Choosing Entry Mode to Mainland China

10.29724/TMR.201107.0003

Joung-Yol Lin；Batchuluun Amrita

Taiwan ； Mainland China ； model ； banks and financial institution ； ECFA

東海管理評論

12卷1S期（2011 / 07 / 01）

71 - 119

英文

The Economic Cooperation Framework Agreements (ECFA) is an agreement between the Republic of China (Taiwan) and People's Republic of China (Mainland China), which was signed on June 29, 2010. The ECFA can have a far reaching impact on bilateral businesses relationship of the two parties, further strengthening the financial infrastructure and enhancing financial stability. Currently, thirteen Taiwanese banks meet the capital adequacy or stake acquisition requirements in the mainland China; on the contrary, five mainland Chinese banks meet the capital adequacy and operation experience requirements for opening a representative office in Taiwan. Consequently, a merger of banks and related options between the two regions are under discussion. In a review of the ECFA and other reports, Taiwanese banks will be able to progress further on the banking business in the mainland market within 2 years. However, there are still many uncertainties and questions concerning bank characteristics after ECFA; such as competitive position, market efficiency, long term returns and dimensional stability. This paper investigates theoretical and empirical studies and application of PESTEL analysis on the major factors in the macro environment of China. Specific attention is made in regards to the securities, banking and insurance aspects. The vital finding of this study is investigation of the entry mode strategy for the Chinese market with a long-term vision to foster into global competition. Finally, in order to intensify the competitive advantage, this paper explores a viable model for Taiwanese Banks to structure their products and services upon. The result of this study has important implications for the Taiwanese bank management in guiding a successful market entry into Mainland territory.

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