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Asia

German banks want to conquer the Chinese market

While German politicians discuss how banks should also be made to share the costs of the financial crisis, Germany's biggest financial institutions are investing in China – the world's biggest growth market.

Commerzbank is homing in on China's medium-sized enterprises

Commerzbank is homing in on China's medium-sized enterprises

2009 was a catastrophic year for Germany's Commerzbank. It was only saved from collapse by the German state, which took over 25 percent. However, massive losses in 2009 have not stopped Germany's second-biggest credit institute from wanting to make its mark on the Chinese market.

It now already has four branches there, explains Michael Kotzbauer, the bank's Asia head and the reason for wanting to expand in China lies in Germany. "We are deeply rooted in the small-and-medium enterprises segment. We want to market ourselves as a bank for small-and-medium enterprises abroad in the same way as we market ourselves in this way in Germany."

Commerzbank customers divided into two groups in China

A year and a half ago, the European airplane manufacturer Airbus opened its first assembly plant outside of Europe in Tianjin. Several medium-sized suppliers followed Airbus.

Many are Commerzbank customers, Kotzbauer says, and belong to the first group of customers in China – German companies that have traditionally been with the bank.

An Airbus assembly plant in the northern port of Tianjin

An Airbus assembly plant in the northern port of Tianjin

The second group is made up of Chinese companies wanting to buy medium-sized companies in Germany, to which Commerzbank can provide advice.

Deutsche Bank is also on the Chinese market

Commerzbank is not alone in China: Its biggest competitor in Germany, Deutsche Bank is also keen to expand its business there. Deutsche Bank Asia head Robert Ranking recently announced he wanted to make four billion euros from business in Asia in 2011.

But his bank, as opposed to Commerzbank, is focussing on private customers. To get closer to Chinese customers, it now has holdings of almost 20 percent in the Chinese Hua Xia Bank – this is the legal restriction.

"We simply see it as a strategically-important investment for our private customer base in Asia and the experiences that we have made until now in our cooperation with Hua Xia have been very positive," says Michael Lermer, a spokesman for Deutsche Bank.

Deutsche Bank is focussing on China's private customer market

Deutsche Bank is focussing on China's private customer market

Lermer rejects criticism from the Chinese side that cooperation has been limited to capital: "We have 850,000 customers in the credit card segment in China. We have also made very good steps with our partner Hua Xia Bank in strategic cooperation."

Greater domestic competition

Although Deutsche Bank and Commerzbank are direct rivals in Germany, in China they have taken different paths.

"We know that Deutsche Bank is already actively working with private customers in Asia," says Kotzbauer, who is not worried.

"We don't have any ambition to go into the private customer business. There are already very strong Asian banks that specialise in the private customer business and know the local market very well. We should also stick to what we know well."

However, analysts say it will not be too long before Deutsche Bank and Commerzbank come up against each other in China too. Their task will not be made easier by increasing competition from Chinese banks and stronger state regulation.

Author: Jun Yan /act
Editor: Disha Uppal

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