Case Name :      Citigroup in Post-WTO China (A)

Authors :           David W. Conklin

Source :             Ivey Publishing

Case ID :            902M12

Discipline :        Business & Government Relations

Case Length :    23 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

China’s entry into the World Trade Organization (WTO) at the end of 2001 brought promises that foreign financial institutions would be permitted to operate throughout China. In 1998, Citicorp and Travelers Group Inc. had merged to create the new Citigroup Inc. Travelers brought a vast array of financial services that added to Citibank’s existing portfolio of consumer and commercial lending. Travelers had developed extensive businesses in investment banking, asset management, life insurance, and property/casualty insurance, as well as consumer lending. Citigroup now had to determine the business prospects for each of its activities in the growing China market. Fears of social and economic dislocation might lead China to impose regulatory restrictions limiting the pace of foreign expansion. Economic growth might be impeded by the existing political structure, and reforms might not occur in the near term. A myriad of other challenges included human resources difficulties, e-commerce limitations, and regional disparities. The pace of privatization of state-owned enterprises and the societal preferences in regard to alternative insurance and investment products added to the uncertainties. Citibank had a record of success in less developed countries, and had developed certain competitive advantages that might be the basis for success in China, but whether and how these could be extended to other Citigroup financial activities remained an important question.