Challenges and opportunities of Chinese commercial banks in the Brazilian market: a case study
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2021-02-03
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Calixto, Cyntia Vilasboas
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In the first decade of the 21st century, the five largest Chinese Commercial banks entered the Brazilian market. However, as state-owned joint-stock banks with global expansion, the “Big-5 ” Chinese banks have faced difficulties competing with local banks as well as other foreign banks in Brazil; most of the “Big-5” have suffered unsatisfactory performance in comparison with their operation and revenue in other foreign markets. This paper aims to analyze the internal and external challenges Chinese banks facing and how they diminish those difficulties while operating in Brazil. This dissertation analyzes the situation of Chinese state-owned commercial banks during the last decade in the Brazilian market, especially in Sao Paulo and Rio de Janeiro, through qualitative research involving a case study of four typical commercial banks in Brazil. The paper explores external difficulties such as the unstable policy, the recessional and sophisticated banking sector, and the fierce competition from domestic and foreign peers. The paper summarizes internal difficulties related to compliance, scale, product, customer service, and human resources. Furthermore, this study outlines the future opportunities for development, with the recovery of a sustainable economy, high willingness of bilateral cooperation, and the risk tolerance of SOEs. To this end, the dissertation provides the managerial contribution according to the future economic trends and a reflection on policy. The paper concludes that there are still opportunities for late movers to enter the Brazilian financial market, recommending that study should be continued in the following two to five years in order to draw conclusions regarding the managerial contribution.