"Headquarters economy" boosts Beijing's banking sector
(Xinhua)
Updated: 2005-08-29 20:44

With more domestic and multinational corporations headquartering (HQ) in Beijing, the so-called "HQ economy" has become a powerful force in the capital's finance industry, particularly banking sector.

In 1999, the Beijing municipal government introduced a number of measures to encourage multinationals to set up their regional headquarters in the capital.

Since then, an increasing number of distinguished multinationals have established their global research and development bases in Beijing, branding the city with a distinctive HQ economy quality.

Currently, four major HQ centers have emerged in Beijing, including the Zhongguancun business district, offering a technological and business HQ atmosphere for enterprises during their hatching period; the Central Business District (CBD), providing a business environment for multinationals and joint ventures; a HQ center in Yizhuang for manufacturing enterprises; and a business district in Fengtai, a concentrated HQ area for multinationals and domestic enterprises.

Smaller business districts also appear in Beijing's Dongcheng, Xuanwu, and Chongwen districts.

The development of Beijing's banking industry plays an active role in attracting more headquarters to station in the city, and on the other, more headquarters will encourage the faster development of the banking sector, further strengthening the capital's financial advantage.

According to recent research on the financial business exchanges between the headquarters of 137 large state-owned enterprises, 27 regional enterprises, 29 multinationals and banks in Beijing, the HQ economy profoundly impact to the capital's banking industry.

First of all, headquarters bear great significance to the development and stability of Beijing's banking sector. The demand for highly effective fund management within the headquarters requires the banking industry to improve its electronic operation level.

The improvement of the internal fund management within headquarters lessens their demand for banks' traditional services, forcing banks to create more advanced financial products.

Furthermore, the imbalanced flow of information pushes banks toface more risks during the financial exchanges with the enterprises, hence requiring higher standards for the industry to build a credit system for their clients.

The large amount of money saved in banks by state-owned enterprises comprises a major source of income for Beijing banks' deposits. Generally speaking, state-owned enterprises enjoy comparatively abundant funds, while multinationals rely little on bank loans for the funds they need, and only regional enterprises rely heavily on bank loans.

All these factors help Beijing's banking system save a considerably large amount of financial resources for the capital's economic development.

Foreign banks are paying great attention to China's state-owned enterprises in Beijing. According to a study by the People's Bank of China and the State Administration of Foreign Exchange, 13 out of the 22 foreign banks in Beijing regard state-owned enterprises as their stable clients.