Citigroup Inc. announced on Wednesday 9/1/10 that it plans to expand its workforce in China to 12000 employees over the next three years. They claim that China is "one of their priority markets around the world and [Citigroup] intends to strongly grow [its] business" (see article). http://online.wsj.com/article/SB10001424052748703882304575465233823561048.html?mod=WSJ_Banking_leftHeadlines
I see this announcement coming as a reaction to the enactment of the new credit card regulations which limit the ability of credit card companies to charge penalty fees and change interest rates. It is becoming harder to be successful and make a profit in the changing landscape of the American credit market. Citigroup realizes that in order to continue to be a successful corporation, it needs to find a way to bring its credit card profits back up. Expanding its business in a country with fewer regulations will certainly boost Citigroup's profits. Amidst the talk about increasing regulations on banks in the United States, I expect more companies to follow Citigroup's lead and expand their businesses overseas. It will be much easier for companies to succeed in an environment with fewer regulations and restrictions on profitable aspects of their businesses.
-Justin Schaffer
Expanding their global market would certainly give them a new target market with much less regulations but as prof. said "china is a much more complex economy" with less regulations is citigroups credit investments going to be safe? i mean regulations are put in place for a reason after all
ReplyDeleteWhat would be some other reasons that Citigroup is expanding its operations in China? It may be that the new credit card regulation is not the only reason that banks look to expand its operations abroad.
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