The Entry Strategies into Mainland China for Taiwanese Futures Commission Merchants
Date Issued
2014
Date
2014
Author(s)
Wu, Huang-Chi
Abstract
With the futures industry in Taiwan has been developing over 20 years, the local market is gradually stepping into maturity. China’s booming development of futures market & futures commission merchants (FCMs), expedited new futures contracts’ listing, opening-up of new futures business and FCMs’ expansions all contribute to China’s futures market becoming one critical developing area in global market. Looking into the future, the continuous market growth is expected with China’s guiding policy. This thesis studies the current status and future development opportunities, also compares futures markets at both sides of Taiwan straits. In here concludes the futures industry at both sides complements each other. Taiwan’s futures industry is also one of very few relatively superior industries in financial service area in Taiwan. With similar regulations, Taiwanese FCMs are with better competition edge entering Mainland China market. Collaboration from FCMs at both sides will not only be able to improve the service quality but also to accelerate market development in China. This thesis also studies the challenges entering China futures market, which comprises: 1. severe competition of futures brokerage business in China; 2. futures industry requires specific government permits, especially non-clearly-written regulations, unpredictable China’s government attitude and cross-straits relationship at both sides is largely effecting the investing China. Due to the suspension of Cross-Strait Service Trade Agreement, this thesis studies the different entry strategies and possibilities for Taiwanese FCMs entering Mainland China. The newly released “Futures Supervision and Administration” by China government has clearly regulated foreign investors invest China’s FCMs by joint venture. Another option is for FCM investing in China’s information technology companies which can take part of the emerging opportunities of China’s options market and also participate in China market indirectly. Investing westward, Taiwan FCM has to consider whether human resource, capital, technology and logistic support are adequate to manipulate appropriate entry strategies. The objectives of each partner may differ in join venture. Difference in the culture and style of business also leads to poor co-operation. This study suggests Taiwanese FCMs can choose non-securities or futures partners in joint venture with China’s FCMs. to control the ownership and voting rights.
Subjects
China futures market
Join venture
FCM
Futures industry
Entry strategy
Type
thesis
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