Shenzhen Development Bank Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Problem Diagnosis

In June 2002, less than a year ago a deal had been signed for a binding framework agreement between the Shenzhen Development Bank and New bridge. However, on 12^th May, 2003, a major announcement had been made by the owners of the company that had shocked the banking industry of China and also the internal business community of China. The announcement was regarding the dissolution of the transitional management committee which consisted of about 8 people which had been appointed by TPG New bridge Capital whose purpose was to guide and advise the management of Shenzhen Development Bank.

This announcement sent shock waves in the whole business community of China. As a result of this announcement, the management director of New bridge Capital had planned for a meeting with the banking regulators, the government officials and the board members to make a final attempt in order to save this failing investment in Shenzhen Development Bank. Weijian Shanis now facing one of the toughest decision of his life regarding the investment of New bridge Capital in the Shenzhen Development Bank which is one of the fifteenth largest commercial bank of China.

Now an action plan needs to be devised in order to save the company from dissolving the committee and a plan also needs to be implemented in order to renegotiate and revive the transaction or on the other hand, the management of the New bridge could simply give up completely on this deal altogether. After the detailed and careful analysis of the Chinese banking industry future, the value of the investment in Shenzhen Development Bank and all the related factors, the final decision has to be made.

Analysis

Value of doing business in China as opposed to doing business with China

China is one of the fastest growing countries in the world. The current economy of china is around 10 trillion dollars and it has been increasing at a rate of 7% per year. If we look at the past 30 years of the China’s business history then it has been seen that the government of China has always opened its doors for the foreign companies to trade within China and establish their operations for growing the economy of China. While on other times the government of China has also closed the doors for all the other foreign companies firmly

The government policies of the China is one of the most significant factors that has been contributing the up and down of the Chinese economy over the past years (J. F. Huchet, 2007). This shows that the government of the China possesses all the levers for controlling the economy growth of China. On the other hand the marketization by the government of China for the prices of the land, water, electricity and capital also puts a significant impact upon the business growth of China (K. Bradsher, 2012). The people of China specifically consisting of the middle class people of China that are buying homes and around 18 million of cars per years are also critical and it is their confidence and the level of the earnings in their future which also determines the growth of the business environment of China in future.

Looking at the trend of the Chinese economy and the growth opportunities of China there are many industries that provide their investors with tremendous growth opportunities in China. Most of the multinational corporations in China tend to perform well and yield higher profits as a result of their differentiation, pricing, marketing initiatives, branding, strategies etc. They are providing the required functional capabilities to the people of China and that too in their local context. China is also the center point of the most innovative and technological Internet based companies.

However, as the people of China are still more used to their traditional methods of banking and shopping therefore, there prefer less to buy or shop online. One of the biggest industries in China is the banking industry. The banking industry of China has experienced a tremendous growth over the past decade with a compounded growth rate of around 8.1% from the time period 1996 to 2002. The total deposits and the total loans had grown by around 16.4% and 13.6% annually. The growth of the Asian loans as compared to the growth of the Chinese loans had been just 9.6% and 14.9% respectively.............................

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