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Core Competitive Strength of Securities Companies

The history of the international and domestic financial industry shows that, in the long run, sustainable financial enterprises are those that pay great attention to risks, stick to a professional and pragmatic approach, and prioritize services and innovation.

For a rather long period in the future, the trends of information globalization and global economic integration will remain unchanged. The financial innovation development based on technology and knowledge will change the global financial pattern. The strategic restructuring of the Chinese economy is gaining momentum as the economic development and reform of China enters a new stage. The domestic capital market has also entered into a new developmental period. Competition in the securities industry is now in an era dominated by services.

In front of rare historic opportunities and unavoidable challenges, domestic securities companies must strengthen their sense of mission, responsibility, and urgency. They must seize the opportunity, take to exploration and innovation, improve corporate governance, standardize their operation according to law, strengthen coherence, and focus their efforts to rebuild the glory of the securities industry.

Securities companies should meet requirements in the following five aspects:

1. Capital sufficiency: They should improve their net capital strength to enhance their resistance to risks, while ensuring there is enough capital for business exploration and innovation.

2. Step up business collaboration and enhance service quality: They should build up the overall service brand of the company, improve collaboration among various business lines, and raise their integrated customer service level.

3. Scientific management and high-efficiency operation: The transformation should be realized from extensive operation to intensive operation. The internal governance structure, organizational architecture, operation process, and bylaws of the company should be further improved to raise management efficiency and business implementation effectiveness, translating the ambitious strategic planning of the company into real productivity. A corporate operation and management culture should be cultivated, characterized by complete organizational architecture, well-designed management systems, and effective implementation.

4. Stringent internal control and safe operation: Robustness of operation should be ensured. Various management mechanisms and processes should be able to function smoothly. Operation and management risks should be predictable, controllable, and avertable to counter the negative impact from changes in the external environment.

5. Great ability to make profit: The ability to profit from business should be gradually built, commensurate with the net capital strength of the company to ensure constant profitability and continuous growth.

To build a modern financial enterprise, core competitive strength is indispensable in the aspects of expertise, management, innovation, and risk prevention, as detailed below:

- Expertise: Expertise is the direct manifestation of a securities company's competitiveness and service capability, epitomizing the core competitive strength of the company. Starting from the needs in market competition, in comparison with other multiservice securities traders, the expertise of a company should include:

- Marketing ability

- Wealth management ability

- Market trend analyzing ability

- Ability to determine the value of products and services

- Ability to develop and design products and services

- Ability to evaluate the value of a client

- Ability to provide the client with comprehensive financial solutions

- Ability to conduct and increase the value of investment transactions, investment counseling ability, haggling, and pricing abilities

- Ability to securitize assets

- Ability to develop, implement, and integrate information technologies

- Management: This mainly refers to the ability to make plans, organize, and coordinate in the context of the operation and management of a company. It epitomizes a company's organizational architecture, rules and bylaws, processes, and mechanisms. The cornerstone of management strength is the building of a managerial talent pool. Senior managers should have industrial foresight. Medium managers should have solid industrial experience and implementation effectiveness.

- Innovation: Innovation can be found in every link and aspect of the operation and management of a company. It is the fundamental force driving the development of the company. It mainly consists of innovation in products and services, organizational innovation, and managerial innovation. Innovation of products and services is the core component, organizational innovation is the safeguard, and managerial innovation is the basis.

- Risk Prevention: Risk prevention is the ability to strike a balance between profits and risks, and to control and stay on top of risks. It includes identifying, measuring, controlling, and resolving risks.

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