Century Change: China's securities market entering the new century

Author: Ye Guoying
Publisher:
Publish Date: 2002-06-01
Features:
Second, the internal mechanisms are not well-developed, and the management level is low. Due to a short development history and poor standardized management, most intermediary service industries have not yet formed sound industry norms. The operational mechanisms within institutions are still very imperfect, and the management level is relatively low. Particularly, some institutions have loose internal management, lack long-term development plans, exhibit prominent short-term behavior, have little public savings, and use outdated service methods.
Third, the quality of professionals varies greatly, and their professional ethics are evaluated low. Some professionals have poor moral integrity and cannot resist the temptation of profit, leading them to collude to issue false business reports. Others are irresponsible or engage in deceptive business practices, or even break laws and regulations. These phenomena exist in various types of professional intermediary institutions. Statistics show that in 2001, 14 accounting firms were involved in false reports, involving 41 people and amounts exceeding 7 billion, causing extremely serious consequences.
Low quality, strict management, lack of integrity, and other issues have led to the participation of these institutions in many violations by listed companies. For example, Zhongtianqin Accounting Firm was involved in the profit fabrication of Yin Guangxia. Of course, it cannot be denied that foreign intermediary institutions face similar problems. However, on the whole, China's intermediary institutions seem to have more severe issues in this regard.
Therefore, after joining the World Trade Organization (WTO), with the opening of service sectors, foreign-funded service providers will enter the domestic market. They possess rich industry experience, management capabilities, and other advantages, posing a threat to the survival of domestic intermediary institutions:
① Competition in Business: After China joined the WTO, market openness is bidirectional. While Chinese intermediary service industries can enter foreign markets, foreign competitors can also enter the Chinese market. In terms of strength, international large-scale professional intermediary institutions have a history of over a hundred years, while China's counterparts have developed through ups and downs and may have at most only 20 years of history. The disadvantage is obvious. In the future, traditional businesses will still hold a certain share of the market for domestic institutions, but in high-value-added services such as management consulting and foreign-related businesses, our competitiveness is relatively low. The entry of foreign institutions will have a significant impact on the market, and even before domestic institutions have the conditions to develop the market, foreign institutions may already dominate it.
② Competition for Talent: "Employee localization" is an important measure for multinational companies and also a key strategy for foreign professional intermediary institutions entering China's intermediary service market. Due to differences in language, cultural background, and living habits, foreign professionals find it difficult to start working directly upon entering. Therefore, they inevitably hire local professionals with high salaries, overseas training opportunities, brand reputation, and superior office conditions. Compared to large international institutions that have accumulated wealth and experience over decades or even centuries, China's professional intermediary institutions still have a significant gap in various aspects and are difficult to compete with them. As a result, a large number of outstanding professionals may be lost.
Although the situation is very severe, domestic intermediary institutions can learn what they lack through continuous cooperation, take the strengths of others to compensate for their weaknesses, and thus improve the quality of intermediary services in the domestic securities market. They can advocate a service philosophy that prioritizes integrity, providing support for management.