Overseas Expansion by Chinese Banks Enters Mature Phase: JPMorgan Chase China
The head of JPMorgan Chase Bank (China) says that expansion by Chinese-invested banks into overseas markets has already entered a “mature period” of development.
JPMorgan’s “2019 M&A Global Outlook” indicates that in 2018 the global mergers and acquisitions market saw USD$4.1 trillion yuan in transactions, hitting its third highest level on record.
In sharp contrast China’s outbound M&A activity saw its second consecutive year of sizeable decline after hitting a peak in 2016, with a YoY drop of 23% amidst escalating Sino-US trade tensions.
Lily Zou (邹炼), head of JPMorgan Chase (China), said to Securities Daily, that overseas activity by Chinese banks is entering a “mature period” which will see greater focus on Beijing’s policy initiatives.
“During the initial period of overseas expansion by Chinese banks the focus was on occupying areas, but now it’s become more rational,” said Zou.
“There are usually two options when approaching the establishment of overseas branch organisations – one is to prioritise customer support and establish outlets where the customers are.
“The other is to follow the initiatives and arrangements of the state – for example choosing to establish organisations around Belt and Road and the Greater Bay Area. The process of internationalisation will be more stable with this kind of strategy.”
According to Zou Chinese investors will continue to actively search for strategic overseas M&A opportunities in 2019, with an especial focus on obtaining advanced technologies, famous brands, international sales networks and key natural resources.
Chinese banks continue to lag behind international banking giants when it comes to fintech development, committing between 1 – 2% of net profits to investment in fintech.
In 2017 the total volume of fintech investment of the Chinese banking sector was over 10 billion yuan, as compared to fintech investment of USD$9.5 billion by JPMorgan Chase alone, accounting for nearly 40% of the bank’s net profits.