Does foreign strategic investment transfer management knowledge to local Chinese banks?

Abstract

Purpose

The purpose of this paper is to analyze whether, and how, foreign strategic investor entry to China conveys management expertise to domestic banks. Some observers are concerned that foreign investors will be reluctant to transfer their expertise to local partners, and few skills will be acquired by Chinese banks. At the same time, the trade‐off between China's access to banking skills and foreigners' access to Chinese customers will overwhelmingly favour the foreigners.

Design/methodology/approach

The discussion is based on authentic cases collected from the China Banking Regulatory Commission, various banks annual reports, and the China Financial Development Report. Cross‐border management knowledge transfer from global banks to emerging economies is the theoretical framework for analyzing strategic investment in bank cases.

Findings

The paper finds that there are some successes of management knowledge transfer from such investment, although foreign strategic investment is limited as a minority share in each local bank. Culture shock came at the first stage and syncretism later on.

Originality/value

The cultural shock and rigidity of traditional conception are an impediment in the transfer process. This paper shows that the initial conflict can be avoided.

Citation

Qin, F. and Liu, Y. (2008), "Does foreign strategic investment transfer management knowledge to local Chinese banks?", Chinese Management Studies, Vol. 2 No. 2, pp. 142-152. https://doi.org/10.1108/17506140810882261