Royal Hapsburg Bank™ Strategic Investment in the Prudential Bank of China
Case number:
A03-10-0002
Abstract
This case examines the potential purchase by a western bank of a sizeable share of a Chinese bank. Particular emphasis is on the macroeconomic environment of China, to include issues of risk for the investor related to valuation of the renminbi, the global financial crisis, China’s increased trade prominence, commitment of the Chinese government to reform, the process, staging, and timing of financial reform, domestic social stability, and the Chinese economy’s interdependence with the outside world.
Teaching
The purpose of the case study is to illustrate the challenging and complex political/economic/business environment of China that Ian Clancy and the Royal Hapsburg Bank are considering entering. The case highlights the complexity of a market-entry decision and the due diligence that must be exercised. It also details the tightrope that China is walking, between the desires to maintain a high rate of domestic growth and consequent political stability, and continue the process of economic reform and liberalization, on the one hand, and the realities of its interdependence with it trading partners and the constraints this imposes, on the other. This case is also a succinct history of China’s reform process in the Mao era, as well as a catalogue of the current economic frailties that could derail China’s continuing rise.
Case number:
A03-10-0002
Subject:
Business
Government
International Policy
Year:
Setting:
China
Length:
9 pages
Source:
Library, general experience