Question

Please offer a response to the following discussion post:

The idea of the ICBC offering shares to the global capital markets proved to be a very prosperous and strategic business move by the Chinese government, an advantage that allowed their industry leaders to receive global recognition and increase the balance sheets of its largest companies (Hill, 2015, p. 369). The disadvantage of this move was that it allowed international influence on the Chinese corporations because of the oversubscription of the shares being offered. Also, China was listing shares on the Hong Kong stock exchange because Hong Kong’s regulations was more in line with international standards and would allow better access to reporting issues expected by global companies (Hill, 2015, p. 370),

As a foreigner trying to do business in China, I would want some added security in knowing that my investments would not be seized by other international companies that was seeking payment for their investments with the ICBC. Since they have oversubscribed the amounts of shares for their corporations they may not have the final say as to what direction the company was heading. I would not want my money to be tied up in legal limbo while the Chinese government was fighting over who had the ultimate control over the business I invested in.

In our present world and if this was something that I was facing as a potential investor in the Chinese market, I would have to wait to see how the American government handled the issue of trade that exists between our two countries. It would be foolish more me to bypass the advice of the U.S. government and create a partnership in tourism with Chinese travel agencies, knowing that I may not get the return on my investment that I deserve. The Chinese government need to join the rest of the world in terms of international business and allow its companies the ability to trade with the rest of the world without all the restrictions it currently has over them.

Answer 1

ICBC played a strategic move no doubt by offering shares to the global capital markets. It allowed it to be globally recognized banking major and thus opened new avenues for capital. However, there is a high requirement that many of the procedures and standards that restrict it's global exposure to be tilted in order to favor and allow easy access of capital accross various global economies. This, it's the need of the hour for it to make certain changes in it's policies to be more lenient and forward looking for accepting global capital.