Citigroup in Post Wto China
Essay title: Citigroup in Post Wto China
Citigroup in Post WTO China
China entered into the World Trade Organization with the promise that foreign financial institutions would be permitted to operate through China (harvardbusinessonline.hbsp.harvard.edu). Citigroup had previously experienced operational success and a competitive advantage in many other Asian countries and now looked to experience the same type of success in China. How Citigroup adapted to the Chinese governmental and business environments would play a critical role in shaping the company’s expansion into the Chinese market.

There are numerous reasons that would make it difficult for Citigroup to adapt to the Chinese environment. First, Citigroup would have to overcome numerous human resources obstacles. Citigroup held true to its belief in hiring local employees. As a result, over 95% of Citigroup’s employees in foreign markets were local. However, as China lagged behind in its business administration curricula, Citigroup would have to spend a longer time training local employees. Furthermore, as Citigroup completed training of workers many left for jobs with other competing financial institutions.

Next, lagging telecom in China could possibly make it difficult for Citigroup to adapt to the Chinese environment. Citigroup had a vast array of e-commerce options the company offered to its customers and employees. There was a prevailing sentiment that China’s lagging telecom industry would make it extremely difficult for the company to utilize its e-commerce competitive advantage. This potential e-commerce dilemma would make it hard for Citigroup to adapt its operations to the Chinese environment.

Finally Citigroup’s reluctance to enter into joint ventures would make it hard for the company to adapt to the Chinese environment. When China began to ease restrictions on foreign companies in the insurance arena, AIG gained a competitive advantage over local Chinese insurers in the city of Shanghai, garnering an impressive 88% market share. As a result, China incorporated new barriers to entry aimed at deterring other foreign companies from amassing the same type of market share in other cities. Most notably, the People’s Bank of China required foreign companies to utilize joint ventures to enter the market. Citigroup, although experienced, was not amenable to entering into new joint ventures. In addition the company’s flagship insurance company, the Travelers, targeted a high net worth clientele, which was not a large target market segment in China.

Although these human resources, e-commerce, and governmental regulations made it difficult for Citigroup to adapt, this group believes overall the company was able to successfully adapt to the Chinese environment. Citigroup’s expansion into the foreign market provided an astonishing array of opportunities for the company’s strategic growth and marketing position. Citigroup was able to capitalize on Chinas entrance into the WTO by utilizing strengths already incorporated into Citicorp who has had a presence in China for over 100 years. Citibank, a division of Citicorp originally entered the market in 1902, which proved to be strength for Citigroup when attempting to expand business in the Chinese markets. Most foreigners found it difficult to adapt culturally to life in China, but because Citibank has had a presence in China for over 100 years, they are able to hire over 95% of their staff from local areas. This local presence gave Citibank a distinct advantage in China where it is often difficult for foreign companies to develop close ties with the community and with the local central bank.

Citigroup also displayed environmental adaptability by providing its new customers with a variety of services that could accommodate their financial needs and wants. Although Citigroup had already established a presence in China, Citigroup

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Company’S Expansion And Citigroup. (June 9, 2021). Retrieved from https://www.freeessays.education/companys-expansion-and-citigroup-essay/