There was a panic wave among Chinese bankers when westerrn banks were allowed in in 2007. Those fears have now almost totally receded.
Many foreign banks are adjusting to the new situation and beginning to pay more attention to their strengths, such as investment banking services, financial consulting and acting as business intermediaries.
In 2005, the State Street Bank, the biggest trustee bank in America, founded a Beijing representative office. Lu Xiaoma, leading representative of the State Street Bank’s China division, said to his boss before leaving America for China, "China has entered an era of fast development and there is going to be a financial party. We have to book a seat at the table."
By the end of 2009, banks from 13 countries and regions had founded 33 foreign-owned banks in China, two jointly-owned banks, and two foreign-owned financial companies; 24 countries and regions set up 71 bank branches in China and 194 banks from 46 foreign countries and regions had established 229 representative offices.
Foreign banks appear to have underestimated the speed at which Chinese banks could catch up and learn from their foreign counterparts, especially in regard to the battle for retail banking. And although foreign banks, including HSBC, Standard Chartered Bank and Citibank, have opened branches in China’s main cities and some wealthy rural areas, their business network and client base remains weak.
Economic Observer in a long, well researched and very detailed article report a high-level executive of a foreign bank said its branches in western China were merely ornamental.