Tasha Haight

Professor Shapero
International Management
November 24, 2014
HSBC in China
1. How has HSBC adapted its global strategy to operate in China, both before and after
Chinas WTO accession?
Prior to the WTO accession, Chinas banking industry operated as a cog in Chinas centrally
planned economy (Chinas Banking Sector Pre WTO, 548). While creating some of the most
successful enterprises due to government involvement, the banks also supported the most
unstable, unprofitable state enterprises. This left the banks in major debt. In 2001, China joined
the World Trade Organization, allowing foreign banks to conduct business in China. HSBC was
in the perfect position to take the most advantage of this new opportunity because of their long
success in China already. They recognized the potential in China and with credit cards and
provided domestic reform and regulatory moves to adapt its strategy with the WTO accession.
2. Discuss HSBCs strategy for entering and operating in other emerging markets. Where
has it found success, and where has it faced setbacks? Why?
Managing for Growth builds on HSBCs global, international scope and seeks to grow by
focusing on the key customer groups of personal financial services; consumer finance;
commercial banking; corporate, investment banking, and markets; and private banking
(Managing for Growth, 547). HSBC believes emerging market growth will exceed developed

market growth and therefore uses long-term profits instead of immediate results and uses other
companies as a benchmark. This proved to be true in Mexico, where HSBC found great success
due to the implementation of credit cards and the expanding market. HSBC also bought an
undercapitalized bank that helped it succeed. In Argentina, however, the results were not nearly
as good. When the Argentinian government converted American dollars to pesos, the strong
economy quickly fell. The devaluation of the currency created major losses for most banks,
especially HSBC and its strong presence in Latin America.
3. What are the pros and cons of HSBCs Managing for Growth strategy?
Like any strategy, HSBCs Managing for Growth strategy has many pros and cons associated
with it. It aims to vault HSBC to the worlds leading financial services company (Managing for
Growth, 547). Pros of this strategy include using peers to set targets for itself and instead of
expecting immediate results, this strategy understands the earnings over the long term. Eight
pillars were used to plan goals and how to achieve them, being a very big pro. Unfortunately,
HSBC increased their spending, which increased expenses, and profits decreased. HSBC
became outranked and employees soon left the company, creating a major con to offset the pros.
4. How did HSBC withstand the world economic crisis? Was HSBCs position weakened or
strengthened as result of the crisis? What were the results of HSBC group strategy in
2009? What regions were identified as new global opportunities?
The consequences of global economic crisis were severe for the worlds banking system,
prompting thousands of banks to seek financial assistance from their local government
(Economic Crisis and Financial Performance, 546). HSBC however still profited in 2008,
even though the profits were lower than that of 2007. This is mostly due to their strong hold

in emerging markets. They see Asia as having major potential growth and China as key to
future success. India is also a grand possibility.
5. What is the core of HSBCs current Organic Growth Strategy in China? Why did
HSBC decided to expand its financial services in Chinas rural areas? What are the pros
and cons of the rural expansion?
HSBC plans to expand into China using two strategies Organic growth and Strategic
investments. With the organic growth strategy, the plan is organic business growth via own
branch network and the strategic investments are creating value and synergies from HSBCs
investment in strategic partners (HSBC Current China Strategy, 555). To expand rural business
growth, government campaigns and capitalization on the growing economy are included in the
current plans of the company. 2/3 of Chinas population lives in rural areas, yet there are no
financial services available making it a first mover strategy to expand into rural areas. The
untapped area has the potential to be extremely successful, however they will have to face risks
of doing business in rural China. It is a developing market and therefore contains risks and costs,
but the potential benefits are strong.