Ericsson's affiliate in East China's Nanjing suddenly collected money to pay off up to 1.99 billion yuan (US$240 million) of loans from the Nanjing Industrial and Commercial Bank of China and the Bank of Communications while extended loans of the same amount from Citibank's Shanghai branch, eastday.com reported on March 27.
Ericsson, the world's leading supplier in telecommunications, has made a stir in the financial sector of Nanjing this time.
There are no reasons available so far for Ericsson's sudden action. Foreign-funded banks, with higher service standard, might offer more preferential conditions for loans and a complete variety of financial products, an expert predicted. Those foreign banks have already built better credit relationship with foreign-funded firms aboard, the expert added.
The Bank of Communications' Nanjing branch has already completed a research report to mediate its service quality and try to work out countermeasures. Other commercial banks all began to follow suit. According to China's commitment to enter the World Trade Organization, the central bank stipulated that the Shanghai-based foreign banks are allowed to handle yuan dealings in Jiangsu and Zhejiang province. Citibank is the first foreign bank to join the competition of the Jiangsu financial sector and get such a huge profit. Other foreign banks of Shanghai are busy preparing to capture a market share of Jiangsu Province. The multinational companies such as Ericsson and Motorola will be the first target of the foreign rivals. There are three branches and five representative offices of foreign banks in East China's Jiangsu Province so far.
(China Daily March 27, 2002)
