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Core Points of View

At the turn of this century, China's capital market entered a new era. Since then, the continuously fast growth and rising income levels in China have led to significant change in the market's financial structure. Increasingly, active financial investments are becoming more market-oriented, and individual demand for financial services has brought about increasing need for diversity, securitization, and portfolio management services.

Meanwhile, securities companies in China, as the major providers of financial services in the capital market, are going through a period of significant opportunity. Taking into account the broad space for development and increasingly tough competition, Chinese securities companies face challenges in areas such as functional position, organizational structure, profit model, risk management and control, talent structure, core competitiveness, and international vision.

As we go forward, four elements are crucial if Chinese securities companies are to dominate in the fiercely competitive capital markets: (1) solid capital power accompanying a fluent and efficient mechanism of capital formation and complementary factors; (2) matchless core competitiveness based on outstanding innovative ability in human resources; (3) rigorous risk management and control mechanisms and the ability to cope with risks efficiently; and (4) broad international vision combined with top-ranking international ability. The securities companies that can look forward to a bright future in China are those that can synthesize capital, talent, institution, and vision, which combined will build incomparable competitive power in the market.

When mapping and analyzing the future development and institutional transformation of Chinese securities companies, it is necessary to tease apart the history of their development and judge them in the light of several cases; namely, Wanguo Securities, Junan Securities, GT Securities, Haitong Securities, Industrial Securities, China International Capital Corporation, and CITIC Securities. These seven companies present a microcosm of the Chinese securities industry as it has existed in the past two decades.

It is necessary for the future development of Chinese securities companies to take example from and absorb the experience and lessons of international investment banks (securities companies) in mature markets. The 100-year history of international investment banks' development represents the whole world history of modern finance, with its basic characteristics of spectacularity, secretiveness, fluctuation, and unpredictability. The question we must ask is: How will Chinese securities companies find their position in this history, intertwined as it is with both fog and sunshine?

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