Banking on the East
The exploding growth of the Chinese market may turn out, in the end, to be the saving grace of Austrian banks
On the 3rd of September, the Raiffeisen International Bank-Holding AG (RZB), the largest Austrian banking group, opened a second branch in Xiamen, China. Currently, there are 32 bank institutions in this city, including 16 domestic banks, 12 foreign bank branches and 14 bank representative offices, according to China’s Bank Regulatory Commission.
"The decision to set this branch in Xiamen is due to the market position," said Victor Chen, the assistant GM and Head of Marketing Division of the Beijing Branch.
The branch in Xiamen mainly focuses on trade financing and package financing, meaning that the main clients are private enterprises and foreign invested enterprises. "One of the earliest Special Economic Zones made Xiamen a favorite destination for foreign investors" Chen says, and benefits eastern and southern China, particularly from investment capital of Hong Kong, Macau and Taiwan.
Xiamen is the host of the China International Fair for Investment and Trade, which is held annually in early September to attract foreign direct investment into the Chinese mainland. During 2007, 474 more projects with foreign direct investment had been approved in the city, with a contractual foreign investment amounting to 2.24 billion euro. Opening a second branch here shows the attentive interest of RZB in Xiamen.
This Raiffeisen International Bank-Holding AG is the central institution of the Austrian Raiffeisen Banking Group. It was found in 1927 and it is a leading corporate and investment bank in Austria and also considers Central and Eastern Europe (CEE) its home market.
"We were invited at that time to open a branch, becoming the only Austrian bank in China, and were convinced that our decision would be timely as we had observed the growth of the Chinese market over the previous years," said Dr. Eberhard Winkelbauer, the Executive Vice President and Division Head of International Business Units. Their bank had correspondent relationships with Chinese banks long before other Austrian banks had even considered it.
Raiffeisen Bank opened its representative office in Beijing in 1995 and got the permission to set up a branch at the end of 1999. It already received concession for banking business in Renminbi, the local Chinese currency. Furthermore, RZB has representative offices in Harbin, Zhuhai as well as a representative office in Hong Kong where they also have a moneylender subsidiary.
The branch in Xiamen will shoot for the domestic market later, besides the foreign exchange operations. "This will be an important step for RZB in terms of broader access to the Chinese market for financial services," said Victor Chen.
Drawing from their thriving economy, Austrian companies have established more than 400 subsidiaries and offices in China, and the scale of investment is still growing. Not only in investment sectors, but also in bilateral ones. The statistics from the Chinese Economic and Commercial Counselor Office show that from January to May, the trade volume between Austria and China is 14% higher and Austria export value rose to 761,690,800 Euro, increasing by 27.9%, which is 1.54% of its total export value.
The Wall Street banking crisis has brought a chain repercussion all over the world. The decision of the People’s Bank of China to cut the interest rates rang a bell; however, the head of the Austrian Chamber of Commerce was of the opinion that although the speed of Chinese economy development is slowing down, Austrian enterprises still have plenty of opportunities in many fields.
Confidently, Victor Chen stated, "From my point of view, it is basically a way of short-term adjustment. The crisis will not affect RZB in China too much as China has a huge market potential."
The Austrian Commercial Counselor in China estimated that, in Mainland China and Hong Kong, a population of 2 to 3 hundred million reached the European purchasing power. The consumption group will bring Austrian companies lots of business opportunities. China is on its way from the "world factory" to the world market.