The standard approach

?People come in off the streets looking for information about China," says Helen Tantau, Standard Chartered Bank's public relations and product manager in Hong Kong. "And these people aren't necessarily from Hone Kong."

As an increasing number of businessmen begin to view China as a market of a billion people hungry for consumer goods, foreign banks are falling over themselves to compete for investors' custom. "What we are trying to do," says Tommy Lam, deputy general manager of the bank's China operations, "is stay one step ahead of our competitors."

The bank offers the traditional range of services permitted to foreign banks in China's still restrictive system. These cover: corporate banking, export financing and factoring, merchant banking, counter trade, instalment finance, leasing, investment management, project loans, syndicated loans, trade settlements, guarantees and bonds, foreign currency accounts, remittances, treasury derivatives, indirect trade, B-shares dealing, forex adjustment, and custodial services. In addition, it tries to keep its investors up to date with a market that is rapidly changing. "It is a whole new ball game every two or three years for China business," says Lam. "We can point them in the right direction."

Many companies however, are discouraged by these constantly changing regulations, and by the fact that predicting when profits can be realised can be tantamount to gazing into an extremely murky crystal ball.

"Obviously there will be bureaucratic or administrative interference or friction among the foreign investors or the joint venture partners or the local government," is Lam's response. "But those things are just part of the hassle one has to go through when investing in any country. That's why if you go in, you really have to take a long term view ? not because you think it's an opportunity for quick cash."

Standard Chartered practises what it preaches. The bank's first office opened in Shanghai in 1858 and there are now a total of seven branches and five representative offices, the most recent being Ningbo's which opened earlier this year. It has the greatest coverage of any foreign bank. "As far as the Chinese are concerned, we are a bank that is taking a long term view of China." says Lam.

The bank is aiming to open three or four branches per year, if such a rate is permitted by the authorities ? and the approach to the opening of new banks has become increasingly systematic.

As Tantau point out ? one of the roles of the foreign bank is to help develop the domestic market. In response to this, Standard Chartered has organised a number of seminars in China, with the aim of introducing new services and ideas, and explaining to local banks and corporations how best to use different products. The Hong Kong office ? the China area headquarters ? gives briefings to a number of mainland visitors on familiarisation trips, organised by the Hong Kong monetary authorities.

Standard Chartered is also engaged in regular theoretical updates with local branches of the People's Bank of China (POBC), where views of the country's banking services are exchanged. Here Standard Chartered is able to explore what services are permitted within the existing regulations, as well as discuss daily operational concerns. These meetings have also been used by the bank to lobby for a new branch in Pudong, Shanghai's young and developing economic zone. At the moment, it would have to forfeit its Shanghai branch if such an office was to open in Pudong.

On a wider perspective, one of the major concerns to Standard Chartered, as to every foreign bank in China, is the question of when permission will be granted for renminbi trading.

"That has been an issue since day one," says Lam. Once this is given the go ahead, banks will be able to offer better services to local customers as well as foreign investors in terms of RMB funding requirements.

But the necessary infrastructure is just not in place yet, says Lam. For one, the fact that the currency is not yet fully convertible is a major stumbling block. Lam now sees this as being three to five years off. The new economic austerity programme with Zhu Rongji at the helm may mean that such issues are temporarily put on a back burner, while the more pressing adjustments are addressed.

"If they are going to improve the financial situation ? then, for , foreign banks, and for China ? obviously it is a Tod thing." There is however, a concern that while a number of reforms are pressing ahead, the modernisation of the banking system is limping along behind. *