China, with its 1.3 billion citizens, definitely represents a very huge market and its banking market is not exception. Just to give a measurable idea, China’s four biggest banks can boast a staggering average of 20,000 branches each.
Agriculture Bank, for instance, has 23,000 branches across the country, and it is present in many remote and rural areas of the country too.
Needless to say, Chinese biggest banks also have to face incredibly high human capital costs, partly due also to the presence in their payroll of tens of thousands of branch managers. Recruitment, retention and promotions are all activities Chinese biggest banks manage on a very large-scale.
Obviously it is not just a matter of cons, all of that also has, in fact, a flip side of pros, in that Chinese biggest banks can, at the same time, rely on a very huge internal pool of talent, so that it is not really that difficult for them to source from within in order to fill internal senior and branch management positions.
Also foreign big banks like Citi, HSBC, Standard Chartered and ANZ are now widely expanding their branches network across China. Since they are doing that starting from a sensibly lower base, they are currently keeping a more rapid rate, as they too are aiming to extend their branches network not only in Beijing and Shanghai, but also across many rural areas.
As foreign banks cannot rely on the same pool of local talents as the local counterparts can, in order to hire branch managers they need to resort to recruitment agencies.
But this is not the only hardship international banks have to face in China, in fact, they also have to face higher recruitment costs and, in order to attract the required talents, they also have to offer more attractive and expensive remuneration packages.
Moreover, international banks also face particular difficulties to retain staff, whilst local banks can rely on their staff considerably long loyalty and lower turnover rate. According to estimates, nearly two third of Chinese banks staff stays in his post for years.
On the other hand of it, the average reporting and analysis capabilities of Chinese branch managers are still regarded as less competitive than their international counterparts.
This does not really mean that local managers are cutting less deals, on the contrary it is just thanks to their success that many international banks have decided and are deciding to move to China.
