Setting Up a New Regional Bank Office in China

A regional bank has decided to open an office overseas for serving those businesses that are expanding internationally. Choose a country with a large financial center that you believe would be helpful to your customer base.

· Discuss some of the challenges you may face in this new environment.

o What are the cultural, ethnic, social, and educational characteristics?

· Describe the political and legal systems.

· How much does the government intervene in the private sector?

o How will that affect your financial institution?

· What type of economic system does it have?

o What is the history of that economic system?

· How is the country involved in international trade?

o How does the government get involved in trade issues?

o Will that help or hurt your financial institution?

· Will your presence in this country be helpful in your attempts to invest in other developing countries?

· Is this country involved in any regional integration efforts? How so?

· Why did you choose this location for your bank?

· As a manager, what would be your overall assessment about whether you want to pursue opening an office there?

o Are the financial risks worth taking?

o Will it be beneficial to all of the stakeholders?

In pursuing this, what type of presence do you think would be best suited to your objectives?

· How should the plant be financed?

· Should they hedge foreign exchange or something else? Explain.

· Identify 3 foreign exchange instruments you would recommend?

· What, if any, government regulations that would affect earnings and cash flow should they be aware of?

· Include the need to be aware of inflation and interest rates and how it affects exchange rates.

· Keep in mind that the country that the plant is in does not necessarily have to be where the financing is done.

· References