The Marketing Strategy of HSBC
Overview of the Industry and Organization
There is no doubt that one of the key financial centers in the world is Hong Kong (KPMG, 2010). Hong Kong has one of the largest representations of the international banks in the world. Statistics showed that 71 out of the 100 largest banks in the world are presented in Hong Kong. In addition, Hong Kong is considered as the 9th largest international banking center in terms of the volume of the external transactions, and it is considered as the second largest in Asia after Japan. The banking industry of Hong Kong plays a vital role in the establishment of Hong Kong as a major loan syndication center in China. Furthermore, banking sector is also considered as one of the important sector which contribute to the status of Hong Kong as the 7th largest foreign exchange center in the world (LowTax.net, n.d.).
At the end of June of 2010, there were a total of 146 licensed banks, 24 restricted license banks and 27 deposit-taking companies in business. Thus, there are a total of 200 authorized institutions that are operating in a comprehensive network of 1,600 local branches. Furthermore, there are 70 local representative offices of overseas banks in the region. With these, the sector contributes to a total of 80,000 employments. And the entire assets of banking totaled to US trillion (LowTax.net, n.d.).
HSBC Holding PLC is considered as one of the largest banking groups in the world. It’s headquarter is located in London (Temporis, 2005). The Hong Kong and Shanghai Banking Corporation Limited was established by Scot Thomas in Shanghai in March 1865, in order to finance the growing trade between China and Europe. It was incorporated in Hong Kong by special dispensation from the British Treasury under the Hong Kong and Shanghai Bank Ordinance 1866 (Temporis, 2005). Soon after its formation, the bank opened agencies and branches around the globe. Although the said network had reached as far as Europe and North America, the company focuses on building up representation in China and the rest of the Asia-Pacific region (HSBC, 2009).
HSBC’s strategic direction reflects its position as the world’s local bank, with its exceptionally international customer base. The combination of local knowledge as well as international extent is supported by a substantial financial capability founded on balance sheet strength, mainly recognized to the scale of the retail deposit bases of the Group. The company is increasingly reshaping its business by investing in faster growing markets and more in developed markets, as well as by focusing on business which have international connectivity (HSBC, HSBC – Fact Sheet, 2008).
PEST Analysis
PEST analysis stands for Political, Economic, Social and Technological analysis, which is considered as a useful strategic tool in understanding the macro-environment, which includes the growth potential of a market, strategic positioning, possible growth and direction for the company (Krach, 2008).
Political Factors
The banking system in Hong Kong is characterized by 3-tier system, which is formed by 3 forms of banking institutions, which include licensed banks, restricted licensed banks and deposit-taking companies. The last is operating under different restrictions.
In addition, the banking sector of Hong Kong is highly open. Thus, it gives other international banks to enter the sector.
Economic Factors
The banking and financial service industry in the region has become successful due to the non-discriminatory low tax regime. Thus, business profits are taxed at a maximum rate of 16.5% whereas employee pays a maximum tax on salaries of 15%. Low rates of tax are due to the absence of different types of taxation. In addition, in the region, there are no withholding taxes, no taxes on the interest, no capital gains taxes, no sales tax or VAT. Furthermore, the incomes which arise outside the jurisdiction are also not taxable in Hong Kong due to the territorial principle.
Social Factors
Currently, the world is becoming more and more dependent to modern technology. In Hong Kong and other parts of the globe, consumers or clients are becoming more and more dependent to Internet banking and mobile banking, which enables them to transact with the bank, i.e. withdraw cash, pay, etc., by using the Internet and/or their mobile phones. Thus, it is considered as the current trends in the industry of banking.
Technological Factors
The growing popularity of e-banking or Internet banking with the help of the Internet, intranet and extranet also influence the industry. Another important factor is the popularity and advancement of many handheld devices and the protocols and standards in mobile Internet.
References
Krach, U. P. (2008). Secrets of successful speculation. Ulrich Krach.
KPMG (2010). Banking. Retrieved on 7th November, 2010, from KPMG website: www.kpmg.com/cn/en/WhatWeDo/Industries/Financial-Services/Pages/Banking.aspx
LowTax.net. Hong Kong banking. Retrieved on 7th November, 2010, from LowTax.net website: www.lowtax.net/lowtax/html/hongkong/jhkbanking.html
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