China Securities Profitability Problems

The security industry in the world encounters great setback after the year 2001.The security companies both in the Occident and our country are facing great frustration and the companies'loss-profit sheets look very bad. In order to survive many companies in this industry have to reduce the staff .And there is distinct difference between the security companies in the occident and our country .That is only a small amount of the security companies in the Occident making loss compared most of the security companies in our country making loss .All of this let us to contemplate the way that our security companies make profit. Obviously it is important for us to explore the break through for our security companies which will in a more intensively competitive circumstance in the future.There are many reasons making this. But the common background is that the stock index declines greatly after the year 2001 which weakens the investor's confidence .Accordingly the amount of the investors reduces. Further more, the lack of finance derivatives for the security companies in our country to evade risk let the security companies have to face the fact of making loss when the security market in our country is not booming.The above is just the external reasons .And the following is the internal reasons: the singleness of the operating structure, the lack of the way and consciousness to evade risk. Generally it is the limitation of the profit making mode. This kind of limitation will consequently makes the security companies'ability to make profit based on the security market .In other word it is that when the market is booming most of the security companies will have black loss-profit sheets and otherwise will have red sheets. Therefore, we could rather consider that the great loss in recent year and the huge profit before the year 2001 made by the security industry are two different outcomes of the risk than consider that the appearance of operating loss in the security industry after the year 2002 is owing to the downturn of the security market.