Minsheng Bank and the Banking Industry in China - Essay Example

The process constitutes the regulation of business activities and business enterprises by the government, just like the case with the banking industry in China.

The regulation of various industries by the government is intended to influence how an economy is run. The Chinese government highly regulates the banking industry in China, but this does not rule out the coexistence of both public and private sectors in the Chinese economy. Minsheng bank operates alongside state-owned banks which constitute the basis on which Minsheng and other private commercial banks are regulated in China. The effects of government regulation impact differently on different enterprises, companies, or organizations.

Government regulation has its benefits and shortcomings. On the positive side, the imposition of regulations by the government does not only protect consumer interests, but also the interests of all players and stakeholders in the industry. The consumer is safeguarded from exploitation by the operating enterprises. On the other hand, government regulation creates cohesion in the industry, making it possible for the markets involved to exhibit fair competition. Such moves treat all players in the industry equally, thereby enhancing economic growth and development regarding the contribution of all operational firms in the industry.

On the other hand, government regulation curtails the full potential of an enterprise. It limits the expansion capacity of a company if the company’s expansion strategies are not consistent with the government’s provisions at that time. Government regulation also interferes with market autonomy and free market activities, thus limiting the liberalization factor in the global arena. In this respect, the public sector appears to be relatively favored by the government due to the priorities it is accorded within the regulation process.

In light of government regulation, another significant business strategy emerges in the global banking industry; acquisition. The substantial regulation of Chinese markets and industries has prevented many potential foreign firms from investing in China. As a result, the acquisition of foreign firms has come in handy in enabling foreign firms to gain access to Chinese markets and industries and vice versa. However, the government, through its regulatory bodies and agencies, has created barriers to the acquisition process.

The government sets acquisition standards and requirements that must be followed before an acquisition green light is granted. Minsheng’s stake in UCBH came after the regulatory commission was fully satisfied. On the other hand, the acquisition was highly likely to open up China to foreign banks. In this respect, market autonomy and free market activities challenge acquisition processes regarding the goals and objectives of the involved firms and the respective states in the target markets.