Choice of Company and Core Business
The Chinese Development Bank is one of the largest Chinese commercial companies present in the Asian and Middle-Easter regions. Currently, it has no branch companies within the UAE. The only Chinese bank present in the country is the Bank of China, which operates by establishing its business via a branch company. The core business of the Chinese Development Bank involves supporting critical development projects in their countries of choice, such as projects in improving the infrastructure, agriculture, and production of the target country (“About CDB,” n.d.). As it stands, there are no dedicated foreign banks that seek to receive dividends by specifically supplying the UAE economy in these directions.
Porter’s Five Forces Analysis
The UAE market can be evaluated by using Porter’s Five Forces framework (“Porter’s five forces,” n.d.). The threat of new entry is relatively low, as opening new banks require considerable resources. The buyer power is moderate. The UAE has 24 banks operating in the region, but none of them is specifically dedicated to development projects. The supplier power is moderate-low, as there is always a choice between different banks.
The number of competitors, as stated, is relatively high, although a great number of them are limited by the connections to the government or by the restrictions imposed upon them. Lastly, the competition between banks is relatively steep (“Strategy,” n.d.). Nevertheless, the Chinese Development Bank has the support of a much larger country with plenty of potential support dedicated to starting the venture.
Company’s Capabilities
The company has experienced and the financial capabilities to work with large government and private entities interested in infrastructural projects, such as the construction of roads, airfields, railroads, ports, and other similar projects. In addition, the Chinese Development Bank has funded similar projects in the Middle East, Eastern Europe, and Africa, giving them an advantage in credibility over their competition. Lastly, the company has access to over 28.7 billion dollars in operating cash (“About CDB,” n.d.). This has the potential of revitalizing the UAE infrastructure beyond its existing parameters.
Proposed Strategy
The strategy for market penetration proposed for the Chinese Development Bank is the bank internationalization process. It would be possible to open a branch company in the UAE in order to adhere to the country’s legal demands towards foreign banking enterprises. The company should go slow and try not to penetrate the market via aggressive means, as it would likely provoke retaliation from the country’s government, which would seek to maintain the dominance of its domestic banks.
Mobile Applications
In order to successfully attract customers, the company should feature an array of mobile applications available to different customers. While the focus point would be on large companies and government entities, the bank should not neglect regular banking services and feature a mobile application to compete with those already present on the market. In addition, a different app should be designed for specific client companies in order to allow them maximum security and comfort while using a mobile application.
The realities of construction and development require immediate access to funds whenever it is required. Chinese Development Bank could promote the usage of micro-loans in the event of emergency expenditures. The market for microloans for corporations is currently underdeveloped in the UAE, thus creating problems whenever the companies find themselves in an urgent need of cash. The Chinese Development Bank could provide mobile solutions to the problem, speeding up the process and outpacing the competition.
References
About CDB. (n.d.). Web.
Porter’s five forces. (n.d.). Web.
Strategy: Porter’s five forces explained (plus example Uber). (2018). Web.