By Chang Yanjun
As of the end of 2012, the trust industry, with asset management volume of RMB 7.47 trillion Yuan, surpassed the insurance industry, now looking at the banking industry "the eternal king" distantly. According to statistics, the volume of trust asset has been growing at an annual rate of more than 50 percent for 4 years in a row since 2009. In the face of intensifying industrial competition, can the trust industry maintain its rapid growth in the next 10 years?
Go with the flow, striving for number 1 while securing the number 2 position
Some people say that every year has been a tough year for the trust industry, but it has weathered each year nonetheless. "Every year has been a tough year" indicates the uncontrollability of the overall complicated financial environment, whereas "it has weathered each year" indicates the innovation and flexibility of the trust industry in last year when there was not finance-exclusive business. Xin Wei, general manager of COFCO Trust CO., LTD said that in the process, employees of the trust industry had provided sincere and amiable services to clients".
Qian Jun, president of Huabao Trust, believes that the cause for the prosperity of the trust industry today is that it is able to meet market demands. "The accumulation of the people's wealth results in needs for wealth management, and what the trust industry does is just going with the flow".
"In the next decades, with deepening reform of the finance industry and liberalization of interest rate, more resources will be transferred to the "broad assets" management field of direct financing, and trust will certainly be one of the main forces", said Lu Qiang, general manager of China Resources SZITIC Trust Co., Ltd, who believes that: "the springtime of China's wealth management has just come, and the RMB 7 trillion is just a beginning".
Is the rapid growth sustainable
"The growth of 50 percent of the trust industry cannot be sustainable. The turning point from rapid growth to medium-speed growth has appeared", said Qian Jun, who points out that currently some trust products are highly similar, which is a common trait of the rapid development stage of the market; in the next stage, however, professional management capability and service quality will determine future development.
The main body of China's wealth management market is becoming more diversified: innovations of securities traders, loosening up of insurance, breakthroughs of futures, law amendment for private funding… In the face of more extensive competition, "trust companies should strengthen their risk management ability. They should not only attach importance to pre-crisis risk management, but also strengthen the ability to manage risk during a crisis and handle risk after a crisis", said Xin Wei.
"Currently, most of the RMB 7 trillion yuan of the trust industry belongs to channel business, but more and more trust companies have begun to enhance their independent management ability". According to Lu Qiang, the advantage of trust lies in that it can integrate supply and demands so as to improve product design, relying on professional teams and outstanding risk management to meet demands of the wealth management market.
Relying on its parent company, COFCO Trust Co., Ltd has made explorations into agricultural products, having introduced such products as pig-breeding trust, tea trust, and wine trust. "COFCO Trust intends to establish a differentiated competition mode that is based on the background of its parent company". Xin Wei points out that COFCO Trust will continue to stick to agriculture unswervingly; besides, it will also dig deeper into asset securitization of consumer loan, such as the asset securitization of car loan.
Differentiated channel building
Originally, sales of the trust industry depended on banks, and later on third-party money management organizations. In recent years, some trust companies began to build their own channels. In the face of the coming decade of great assets management, do trust companies need to build their own sales channels?
"Channel building has a bearing on the building of a trust company's sustainability and its long-term competiveness", said Yang Huahui, Chairman of the Board of China Industrial International Trust Limited who used to work in the banking sector and thought a lot of the channel building of trust company.
Although supply of high-quality products in the wealth management market is severely insufficient, Xin Wei believes that differentiated channel building is still needed even under the current circumstance. "If trust companies can establish proper channel sales capacity based on their own characteristics, it is in fact a beneficiary complement to their exterior channels".
