If Chinese authorities approve its recent application for a licence to lend in yuan, Kasikornbank will have differentiated itself as the centre for helping Thai small and medium-sized enterprises that would like to do business in China and Chinese SMEs interested in Thailand.

"China is a very big country. The Thai banking business here is very tiny. However, let's say that since we first entered Shenzhen in 1994, we now know where we want to go," Suwat Aviruttapong, the chief of Kasikornbank's Shanghai representative office, said last week.

Since it usually takes some six months to hear results, the bank is continuing to operate its existing business of lending in US dollars.

In line with its plan to expand in the mainland, Kasikornbank has targeted the SME market in cities with more than 100,000 private companies.

"In China, there are about 20 cities that have more than 100,000 private companies. In Shanghai only, there are around 700,000 companies while in Shenzhen, the figure hits almost a million," Suwat said.

The bank's strategy is practical as it is aimed at a certain group in a certain area, he said.

Kasikornbank can also be a choice for Chinese SMEs that want to expand but find it hard to get a loan from the big four local banks - Bank of China, Industrial and Commercial Bank, China Construction Bank and China Agriculture Bank. These four giants account for 68 per cent of all loans.

Last April, according to the Shenzhen Special Zone Daily, Kasikornbank raised US$100 million (Bt3.5 billion) to finance Shenzhen's SMEs. The funds were raised through a joint lending agreement with China Minsheng Bank.

As in soccer, many good teams have good records at home but when it comes to away matches, things are more difficult emotionally and practically.

Many Thai companies have tried to establish a presence in China, but only a few are still around. Among the survivors are CP, Saha Union, Siam Cement, Advance Agro, Mitphol, Banpu, Osotspa, Red Bull and Phiboonchai Maepranom Thai Chilli Paste.

Kasikornbank has also been making progress amid the fierce competition in Thailand, where it is the fourth largest bank. While competition in Thailand is about becoming a universal bank, running a banking business in China is a different story.

Following the global trade liberalisation trend, China has been slowly opening its financial sector to foreigners. Before going into banking, foreigners must open a representative office. Two years later, the office can be upgraded to a branch, but can do business only in foreign currencies. If the foreign bank would like to do business beyond this, it has to form a joint venture with a local partner as the majority shareholder.

Before, foreign banks could not conduct business across areas. That is, if a branch opened in Shenzhen, its business was limited to Shenzhen. Lately, the regulations were relaxed and cross-area transactions are now allowed.

Kasikornbank is looking forward to expanding its business here. Suwat said that following the bank's approaches to some Chinese businessmen, it found that many consider the political uncertainty in Thailand as a key factor in decision-making.

"They now have choices of where to go. However, on our part, we have prepared a lot for this SME target. Every branch of Kasikornbank in Thailand provides trilingual information. That's part of our service that many Chinese have enjoyed," he said.

The bank would like to make its Shenzhen branch successful first, then if everything is set here, Shenzhen will become the model for other branches to be opened in the future.

Bangkok Bank was the first Thai bank to enter China. It has four branches - in Shantou, Xiamen, Shanghai and Beijing, serving mainly Taiwanese and Thais. Krung Thai Bank is now in Kunming while Siam Commercial Bank is still working on its first move.

Piyarat  Setthasiriphaiboon

The Nation

SHANGHAI