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Taking Sides Case Analysis

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Citibank, part of Citigroup, was one of the first foreign firms that had obtained licenses to conduct a limited range of commercial activities in China. By 2002, Citibank had become one of the strongest foreign banks operating in the People's Republic of China (PRC), but as a foreign bank it had only limited market access, even for its limited array of services. At headquarters, Citigroup wanted to determine the growth prospects for each of its divisions, and which of its vast array of financial services should be the focus for expansion in China (Pearce, J, & Robinson R., 2005, pg 595).

Displayed Adaptability Pros

Citigroup has displayed adaptability in China for over a decade. They were the first international bank to enter into China and have developed a lucrative business relationship in the country. Specific areas that they have proven adaptability include, but are not limited to, human resources and global relationship banking. China should really be viewed as a developing country in terms of its banking system. The article states China really had no real marketing system (thus the price of goods varies substantially), had no real accounting or auditing procedures in place, having both communistic and democratic policies and its own banking system was diluted with bad loans and illegal practices. For a company just to get its foot in the door and even achieve a 5% share (Datamonitor) in China's credit card market is an achievement all unto itself.

In the area of human resources, Citigroup has hired and trained the locals to operate their establishments. Over 95 percent of Citibank's jobs held outside the United States were held by locally hired staff (Pearce & Robinson, 2004, pg. 14). In the area of global relationship banking Citibank has adapted by developing a strategy that targets strong state owned enterprises. Citibank identified 10 industries that had potential to develop fast. After identifying each of the industries identified were given a team (hired locally) and provided in-depth consultation on growth opportunities. This strategy provided opportunity and developed relationships that offered future growth potential.

China has a vested interest in building their financial infrastructure due to their recent membership in the World Trade Organization. "China's entry into the WTO in 2001 entailed the provision of even more concessions to the global economy, and marked a key watershed in the relationship between the Chinese state and globalization."(Breslin, 2004) China has adapted Citibank audit standards which show a sense of trust between the government and the organization. Before the World Trade Organization membership, "Citibank had been licensed only to provide corporate banking services, and only to foreign-invested enterprises. Furthermore, Citibank had been licensed to operate branches in only a few of the Chinese cities open to foreign banks" (Pearce & Robinson, 2005).

Displayed Adaptability Cons

An area that Citigroup has been less inclined to adapt to pertains to joint ventures in China. Government regulations associated with joint ventures do not fit into the company's strategic plans and objectives. However, in 2001, Citibank first approached PDB, China's ninth largest consumer bank with a network in 30 major Chinese cities, to suggest co-operation in the credit card business. The venture would be set up as a separate join venture between the two banks (Powers, 2003, pg.6). Joint venture are something



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