China
Construction Bank Launches the Cost Leadership Strategy
Cutting
Operational Cost and Raising Business Performance
Setting the long-term strategy of strengthening
cost control and implementing the cost leadership strategy, China
Construction Bank (CCB) has established the Cost Control Committee
headed by the bankĄ¯s President as the body to control cost and
approve major cost expenses and developed the general guideline
and measures of cost control.
In recent years, as the Chinese financial market
gets increasingly open and the market-based trend of interest
rate forming squeezes the profitability of banks, CCB, by constantly
renovating the operational and management systems, has gradually
developed the business philosophy with long-term value creation
as the orientation and customers as the focus, established the
business performance evaluation system with economic added-value
at the core and the budget management system centering around
economic capital. As a major tool of cutting operational costs
and raising business performance, to strengthen the cost control
measures and implement the cost leadership strategy have become
a long-term strategy of CCB.
The first meeting of the Cost Control Committee
which was held recently outlines the general guideline and measures
of strengthening cost control throughout the bank. First, to build
the cost control concept among all the employees. Organized by
the Cost Control Committee, the cost control concept and cost
leadership strategy should be widely promoted throughout the bank.
Branches, departments and employees at all levels, especially
the management should establish a strong sense of cost saving,
take the lead to cut cost expenses and faithfully fulfill their
cost control responsibility. Every employee should fully understand
the importance of implementing the cost leadership strategy to
shareholding commercial banks. Second, to implement the differentiated
and classified cost management system. Since the nature and rigidity
of the commercial bankĄ¯s cost expense are diversified, advanced
international cost control theories and technologies should be
adopted to rationally control the bankĄ¯s total expenses and readjust
their cost expense structure. Researches should be launched to
develop the differentiated and classified cost management system.
Third, to establish the cost control evaluation system. A regular
information feedback system on the results of implementing cost
control by different departments of the bank should be adopted
and related incentives mechanism should be developed so as to
form a rational cost control evaluation system. Fourth, to restructure
the business processes of cost control. Various business processes
related with cost control should be checked and the existing cost
control methods should be optimized and consolidated.
Recently CCB kicked off the in-depth analysis of
the current state of cost expenses and related business processes
and will gradually implement a series of measures to strengthen
cost control, including saving the transportation, telephone and
car expenses, improving the centralized procurement of air tickets
and IP telephone services throughout the bank and reforming the
system of using the bankĄ¯s cars for business purpose.