The impacts of ethnic resources on enterprises' survival : Liu Chong Hing Bank in Hong Kong

Abstract

The highly competitive banking sector has seen a drastic reduction in the number of players since the 1940s. In 1948, there were more than a hundred of local Chinese banks (華資銀行) operating in Hong Kong. The public harbored a general mistrust in local Chinese banks since many of them had indulged in risky investments and lending. Unfounded rumors could trigger bank runs. It was therefore traditionally difficult for small and medium-sized local Chinese banks to survive in the market. Over the past fifty years, mergers and acquisitions in the banking industry had reduced the number of local Chinese banks to eight in Hong Kong by 2008; four of them being small and medium-sized family banks. As small and medium-sized enterprises, these banks must create and sustain their own competitive advantages to survive in a competitive market. This study assesses how ethnic resources helped a small and medium-sized family bank to survive in the competitive market in Hong Kong. The focus is on Liu Chong Hing Bank, a family bank in Hong Kong with a predominantly Chaozhou clientele, in the period between the 1950s and 2014. Annual reports, newspaper articles, data collected from in-depth interviews with management from the bank and entrepreneurs of the ethnic group are the major sources of data. The study aims to discover a major missing piece in the puzzle of the development and the reason of the survival of a family bank in the Hong Kong. It also increases the understanding of the importance of ethnic resources on a highly competitive industry as well as the change of identity recognition of Chaozhounese in Hong Kong. The author finds that ethnic resources can help a company to develop its competitive advantages, but the competitive advantages would dissipate as changing social conditions transform the articulation of ethnic identity. This study also showed the changes of identity recognition of younger generation of Chaozhounese was influenced by their primary language and culture.