| dc.description.abstract | Since Taiwan allows new established banks to join the financial service industry, crowded domestic banks in a small island, industry globalization and degenerate of domestic economy form fierce competition in Taiwan’’s banking sector. The results are weak profitability for all banks and the poor quality of banks’ assets. Moreover the impact of credit and cash card debts erupted on 2005 was even worsening the economy of Taiwan; the banking sector became extremely hard.
China is an attractive market worldwide with highly growth potential recently, many Taiwanese companies go across the Taiwan Strait to China and operate business there; therefore the demand for financial services from these companies is growing each year. This gives a brand new market for domestic banks to enjoy the business growth if they can directly offer the services in China. These banks find a way to loan their excessive idle capital. In the other hand, those companies who invest in China can get cheap capital from these banks.
Taiwan restricts direct investment in China; only a non-functional office is allowed in China and makes no meaning for these domestic banks. However, there is a breakthrough in year 2008. On April 3, 2008, Taiwan Financial Supervisory Commission (FSC) gave a green light to permit Fubon to take some percent stakes in the Xianmen City Commercial Bank through the Fubon Bank (HK). Fubon paves the way for the first investment in a Chinese bank by a Taiwanese financial company. This is also a milestone for Taiwan banking sector.
Fubon Financial Holding is the firs financial service company who successfully makes great inroads into the vast Chinese market, the key factor is its indirect model; the company can extend its territory to China through a third-country based subsidiary. The purpose of this study tries to identify the opportunities, challenges and risks for those Taiwan based banks who also want to extend the business converge into China. By way of takes Fubon holding as a major case, and also refer to experiences from foreign financial services companies who already step their feet into China, we can conclude the advantages of the invest model Fubon took compare to other models, and hope these findings can be a useful reference for Taiwan banking sector. | en_US |