KOTRA Express talks to Niu Jianjun, Country Head for Korea & General Manager of the Industrial Commercial Bank of China (ICBC), to hear more about Korea’s finance industry and his experience doing business here.
The Industrial Commercial Bank of China (ICBC) was separated from the People’s Bank of China (PBOC), the country’s central bank, with its heritage being deposit and industrial and commercial loans. Established in 1984, ICBC is the world largest bank which ranks No. 1 in terms of asset, loan, deposit, profit, tier one capital, and etc.
The ICBC network covers 48 countries with more than 400 overseas institutions globally. With its staff of 445,000, ICBC has been creating a profit of more than USD 40 billion in recent years with sound asset quality. The bank has a full business line both in wholesale and retail, providing asset management, global cash management, custodian, investment banking, international syndication in project finance and other traditional commercial banking services. ICBC is also a leading bank in Fintech.
Niu Jianjun, country head for Korea and general manager (GM) of ICBC Seoul Branch, received his B.S. and M.S. in Engineering at the Beijing University of Aeronautics and Astronautics. After five years of working as an assistant professor and lecturer at Northwestern Polytechnic University, he joined ICBC in 1995. He has more than 10 years of overseas work experience, and he was the founder and deputy GM of ICBC Hanoi Branch as well as GM of ICBC Phnom Penh Branch. Also, he currently serves as the chairman of the China Chamber of Commerce in Korea. Read on to learn more about his experience doing business here.
How did you become interested in Korea?
Most Chinese are very familiar with Korea through movies, electronic products, cosmetics, fashion, and etc. In particular, the two countries share a similar traditional culture. Fortunately, I was selected to take care of ICBC’s Seoul Branch about three years ago. There is not much difference in terms of both climate and food from my hometown in Xian, China—I feel very much at home here.
What made ICBC establish a branch in Korea?
Following the establishment of diplomatic relations between China and Korea in 1992, ICBC set up a representative office here in 1993. During the financial crisis in 1997, ICBC received approval for a full license as a commercial bank branch, with our business line covering retail banking and wholesale banking.
The goal of ICBC Seoul Branch is to “serve for the trade and investment between China and Korea, act as the bridge of friendship between the two countries and provide the best solution to our clients.” After more than 22 years of development, ICBC Seoul Branch now is a top tier foreign bank among 38 foreign banks, with 156 staff members and four banking offices in Seoul and Busan.
What are the advantages of doing business in Korea?
Korea is the fourth largest economy in Asia with a GDP of more than USD 30,000 per capita. It has a mature financial market, sound legal system, rich human resources, stable political situation, and competitive global companies which make up the rich soil for foreign companies to nurture their businesses in their respective ways. Furthermore, China is Korea’s largest trade partner and a major FDI target country, which act as the important advantage for Chinese banks and our clients.
What opportunities/sectors in Korea are Chinese companies most interested in investing in?
I’m aware that numerous Chinese companies have already entered Korea’s service sector in the banking, insurance, security, airline, shipping, and trading industries. Some of the country’s gaming companies have been acquired by Chinese capital, targeting the Chinese market in the past several years.
As another example, Green Land Group invested in real estate and a hospital in Jeju Island several years ago, although it seems as they have not been able to fully realize their business plans. Since Chinese and Korean companies have similar competiveness in manufacturing and construction, direct competition between Chinese and Korean companies is definitely not the answer—mutual complementation is the right choice.
What advice would you give investors/companies from China seeking to do business in Korea?
If I could give some specific advice in consideration of a SWOT analysis between the two countries, investing in travel agencies could be a good choice. For instance, not many people in Korea are well aware about the rich tourism resources in China. Most of my Korean friends only know a few major cities. However, Xian, for example, is an ancient capital in China which has barely been heard in general, but is among the top three tourist attractions among foreign travelers. Beautiful mountains and grasslands can be seen everywhere.
Also, consulting companies could be another good choice since China has announced its Negative List, and is opening up more industries to foreigners including the financial market and lots of industries. If Korean companies are looking to expand their businesses to China, they need more information on the Chinese market.
Some other examples of good investment include joint ventures with Korean hospitals to attract Chinese private banking customers for annual physical examinations, and investment in other sectors like IT, cosmetics, fashion, international schools and supply chain for core businesses related to Chinese market. I’m aware that KOTRA has released guidelines for potential investors to provide a checklist for their investment activities.
How can Korea become a more ideal business environment for foreign companies like ICBC?
Our performance so far is very high and stable, with more than a USD 70 million profit annually and no non-performing loans (NPL). We appreciate the support and guidance we receive from the Financial Supervisory Service (FSS), the Korea Financial Intelligence Unit (KoFIU), and KOTRA. Still, in such a mature market, low return on asset (ROA) and return on equity (ROE) is a concern. As such, deregulation and lowering the tax rates are regularly mentioned among foreign companies.
What Korean companies/government agencies do you work with to strengthen your business partnerships?
We have a diversified customer base in Korea. The top 30 conglomerations and their affiliates; leading security companies, insurance companies, local policy banks, commercial banks, and card companies are also our target sectors. Our local loans and deposits are in the top three among foreign banks, actively supporting the real economy in Korea. We have signed reciprocal loan agreements with several local banks and provide their Chinese subsidiaries with liquidity support when needed.
What are some future plans/goals that ICBC has in terms of doing business in Korea and in Asia?
The Chinese market is a very important one to Korean companies with huge potential. We would like to help them expand their business in China. We would also like to support Korean companies in expanding their business to other countries in which ICBC networks cover, using our capacity to help them in settlement, forex and financing. We also believe that we can promote and support Korean and Chinese companies expanding to third-party countries.
What are your hopes for Korea-China relations?
Historically, China and Korea are like brothers with hundreds of years of harmonious relationship. Because of the similar culture and way of thinking, it is very easy for us to understand each other. Lots of Korean people can speak Chinese like a native speaker and vice versa. We are mutually important and mutually helpful to one another. The trade and investment volume is strong proof of this. Free trade talks will give both sides a better business atmosphere in the future. President Moon’s visit to China last year significantly enhanced trust to higher levels. I think the opening up of China will be a perfect opportunity for Korea to play a more active and important role in the Chinese market. I have full confidence in the bright future of the relationship between our two countries.
By Grace Park (firstname.lastname@example.org)
Investment Public Relations Team / Invest Korea
Korea Trade-Investment Promotion Agency (KOTRA)