Circular 8 enables a foreign investor to establish a wholly-owned company anywhere in China, with full-fledged trading and distribution rights for as little capital as USD 60,000. The key barriers mentioned above have also been removed, and there is no longer a distinction made between foreign and domestic trade. As a result, companies are no longer required to segment their marketing efforts and can present a single, coherent "face" to the marketplace (Cassie Wong). Ever since China gained membership to the World Trade Organization (WTO), there has been increasing interest from foreign investors in the commercial possibilities that the country offers. The Banking industry of a country plays an important role in the economic well being of that country. The Chinese Banking industry is also effectively serving the purpose of supporting the process of economic growth in China. With the GDP growth rate of approximately 10% an year the assets of the Banking sector in China is also multiplying.
The country launched its open door policy 26 years ago. Since the policy introduction the FDI flows in the country received a quick response. In 2004 China was at no.2nd position in the world of FDI with $64 billion. The Chinese FDI trends can be examined in two phases. First phase: 1979-82 Second phase: 1984-91 Third phase: 1992-99 In the first phase the government establish for special zones with incentive policies. Although there was a high inflow into those regions, the total FDI flow reached US $ 1.8 billion. In the second phase the provinces were opened and recorded US $ 10.3 billion. In 1989 however the trend dropped.
In the third phase Deny Xiaoping opened China for overall economic reform. The phase was very fruitful for China. The government introduced new policies and market oriented economic reform. In result of these reforms the FDI's started flowing into the Chinese economy at rocket speed. In November 1999 US-China had an agreement regarding the WTO, according to which many new reforms were made (Sandra, 2001) those included.
The sectors relating to the distribution services will be opened for repair and maintenance and China will phase in trading rights and distribution services over three years. The Government for the investment opened the telecommunication industry of China. The professionals were also allowed