Banking News
- Foreign banks offer perks to lure rich clients
Date: 14-Jun-2007 Sources: (Shenzhen Daily)
IN the United States, some people who open new bank accounts get toasters. In China, the reward can be far richer, with foreign banks offering such things as test drives in a Ferrari and wine tastings to beef up business.
Since April, some foreign banks in China have been allowed for the first time to do business in local currency with individual customers.
The change, part of China's commitments when it joined the World Trade Organization more than five years ago, has prompted a scramble by big banks such as Citigroup, HSBC Holdings, Standard Chartered and Bank of East Asia.
But foreign banks claim only a tiny share of total deposits, and don't have the scale to compete on basic retail services with State-owned banks that have tens of thousands of branches across the country. Instead, they're hoping to tap demand for more lucrative services from the swelling ranks of China's well-off, like investment advice and special accounts for education.
That presents a marketing challenge, though. Persuading prospective customers to walk into a foreign bank branch isn't as simple as buying more television ads, billboards and full-page spreads in the Sunday paper - though foreign banks are indeed doing those things. Banks have to figure out a way to more narrowly target wealthier Chinese. This is where the high-end freebies come in.
Citigroup's Citibank has arranged test drives in Ferraris or Land Rovers for prospective clients. Standard Chartered has offered wine tastings and luxury-goods promotions. HSBC has held seminars with economists flown up from Hong Kong.
While the banks do these things in other countries, too, executives say they rely on them more in China.
'We need to generate long-term brand equity - you need loyalty to sustain a price premium,'said Tom Doctoroff, North Asia chief executive of WPP Group's ad agency JWT, which represents HSBC.
For all the gains that Chinese companies have made in manufacturing and technology, marketing is one area where Western companies often still hold the edge.
Foreign banks in China face the additional hurdle of having to compete against big players, including Bank of China, Industrial and Commercial Bank of China and China Construction Bank. Like their foreign counterparts, these banks are starting to target the country's nouveaux riches more aggressively.
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