Q: Why did Xiangcai want to cooperate with foreign firms?
A: In the future, we definitely want to do business outside of China, that was one criteria for forming the joint venture. I want to emphasize that the Xiangcai/CLSA cooperative is only a beginning. As more Sino-foreign securities companies develop, more and more Chinese securities firms will also take their place independently on the international stage.
Q: What do you intend to specialize in?
A: We hope to become the mainland's top investment bank. CLSA has experience in the international market -- the high level of its market research is something we can especially learn from. As for the distinction between a "securities company" and an "investment bank," under Chinese law, our joint venture is called "a comprehensive securities company," but we can underwrite stocks and government and corporate bonds. "Investment bank" is a foreign term. In China we say "securities company."
Q: How long did it take to set up the CLSA/Xiangcai joint venture?
A: We started talking in September, 2000, but the laws governing such Sino-foreign financial ventures weren't fully in place. At the same time, because we were the first, there were no precedents to refer to, so that added some time. But compared to similar negotiations, the period was fairly short.
We came to an official agreement in February, 2001. The CSRC accepted our application to set up the joint venture in July, 2002, and the application was approved in December. We became the first Sino-foreign securities company to be established after China's WTO entry.
Q: What further liberalization would you like to see in China's financial markets?
A: China's securities market is going through a transition from being disorderly to orderly. In this maturation process, policies may create uncertainty and heighten systemic risk. Besides that, the Chinese market has gotten to its current level in just a decade. A shortage of high quality personnel is the biggest challenge to our development. Also, China's securities market is seriously lacking in innovation. This is also a big factor restraining our development.