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Lessons

Innovation is the most important highlight of the Industrial Securities business growth model, providing vigor and helping explore new territories for business growth.

- Innovation is an effective way for a securities firm to distinguish itself from others. According to the theory of industrial organization, in any industry, an effective organizational structure is basically a pyramid structure in terms of technical skills. The lower the technical skills, the greater the chances of being imitated and having more competitors; whereas the higher the technical skills, the fewer the chances of being imitated and the better likelihood of having fewer competitors. Currently, there is a serious homogeneity problem in the products and services offered by Chinese securities firms. They have no significant competitive advantage and are unable to meet diversified financial needs of customers. Meanwhile, most Chinese securities firms have a single-line, identical profit model and are still at the mercy of the market. Market volatility can have a serious impact on profitability. A securities firm has to rely on innovation in service differentiation, product system design, internal control, resource integration, and risk management in order to develop its own advantage, better satisfy customer needs, and survive in intense market competition.

- Financial innovation is an effective means for a securities firm to expand business territories. Innovation should be targeted at specific business activities in accordance with the characteristics of that activity. For conventional activities, a securities firm should focus on variety development, create a complete range of products, and build a brand on strengths, while improving internal coordination and integration of resources. For innovative activities, the firm should bring innovative and conventional activities to complement each other in an efficient and effective way, and promote common development for sound business growth.

 
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