Industrial Securities: Robust Management
Industrial Securities, previously known as the Industrial Bank's Securities Department (created in 1991), was incorporated in April 1994 as Fujian Industrial Securities Co. with a registered capital of CNY 100 million.
Since then, Industrial has grown into a multi-business financial holding conglomerate controlling 4 financial subsidiaries, 4 branch offices, and 60 securities business offices. It also deals in securities and futures-related services, fund management, direct investment, and overseas business. It is among the top 20 firms in the industry in terms of main business activities and operating indicators. Industrial has won multiple awards for being among the most unusual securities brokers, most influential securities firms (top 20), and most generous Chinese financial institutions in charitable donations. Industrial had total assets of CNY 30.537 billion and a net capital of 6.536 billion as of December 31, 2010. It also realized gross revenue of 2.738 billion as of that year end.
Innovation-Powered Business Growth: Two Transformations
Innovative Transformation 1: From Shopkeeper to Peddler When the Chinese stock market fell into a slump and the securities industry started to take a hit from the second half of 2001, Industrial Securities was the first securities firm to make a change and seek transformation by exploring a customer-oriented business model and by adjusting its corporate organizational structure accordingly.
Industrial offered a range of new brokerage services and made an effort to expand low-risk activities (e.g., Treasury bond repurchase, margin marketing, targeted marketing) while improving market share with diversified marketing tools. Industrial made new breakthroughs in investment banking every year. In 2003, as lead underwriter, it underwrote the Steel and Vanadium Company's convertible bond, which was the largest convertible bond issuance in the securities market at that time. In
2004, it acted in the capacity of the acquiree's financial advisor in the merger between the First Department Store and Hualian Department Store, which was the first merger between two listed companies. In 2005, it helped Pangang Steel and Vanadium Co. sell put warrants in the first share and succeed in the split-share structure reform. (Industrial Securities was the first securities firm to offer a put warrant-based plan to the split-share structure reform.)
Industrial Securities made outstanding achievements in research. In 2005, it was awarded the first, second, and third prizes by the New Wealth Best Analyst Awards for research findings in nonmetallic building materials, construction, and pharmaceutical industries, respectively. Its research and development center was named one of the best 10 Chinese research teams of the year. Industrial also explored new territories in fund management. Following its equity participation with China Southern Asset Management Co., it created the Industrial Fund Management Co. and launched its first product in 1993: the Industrial Convertible Bond Fund.
In July 2004, Industrial Securities started a workflow reengineering program. Management used workflow reengineering as a breakthrough point, exercised more efficient performance management as well as basic controls, and focused on the improvement of customer services in an attempt to bring a makeover to business, management, and team building. Its purpose was to attract more customers and help them increase their financial assets. The program helped rearrange and remodel business workflows, operating models, and management workflows; more clearly define organizational goal; and also improve execution. In 2005, Industrial Securities was qualified as one of the first securities brokers for standard business activities.
Innovative Transformation 2: From Peddler to Service Provider Faced with increasingly fierce competition in the industry, in September 2009, management put forward another strategic transformation. Industrial Securities focused on finding opportunities offered by the industrial upgrading, and aiming toward a goal for better professional services. Upgrading the business model was at the core of the transformation. Management wanted to replace the old business model, which mainly focused on trading channel-based services, with a new business model built upon trading channel-based services but more focused on professional investment services. To achieve that, management adopted the following measures:
- Consolidate the base of the wealth management business model.
- Reevaluate and rearrange the wealth management product system.
- Launch an industry-leading wealth management platform that integrates investment advisory services, research and information, customer management, and marketing support.
- Build a wealth management team and invest more in professional training.
- Reevaluate and reform the compensation and performance management system, making it a better fit for the wealth management-oriented transformation.
- Build an organizational system for wealth management.
- Adjust the headquarters' organizational framework on the principle that such a framework allows customer-oriented specialization.
- Increase strategic investment in research activities and IT facilities (related to HR development, compensation and performance management, system construction, and others) to support the wealth management-oriented transformation.
In 2007, Industrial Securities further increased its share capital (its registered capital increased from CNY 908 million to CNY 1.49 billion) and was qualified as a securities firm for innovative business activities. In 2009, it further increased its registered capital to CNY 1.937 billion. After taking over and making additional investment in the Huashang Futures (now known as Industrial Futures) in 2007, Industrial became an emerging securities holding group, participating in securities, futures, and fund management services. In 2010, Industrial Securities went public with a smash, providing strong support for the second strategic transformation.
