to incorporate its business in China and set up as a local bank. Consequently, it will then begin issuing credit cards in 2007 and, if all plans are realized, it will become the first foreign funded bank to issue cards in China.
With the massive interest that foreign banks have in China, Standard Chartered's announcement of incorporation may well prompt other foreign players to do the same to ensure that they do not miss out on any competitive advantage. In response that this, Chinese officials might introduce new regulations to further delay foreign players in its market, meaning the task will certainly not be an easy one for Standard Chartered or its rivals.
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