The Nonreplaceable Financial Status of CBD
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| 3/18/2005 1:1:0 Beijing CBD |
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-Interview with Mr. Li Yang, President of CASS Institute of Bank & Financial
Beijing CBD: After China entering into WTO, what is the impact on the financial development of CBD?
Mr. Li Yang: The entry of WTO not only impacts Beijing CBD, but also more extensively impacts the entire banking and economy in China, especially the finance and telecom sectors that are opened at the earliest stage. As a part of the whole chessboard, Beijing CBD will definitely be affected.
Before walking into WTO, over the long period time, China had been focusing on the Chinese characteristics, relatively closed the door to the world. After entering, we more highlight the combination between the international practice and the national situation of China. Some behaviors not consistent with the international practice, for example, in the past, the local government could decide the local financial center, which could be entitled with some preferential policies. But after joining WTO, it is almost losing the survival. Now that we have merged into the global economic system, we couldn't disregard the response of other countries. The system will be more transparent after joining WTO.
In the meantime, after joining WTO, we can also maintain some international development opportunities. Since for a local financial center, the horizon of CBD shouldn't only restrict to himself, but consider the development from the perspective of the whole global structure. Entering WTO ensures China has become as a part of the international economic system from the point of view of system, and the global enterprises in other countries will take China an unsplit part of the whole globe. When these enterprises are considering of the development strategies, they will think of a developable Beijing CBD, in a remote oriental country. With the gradually deepening of WTO effect, more and more foreign businessmen will come into China, and CBD is absolutely their priority in Beijing.
Beijing CBD: how do you understand the difference between Beijing CBD and Shanghai and Hong Kong? What are the characteristics of CBD compared with the Financial Street of Beijing?
Mr. Li Yang: The domestic shaped financial centers are almost in Shanghai, Shenzhen, and Hong Kong, which is the most mature one. In recent years, people suddenly realize the new financial center of Beijing. Although not carrying out the publicity, she has become as the true center already. After joining WTO, we clearly acknowledge some structural characteristics of the economic development in China.
Before entering WTO, our policies are normally at random. But now, the foreign capitals are making the decision in accordance with the market economy rules. Since the economic scale in China is pretty large, in addition with the non-replacement between regions, for instance, the economic structures of Zhujiang Delta and Yangtze River Delta are distinguished, and the regional economy of Bohai Bay centered by Beijing is also very unique, which indicates that there are several characteristic regions in China, based on the market orientation, it is possible to set up several economic centers in China.
The Financial Street is a pure financial region, focusing on the domestic banking sector. I have contacted with many financial institutions, which have evaluated the higher working efficiency there. The main economic management institutions, such as The People's Bank of China, Ministry of Finance People's Republic of China, China Securities Regulatory Commission, and China Banking Regulatory Commission, all gather there. The financial street is the decision making center in terms of the financial and economic polices in China. At present, many information resources and policy resources are still hold in the hand of government, so it is necessary to get deal with the governmental authorities. Therefore, the financial street is an obvious banking locus in China.
On the other hand, CBD is more inclined to globalization, mixed with the industrial, commercial and financial sectors. Notwithstanding that CBD is not as convenient as the Financial Street on understanding the domestic policies, due to residing in Beijing, she still has the advantages compared with Shanghai and Shenzhen. In virtue of the policies born in Beijing, in order to get acknowledge with the policies, each region has to establish up the office in Beijing, and many large-scale enterprises have to set up the representative offices in Beijing. Even the business locations of some enterprises have been moved, but a representative office has to left in Beijing, which illustrates that Beijing has the non-replaceable advantages.
Beijing CBD: Now the rental of CBD office building is the most expensive in China; meanwhile, the multi-national companies and financial institutions more concern about the costs. After all, it is easier to reduce the rental expenditure than to increase several percent of profit margin. How do you think of this conflict?
Mr. Li Yang: It is really expensive to dwell in CBD; of course, the government is making efforts to decrease such cost. However, if you ask to some companies residing in CBD, they will tell you the more value produced from other respects. First of all, due to the concentration, the information exchange is prompt. If you are far away from CBD, you may miss much information. In CBD, you are communicating with the senior staff in multi-national companies, completely differentiated with the free chat with the common people, totally two conceptions. There are also many policies that are playing the key role to impacting your business operation.
Additionally, as long as the economic activities are collected in a place, the banking industry will also be very concentrated there. A golden rule of banking is to follow the clients, where is the economy, then, where is the finance. Otherwise, you can find a place with picturesque scenery, even walk out of the downtown, the cost will be decreased, but the fatal weakness is rare economic opportunity.
Beijing CBD: There is an opinion of "free market free man" in the economics, the choice of the enterprises means the best service that a certain place can provide, normally, what are the determinative factors for the enterprises to choose CBD?
Mr. Li Yang: As for choosing the address for banking institutions, we draw the conclusion that the analysis on demand and supply is still playing the key role. When making the decision to choose the address for the financial institution, the stabilities of the politics and economy are very significant. The capital cost is the important supply factor impacting the operation of the financial institution. The stability and continuity of the policy are highly concerned by the financial institution. As for the demand, the client is absolute the vital factor.
Over the past several years, there is an obvious trend that, the economic activities are moving into some central cities. Such trend can bring forth many advantages, e.g., sharing the uniform infrastructure, safe and convenient foreign currency exchange, etc.. It is quite often for multi-national company to operate the capital flow of several billions of US dollars, which can't be suspended even for a minute. In CBD, it is easy to conduct such transaction to meet the survival and development demand of the multi-national company.
There are also some intangible factors in CBD, such as the innovation and motivation. Long before when I was in Wall Street, there were many bars there for the Red Waistcoats to have a rest at noon. They could communication here and reached the agreement, so maybe in the afternoon, the transactions were changed. The innovation can't be gained through contemplation, but the communication between professionals with plentiful expertise and knowledge.
Beijing CBD: In your own opinion, what is the weakness of CBD? In another word, what should be enhanced for the CBD?
Mr. Li Yang: Normally the financial enterprises have the tailored service objects. Except for the super-large financial institutions of Industrial and Commercial Bank of China, and Construction Bank of China, most of the financial organizations have the limited energy, so have to follow with the customers. And the multi-national companies also complying with such principle. We notice that among the hundreds of financial institutions, there are only several ones to treat local Chinese enterprises and local citizens as the service objects. Under most circumstances, for instance, some Japanese and European financial institutions only provide the service for their own customers. CBD is the place where the headquarters of many multi-national companies locate; therefore, many financial institutions will follow them. It is not the preferential policy that attracts these financial institutions but the business opportunities orientated by the large companies.
I feel that the commercial service inside CBD is pretty convenient. But the imperial manner of Beijing is still very strong, so the service awareness needs to be improved. In my opinion, CBD shouldn't pay much attention on cost, but the premium-quality service. As for some powerful enterprises, the cost is not a big case at all. What is more important is they can do whatever they want. We hope CBD to make improvement on providing the commercial service.
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