Vietnamese Securities Companies; Chapter 1: RESEARCH OVERVIEW 1.1 Proposing the solutions of enhancing the competitiveness competence for Vietnamese Securities Companies, particularly in the context of stock market liberalization under WTO participation commitment REASONS OF RESEARCH Vietnam stock market has been changing dramatically since 2000, especially since 2005 The law and institutional framework have been established As of 31/12/2014, there were 672 listed companies and 160 registered trading companies on Vietnam stock market, of which the market capitalization reached up to 1,128 trillion VND equivalent to 31.5% GDP Within 15 years of establishment and development, more than 100 securities companies (SCs) have founded and operated in Vietnam With various organization models, number of domestic and foreign strategic partners and unlimited support from long-standing financial organizations in Vietnam, the Vietnam stock market have shown its increasing completion and effectiveness This increasingly mature market offers many convenient conditions and challenges for the SCs which are effectively operating As the entity on VSM, SCs have been contributing to the vibrancy and effectiveness of the market, thus leveraging the operation effectiveness competence of SCs However, competitiveness of Vietnamese SCs has been considered low in comparison with other competitors such as Foreign SCs Under pressure of economics integration originating from the participation of high level foreign SCs in Vietnam market, Vietnamese SCs are hard to find themselves developing sustainably, taking their key responsibilities on VSM without further pushing up their competitiveness competence Competitiveness and the analysis of enterprises’ competitiveness competence in Vietnam are always at heart of attentions from various parties It is safe to say that numerous researches on competitiveness competence have been published continuously in every business sectors during recent couples of years As for finance – securities sector, the number of researches on this matter for each enterprise, business organization has climbed up to dozens, among those the counts of such researches on SBs are considered significant The research topics on competitiveness competence in Securities sector are also diversified and varied As important financial intermediaries in the Stock market, SCs will keep the incessant effort in enhacing the effectiveness competence in Stock market, in ensuring their stable position and status for sustain development With the increasing numbers of SCs and their important roles in the securities trading in market, Vietnamese SCs haven’t carried out yet the intensive researches on their competitiveness competence This is the main reason why the author decided to focus more on the research titled “Increasing the competiveness competence of the Vietnamese Securities Companies” Objects and scope of Research Research Objects For the information transparency which is strictly applied for all listed enterprises in Vietnamese Stock Market, the Securities Companies are also included Hence, in order to reach the aim of setting up and analyzing the transparent data to produce the best research outcomes, author selected the research objects as Vietnamese Securities Companies, particularly focusing on competiveness competences of Vietnamese Securities Companies Scope of Research Geographical context: Covering all Vietnam territory with more focus on the large financial and securities centers such as Hanoi Capital, Da Nang City and Ho Chi Minh City Timing Context: PhD candidate conducted survey, data collection during period from 2011 to 2014, in which some data had been analyzed based on data collected since the establishment of Vietnamese Stock Market 1.2 RESEARCH OVERVIEW Competiveness is the complicated and long-lasting economic – social phenomenon with numerous researches, analysis reviews from different economists in many centuries The complexity of competitiveness is clearly explained by the existence of different concepts and perspectives of competitiveness, based on various approaches and analysis of competitiveness phenomenon Competitiveness competence is the concept attracting lots of attentions from various parties in different sectors such as economists, industrial capitalist, politicians, journalists, scholars in varied countries It depends on context and degree, each approach will lead to different definition of competitiveness competence The level of Competitiveness competence: the level of Competitiveness competence is the category which achieves highest consensus among scholars in the world Most of theories, analysis on competitiveness competence all divide this concept into 03 different levels: Competitiveness competence at national level, Competitiveness competence at sector level, Competitiveness competence at enterprise level 1.2.1 Researches on competitiveness competence Research on the internal factors affecting the competitiveness competence of Some outcomes of researches on competitiveness competence produced by scientists such as: PhD in Economics Thesis Research “Some solutions to enhance the competitiveness Competence of Vietnamese coffee” by author Tran Ngoc Hung in 2003; PhD in Economics Thesis “Improving the competitiveness competence of Vietnam Electronics Sector during global economic integration process” by author Hoan Thi Hoan The Research Objective Systemizing the scientific theories on competitiveness competence, competitiveness competence of Securities Companies; in 2004; PhD in Economics Thesis “Improving the competitiveness competence and integration of commercial banks until 2010” by author Trinh Quoc Trung in 2004;… of Stock market would be proposed The reference books including “Improving the competitiveness of our economy during regional and international integration process” by Prof PhD Chu Van Cap, the National Political publishing house (2003); “Improving the competitiveness competence of SMEs” by Prof, PhD Pham Quan Trung, National Economic University Publishing House (2006) …are some of works defining clearly a number of hypothesis on competitiveness competence of enterprises Rationale, theoretical contribution 1.2.2 Researches on Securities Companies PhD in Economics Thesis “Solutions to enhance the involvement of finance intermediaries in process of building and developing Stock markets in Vietnam” by author Trang Dang Kham (2002) did mention the financial intermediaries on stock markets; PhD in Economics Thesis “Developing the operations of Vietnamese securities Companies” by author Le Thi Huong Lan (2008) elaborated all the financial activities of a single securities broker and analyze all the factors relating operation development of securities broker;… 1.3 This paper applies the assessment model of internal factors written by Thompson and Strickland (2001) to identify 07 internal factors affecting the competitiveness competence of Vietnamese Securities companies, including financial resource; intellectual capital; product quality; technological level; service quality; trademark; reputation and promotion activities; operating network Findings, recommendations from the research outcomes (i) Dissertation has set up and assessed the 07 internal factor model affecting the competitiveness competence of Vietnam Securities companies, which 07 factors prove their positive effect (+) on the competitiveness competence of Securities companies (ii) The dissertation has weighted the effect level of each internal factor toward the competitiveness competence of Vietnamese Securities companies From that, the author has proposed the relevant solutions related to improvement of competitiveness competence for Vietnamese Securities companies, especially in the context of liberalization of the stock market (iii) Some centralized solutions: Void for research (i) Build up the complete set of rationales related to competitiveness competence of Securities Companies; (ii) Build up and review the internal factors affecting the competitiveness competence of Vietnamese Securities Companies (iii) Proposing solutions to improve the competitiveness competence of Vietnamese Securities Companies in context of liberalization of Stock markets 1.4 1.6 NEW CONTRIBUTIONS OF THESIS Set up organization model coherently, set up and develop the workforce, identify criteria in attracting talents, research and develop products to concretize and enhance the intellectual competence for Securities companies; Research questions (i) What are the rationales of competitiveness and competitiveness competence of Securities Companies?; (ii) What are the internal and external factors affecting the competitiveness competence of Securities Companies? (iii) How is the current status of competitiveness competence of Vietnamese securities Companies? (iv) On the basis of reviewing the internal factor group affecting the competitiveness competence of Securities Companies, what are the necessary solutions to enhance the competitiveness competence for Vietnamese Securities Companies, especially during the process of internal economic integration under WTO participation commitment? 1.5 Research methodology Analysis and synthesis are two methods applied throughout the research carry-out Intensive interview with experts, who are the managers in charge of Securities Companies operation (CEO, Deputy CEO…), fellows would have the background to review the internal factors affecting the competiveness competence of Securities Companies From the comprehensive analysis, fellow will build up the questionnaire for field survey, reviewing for research outcome From that, solutions for Vietnamese Securities Companies in application of suitable internal factors affecting the competitiveness competence of Securities Companies to improve the competitiveness competence under the liberalization Set up requirements of overall technology for operation of Securities companies, develop the criteria assessing the updating level of technology and applying the new technology on service product, issues relating to online transactions being ensured smooth 24/24…are concretized to sets of requirements to improve the technological competence for the development of Securities companies 1.7 DISSERTATION STRUCTURE Dissertation comprises of 05 chapters: Chapter 1: Research overview Chapter 2: Companies Literature Review of Competitiveness Competence of Securities Chapter 3: Current situation of Competitiveness Competence of Vietnam Securities Companies Chapter 4: Research into model of internal Competitiveness Competence of Securities Companies Chapter 5: factors affecting Solutions of improving the Competitiveness Competence for Vietnamese Securities Companies characteristics and conditions of securities, appraise the stock market, analyze the financial situation of the issuer to advise the investor on successful transactions of securities Securities portfolio management (investment trust): is the activity in which Securities Company is entrusted to deal securities for clients Chapter 2: LITERATURE REVIEW OF COMPETITIVENESS COMPETENCE OF SECURITIES COMPANIES 2.1 BASIC UNDERSTANDINGS OF SECURITIES COMPANIES Concept and characteristic of Securities Companies Concept: Securities Companies is defined as a financial intermediary institution established by law, make a and/or some of activities on the stock market Characteristics of Securities companies Characteristics including: (i) A Securities company is the intermediary institution on transactions; A Securities company is the intermediary institution to provide information; (ii) A Securities company is the capital intermediary institution between seller and buyer; (iii) A securities company is the intermediary institution of risk; (iv) A securities company is the intermediary of payment; (v) Conflicts of benefits between the securities companies and clients; (vii) A securities company is a business institution with conditions, which shown by: Capital condition; Condition on specialization and human resource; Conditions on facility Roles of Securities companies (i) Firstly, Securities companies create the mechanism of capital mobilization for enterprises and economy; (ii) Secondly, securities companies contribute into the stabilization of stocks on market; (iii) Thirdly, securities companies offer new product and service on market; (iv) Fourthly, securities companies help the market control authorities manage, supervise the activities on market most effectively; (v) Fifthly, securities companies help to reduce the transaction fee, risks and improve the investment efficiency for investors Issuer advisory (financial advisory): subject to Issuer’s purposes and requirements, the Securities Company will conduct its advisory services related to finance or IPO…, therefore, the contents of financial advisory services including: Corporate finance analysis, consulting the valuation of corporate; IPO advisory; Re-capitalization advisory; M&A advisory; listing advisory Securities depository is retention and protection of client’s securities and help clients perform their rights for the securities depository Perform client’s proprietorship: Depriving from the securities depository, Securities Company is able to perform the client’s proprietorship rights of securities deposited Lending: is the operation in which Securities Company approves loan made to client for purpose of securities purchasing and accepts the securities as the loan guarantee from client Besides depository loan, Securities Company also offers Securities loan to client for short-selling Information provision: Securities Company is an information channel of market, issuers, transactions and other legal issues for investors In the meanwhile, Securities Company also provides market information for market control authorities for their management objectives 2.2 LITERATURE REVIEW OF COMPETITIVENESS COMPETENCE Concepts of competitiveness competence Competitiveness competence is the enterprise’s strength and advantage over other competitors in satisfying highest their client’s needs to obtain the increasingly higher benefits Main business activities of Securities companies Levels of competitiveness competence In proprietary dealing: is business activity that securities company sell and buy securities by their own capital for their own account, in the meanwhile suffering risks from that Competitiveness at nation level Securities services Brokerage: is operation bridging sellers and buyers of securities By securities law, securities brokerage means the operation of a securities company acting as an intermediary to carry out securities buying or selling orders on behalf of the customers Underwriting: is operation in which Securities Company helps issuer complete the procedures prior to securities offering, distribute the securities and stabilize the securities price during the 1st phase after offering This content is usually analyzed on general overview, focusing on macro-economic environment and reflecting the role of government Because the economy entities herein are national, they mainly deal with economic – social issues based on making use of all local and international conditions Most of international scholars have shared the same angle that competitiveness competence at national level is national productivity, and resulting in the life quality of people in that nation Competitiveness at sector level At the industry level, competitiveness competence is the ability of companies in the same sector achieving the certain success against other competitors without any protection Securities investment advisory: is activity in which Securities Company defines the or support from government As well as competiveness at national level, concepts and measurements of competitiveness may vary but the final outcome is still the stable stand of sector on market, based on such conditions as effectiveness in business and production, application of advanced technology Competitiveness at product/ enterprise level There exist many different concepts on competitiveness at product/ enterprise level, yet all analyzing competitiveness at micro level At enterprise level, concepts of competitiveness are offered by different organizations, economists with heterogeneous contents Competitiveness at enterprise/ company level generally is any ability which helps enterprise/ company grow and develop or at least maintain their position against other competitors on market Particularly, it’s considered as ability which helps enterprise/ company to exist, maintain or increase the market share, attract customers to use their service or product to increase their asset value, market share, revenue and profit for enterprise/ company Models of analyzing competitiveness internal factors offered the method of assessing the competitiveness competence of a company though matrix of internal factors evaluation Process of building this matrix consists of 05 steps If total weighted scores of all factors given in the matrix are 3.0 onwards, the absolute competitiveness of that company is above average In contrast, total weighted scores in matrix T < (T* = 3,0), the absolute competitiveness of company is below average The internal factor evaluation model helps companies to assess their competitiveness in relation with other competitors on the targeted market, thereof exploring the basic advantages to promote their competiveness on market This analysis method allows to identify which competitiveness factor should remain, reinforce more and which factor should be built, thereof producing the appropriate solution to enhance the competitiveness competence of company The author has applied this model in researching and building the factor set to evaluate the competitiveness competence of Vietnamese Securities companies 2.3 THEORIES OF COMPETITIVENESS COMPETENCE OF SECURITIES COMPANIES Diamond model of M Porter This is the model of analyzing competitiveness which is applied and discussed the most in academic world M Porter conducts research to understand why some companies in certain countries can create and sustain the superior comparable advantages to other strongest competitors in the world in some particular sectors Therefore, he came to conclusions on series of factors which have influence decision on this success, and grouped those into 04 main groups arranged in diamond shape – it’s the existing famous and popular diamond model Four main criteria in diamond model consist of: Factor conditions of production/ business (human resource factors, physical and metal factors), Factor conditions of demand on size, structure and complexity level of local demand on products in certain industry, the related and supporting industries, and most importantly – the enterprise strategy, structure and rivalry Competition image model Competition image model used to evaluate the competitiveness competence of a specific company This model allows the direct comparisons between analyzed company and other competitors The analysis process consists of 06 steps In order to apply this competition image model in competition evaluation, it’s necessary to acquire the data of competitors This work is not easy, especially in the increasingly wide global integration, while competitors of Security companies are not just Security companies themselves but also other Financial Institutions in Vietnam and other foreign countries, refraining researchers from collecting information Concept of competitiveness competence of securities companies Competitiveness of Securities Company is the expression of competence and advantages of company over other competitors in best satisfying the customers’ inquiries for increasingly higher benefits Application of Thompson – Strickland method to assess the overall competitiveness for company, the author has researched and set up 07 internal factors for evaluation of competitiveness of securities companies Internal factors deciding the competitiveness competence of Securities Company The financial resources of Securities Company The criteria to assess the financial resource of Securities Company includes: (i) the capital size of Securities Company; (ii) the profitability of Securities Company; (iii) the financial safety criteria for operation of Securities Company; (iv) the competence of capital mobilization Intellectual capital resource of Securities Company Some criteria showing the intellectual capital competence of Securities Company are: (i) the structure of Securities Company is organized logically; (ii) the staffs are high qualified; (iii) Talent attraction policy which Securities companies find interested; (iv) Securities Company focusing on investment in research of product, market Product quality of Securities Company Internal factor evaluation model The competition model seems to be impossible without enough information of competitors To solve this issue, the Thompson and Strickland’s model of evaluating The product competence of Securities Company is shown by: (i) Securities Company with variety of products; (ii) Securities Company often launches new product; (iii) Products of Securities Company often offer many utilities; (iv) Price (fee, interest rate) of Securities company’s products is competitive expand production scale, contributing into the increase in supply of commodity on Securities market Technological level of Securities Company The development of Securities market The technological level of Securities company is reflected by some factors such as: (i) Securities company usually updates, applies new technology; (ii) The Securities online transactions go smoothly and safely; (iii) The Securities services meet customer’s inquiries 24/24; (iv) Online products of Securities company are provided by core software This is the direct factor affecting the development of Securities company operation This involves commodity development on market and broad participation of investors The development of Securities Company does not only limit to national context but also globally Hence, the professional activities of Securities Company are likely to develop Service quality of Securities Company Legal system and legal environment The service quality of Securities Company is reflected by key factors including: (i) Simple transaction procedure with customers; (ii) The Securities staff are friendly, considerate and cheerful; (iii) Securities Staff shows professionalism dealing with customers; (iv) Transaction duration is short; (v) Securities company has good customercare policy Legal system has its own decisive significance in limiting or promoting and encouraging development in any sector The legal system which adjusts the economic relationships is not only the legal system in host country but also the international legal system once the operation of Securities company not stop at national boundaries The clear legal environment will allow enterprises in general and Securities Company, in particular, develops their operation The securities company is not just adjusted by relevant laws but also comply with the professional regulations – Securities and stock market law Brand, reputation and promotion activities of Securities Company Some factors to assess the brand, reputation and promotion activities of Securities Company: (i) Memorable and recognizable Securities brand; (ii) Securities Company logo is identifiable; (iii) Securities company slogan is memorable; (iv) Products of Securities company are advertised widely on mass media; (v) Securities products are highly evaluated by local customers; (vi) Customers can find information of securities services easily; (vii) Securities company have impressive advertisement mediums; (viii) Securities company promotion programs are suitable and valuable; (ix) Securities company has sponsor activity for public; (x) Documentation of Securities services are eye-catching and impressive Securities company network are widespread The factors dominating the development of Securities company network are shown by: (i) The system of branches, transactions offices across the financial centers (Hanoi, Da Nang, Ho Chi Minh) are convenient for customer’s transactions; (ii) The transaction locations are convenient for customers; (iii) The business hour at Head quarter, branches and transaction offices is convenient for customers; (iv) The branches and transaction offices of Securities company are huge in size In all, the competitiveness competence of Securities Company is constituted by 07 abovementioned basic factors However, these factors are inter-related and all build up into the unified set of criteria rooting from Securities Company, suitable for characteristics of each Securities company Competitiveness among Securities companies Operating in market economy, all enterprises must accept competitiveness, so Securities companies Though competition process, weak securities companies will be eliminated or merged into other stronger companies Securities companies must acknowledge the level of competitiveness and identify their own position on market, thereof employing the appropriate direction and solution Customers Customers of Securities Company are entities involved in stock market, on behalf of securities supply and demand source The stock market complies with intermediary principles, making customers of Securities Company who carry out transactions on market go through Securities Company Customers of Securities company are various and diversified with demands Hence, Securities company needs to sort out customers into groups, regularly by 02 basic groups: Corporate – on behalf of securities supply and investor – on behalf of securities demand Chapter 3: THE CURRENT STATUS OF COMPETITIVENESS COMPETENCE OF VIETNAMESE SECURITIES COMPANY External factors affecting the Competitiveness competence of Securities company The stability of economy and politics 3.1 ESTABLISHMENT AND DEVELOPMENT OF VIETNAMESE SECURITIES COMPANY This is the foremost condition for any activity happening in the economy The stable political environment will create the assurance of investment for investors and assurance of business and manufacturing for enterprises The stability of economy helps enterprises With the rapid increase of listed companies on both exchanges, the number of Securities companies also developed dramatically in 2006 End of 2005, there are only 14 Securities companies, this number of securities companies licensed by State Committee for 10 Securities was 41 within 01 year only (2006), bringing the total number of securities companies to 55 In 2007, another 24 Securities companies were licensed and officially operated, raising the total number of securities companies to 79 Until 2008, the stock market employed total of 90 Securities companies, and until peak of 2010, 104 securities companies, 103 of those were fully eligible for member of Stock exchanges End of 2013, there are only 91 Securities companies operating as member of Stock exchanges, some licensed securities companies which were in process of dissolution or bankruptcy were not eligible for member of Stock Exchange anymore This number continued to drop to 89 members of Stock Exchange in 2014 3.2 BUSINESS RESULTS OF VIETNAMESE SECURITIES COMPANIES Sales revenue, cost and profit of Securities companies during 03 years from 2011 to 2013 dropped continuously The total sales revenue of 80 Securities companies in 2013 which reported in accordance with regulations prescribed in table reached 7,157.05 billion VND, decreasing 29.03% compared to figure of 93 Securities companies which reported in accordance with regulation prescribed in table in 2012 The total cost of Securities companies during 03 years from 2011 to 2013 showed the significant downtrend The total cost in 2013 of 80 Securities companies which reported in accordance with regulations prescribed in table was 5,092.51 billion VND, decreasing 43.45% less than figure of 93 securities companies which reported in accordance with regulations in table in 2012 The total net profit after tax of securities companies during 03 years from 2011 to 2013 increased significantly The total net profit after tax in 2013 of 80 securities companies which reported in accordance with regulations in table reached 2,105.57 billion VND, increasing 74.67% compared to figures acquired from 93 securities companies which reported in accordance with regulations in table in 2012 recovery of economy from bottom The revenue allocation is especially important in other revenue sector, in which revenue generated from lending for securities investment had high proportion, revenue generated from financial consultancy was still not effective The result of revenue allocation proved that IB sector of Securities companies shows much potential and develops irrelevantly with other operations Profitability: From 2011 to 2014, the growth rate of profitability changed due to the effects of difficulties of common economy on the securities companies Compared to 2011 in which the Securities companies has negative overall profit margin of approximately VND1000 billion, this profitability in 2012 changed dramatically, reaching VND 946 billion and increasing to VND1,115 billion in 2013 2014 marked the big jump in profitability at VND2,056 billion In the profitability growth trend over the years, there are some securities companies possessing the satisfactory results, especially reflected by the positive profitability in 2011, and the higher profit margin compared to median profitability of other securities companies being listed on stock market ROA, ROE of Securities companies: Compared to the negative figure of returns on asset (ROA) in 2012, this figure increased dramatically in 2013 and 2014, reflecting the uptrend of securities companies in the context which market escapes from bottom line and goes up Corresponding to ROA is ROE of market; the ROE of overall market in 2012 is relatively high, estimating above 8% The indicator of financial security of Securities companies in 2013 Financial resources Most of Securities companies employ the available fund ratio above 180%, meaning the very high level of security, are not subject to reporting, monitoring or specially controlling If ORS only, this ratio is above 179%, meaning still at the safety level Compared to other group of Securities companies, most of Securities companies have healthy financial status because these entities are “checked up” during evaluation process before listing Besides, these companies also have to follow strictly the reporting and management mechanism for the listed enterprises Charter capital situation Fund mobilization ability of Securities companies There exists around 85% of Securities Companies with charter capital which implemented fully operation on Vietnamese Stock market In which, 06 Securities companies accounting for 30% of total number of Vietnamese securities companies (Saigon Securities Incorporation, Agriculture Securities Company, Kim Long Securities, VNDIRECT Securities Corporation, Ho Chi Minh Securities Corporation and SHS Securities Corporation) are those with capital of more than VND1000 billion These are securities companies showing their leading operation results, management competence among other Vietnamese Securities companies The assessment of fund mobilization ability of Securities companies is reflected by the increased level of capital volume from the initial capital amount as well as the times of capital mobilization, in which the mobilized capital is times as high as the previous capital (meaning double the current available capital) Possibly assessing, the leading securities companies employ the very quick growth speed of capital scale, good mobilization of capital on stock market to increase the capital potential, in which SSI, with their initial capital of VND billion, is successful to increase to more than VND 3,500 billion after 12 years of capitalizing activities Analysis of profitability of the Vietnam Securities Competence of governance – quality of human resource Revenue: From 2011 to 2013, the growth rate of revenue declined due to the difficulties that Vietnamese securities companies had been affected from common economy Until 2014, securities companies gained much better growth rate of revenue due to the The Securities companies with stability of C-level manpower system are the ones leading the stock market at the moment The period from 2011 to 2014, which saw lots of changes in stock market, affects dramatically the business activities of the Securities 11 12 3.3 ANALYSIS OF CURRENT STATUS OF VIETNAMESE SECURITIES COMPANIES companies In this business management, the quality of human resource of the securities companies indeed plays an important role on their outcome of business This represents the growth of leading securities companies with their highly qualified human resource (mostly university graduates) and number of relevant staffs for business activities of securities companies Competence of product development – Price policy – Technological competence The products of Securities sector are homologous and extremely competitive in term of all product related policies such as price, possibility of online transaction, possibility of online management and transaction Reality shows that the Securities companies with excellent core software system especially provided by oversea vendors or applied the oversea management system will employ the great advantage of competing their service products in Securities brokerage sector The Securities Companies list public their transaction fees of each service for customer; however, customers are always entitled some incentives for their deal with Securities companies when approaching and dealing with Securities companies This is one of huge advantages of securities companies which meet fully demands of various customers in the current extremely competitive environment change in general bond market share on market In addition to market share, the numbers of securities accounts which are opened at securities companies as well as number of financial consultancy contracts performed by Securities companies are the important elements to assess the competence of service quality and trademark reputation of Securities companies 3.4 GENERAL EVALUATION Two assumptions: firstly, author builds ranking scores for each internal factors affecting competitiveness competence of securities companies; secondly, author assumes level of importance of factors affecting competitiveness competence of securities companies Based on data collected from current situation of securities companies in Vietnam, author draw a conclusion about ranking securities companies under five main groups, in which a group having the highest competitiveness competence is group and group having the lowest competitiveness competence is group The analysis is for research and reference; author gives personal opinion and takes responsibility for it Chapter 4: RESEARCH INTO MODEL OF INTERNAL FACTORS AFFECTING COMPETITIVENESS COMPETENCE OF SECURITIES COMPANIES 4.1 Network development of Securities companies Among the current Vietnamese Securities companies, around 10-20% of the securities companies have established the marketing department for their operations performing The small Securities companies often combine their operation division to reduce cost However, the delivery of customer services, service product policies is often originated from independent management division which is marketing department The leading securities companies always deploy a network wide system, especially focusing on 03 financial centers of the country including Hanoi, Da Nang, Ho Chi Minh city Service quality – trademark reputation The element performing the competence of service quality as well as trademark of Securities companies is shown as market share of Securities companies in brokerage sector (including stock brokerage – fund certificates and bond brokerage) at stock market in Hanoi and Ho Chi Minh The leading Securities companies always stay in group of those which are listed as top 10 market share owner as mentioned above, no matter what market conditions change Besides the market share of stock brokerage and fund certificates, the market share of bond brokerage also contributes importantly to the assessment of competitiveness competence of Securities companies RESEARCH PROCESS Periods of Research: The research process of the thesis consists of three periods: (i) preliminary study; (ii) pilot study; (iii) official study Research Procedure: Including 06 steps: (i) Overview research; (ii) Qualitative research with expert interview; (iii) Develop questionnaire and send to the suitable interviewees; (iv) The official research conducted by quantitative methods; (v) Synthesis of research findings on the basis of results of testing the model; (vi) Conclusion and solutions 4.2 QUESTIONNAIRE DESIGN The questionnaire consists of 72 questions divided into two parts as follows: (i) Part one: survey focused on demographic variables and the respondents’ experience of using the services of securities companies (ii) Part two: survey focused on the views of the participants interviewed about the factors affecting the competitiveness of securities companies 4.3 SURVEY SAMPLING METHOD A highlight relating the bond market share is the involvement of financial institutions, including the local and oversea Commercial banks which are allowed to have direct bond transaction once meeting all requirements from authorities, resulting in the huge Overall research subject: the staff and customers of securities companies in Ha Noi, Ho Chi Minh City and Da Nang 13 14 The research sample: 500 questionnaires sent, usable 221 answers sheets received Sampling Method: The sample was selected by Convenience sampling method in combination with Stratified sampling method Author selected and interviewed those who are using the services of securities companies on Hanoi, Ho Chi Minh City and Danang Besides, stratified sampling method was based on the criteria of age, education level, income and experience on the use of the services of securities companies Over 50 years old 1.4% High school diploma 4.5% College/Associate’s degree 0.9% Bachelor’s degree 73.3% Advanced degree 21.3% Under VND 10 mil 52.9% VND 10 – 20 mil 26.7% VND 20 – 30 mil 10.9% Primary data collecting method: VND 30 – 40 mil 6.3% To determine the orientation and focus of research, the authors consulted the views of many experts and scientists in scientific meetings Primary data of the study were collected through quantitative research interviewing with structured questionnaire This helps the author to focus the interviewees on research issues Over VND 40 mil 3.2% 4.4 Education DATA COLLECTING METHOD Secondary data collecting method: Secondary data of the study includes information, views, theory system and data relating to the field of securities market The majority of secondary data that thesis using sources from the articles, journals, research papers, thesis, dissertations stored in the library of National Economics University, Vietnam National Library and on the Internet To guarantee the validity and accuracy of the data, the authors use the method of synthesizing, analyzing, comparing and contrasting to filter out the most reliable data 4.5 DATA PROCESSING To collect survey data for quantitative research, the researcher must use a variety of different measurement scales However, due to the complexity of the economic and social phenomenon, quantifying study concepts requires a scale that has tools and test of reliability So before conducting operations and statistical analysis, researchers will conduct the test of reliability of the scale (Cronbach's alpha coefficient) used in the questionnaire The author uses SPSS 18 statistical software for data analysis 4.6 In the sample of 221 observations: Gender Age Criteria Time of using services Under year of securities companies – years 43% 21.3% – years 11.3% Over years 24.4% Factors affecting competitiveness competence of securities companies Test of the reliability of the scale According to a test of the reliability of the scale (Cronbach’s Alpha coefficient), observations with Cronbach’s Alpha coefficient higher than general Cronbach’s alpha coefficient of the scale and Corrected Item - Total Correlation is less than 0.4 so Product Scale is unreliable Official scales will be developed and restructured based on the reliable observed variables SURVEY RESULT Type Income Result Male 52.9% Product Scale Female 47.1% Under 20 years old 18.1% 20 – 30 years old 40.3% 30 – 40 years old 35.3% General Cronbach's alpha coefficient of the scale is the 0.881 greater than 0.7, which suggests that the scale has high reliability Corrected Item - Total Correlation is greater than 0.4,so Product Scale is a reliable scale In four observed variables, SP4 variable has result of Cronbach's Alpha if Item Deleted 0.887, higher than 0.881 so this variable had been excluded from the research results The remaining observed variables are consistent with the reliability of the Product Scale 40 – 50 years old 5% Service Scale General Cronbach's alpha coefficient of the scale is the 0.885 greater than 0.7, which 15 16 suggests that the scale has high reliability Corrected Item - Total Correlation is greater than 0.4, so Service Scale is a reliable scale All five observed variables have results of Cronbach's Alpha if Item Deleted lower than 0.885 so all the observed variables are consistent with the reliability of the Service Scale result of Cronbach's Alpha if Item Deleted 0.912, higher than 0.875 so this variable had been excluded from the research results The remaining observed variables are consistent with the reliability of the Competition Scale Networking Scale After testing the reliability (Cronbach's Alpha) of all scales, research obtained scales with high reliability These observed variables and scales will continue to be used in the next step of the research – factor analysis procedures Calculated figures showed Cronbach's Alpha's coefficient of all variables are greater than 0.7, so all variables are reliable and can be used for models (Nunnally, J, 1978) General Cronbach's alpha coefficient of the scale is the 0.870 greater than 0.7, which suggests that the scale has high reliability Corrected Item - Total Correlation is greater than 0.4, so Networking Scale is a reliable scale All four observed variables have results of Cronbach's Alpha if Item Deleted lower than 0.870 so all the observed variables are consistent with the reliability of the Networking Scale Brand name Scale Overview about the reliability coefficient (Cronbach's alpha) of the scales Regression Analysis The result of regression model on SPSS18 as follows: General Cronbach's alpha coefficient of the scale is the 0.920 greater than 0.7, which suggests that the scale has high reliability Corrected Item - Total Correlation is greater than 0.4, so Brand name Scale is a reliable scale All ten observed variables have results of Cronbach's Alpha if Item Deleted lower than 0.920 so all the observed variables are consistent with the reliability of the Brand name Scale Finance Scale General Cronbach's alpha coefficient of the scale is the 0.939 greater than 0.7, which suggests that the scale has high reliability Corrected Item - Total Correlation is greater than 0.4, so Finance Scale is a reliable scale All ten observed variables have results of Cronbach's Alpha if Item Deleted lower than 0.939 so all the observed variables are consistent with the reliability of the Finance Scale Intelligence Scale General Cronbach's alpha coefficient of the scale is the 0.895 greater than 0.7, which suggests that the scale has high reliability Corrected Item - Total Correlation is greater than 0.4, so Intelligence Scale is a reliable scale All four observed variables have results of Cronbach's Alpha if Item Deleted lower than 0.895 so all the observed variables are consistent with the reliability of the Intelligence Scale Competitiveness Competence = -0.125 + β1*0.036 + β2*0.160 + β3*0.167 + β4*0.120 + β5*0.002 + β6*0.300 + β7*0.274 + ε Conclusion: Based on survey results, all hypotheses given in the model were accepted In all these hypotheses, the factor whose β coefficient is the biggest has the most impact on dependent variables As multiple regression model mentioned above, the factors of intellectual quality with β = 0.300 coefficient is the largest, followed by the factor of technology with β = 0274 The next important factors are the factors of service quality, network and brand name of securities companies, with the corresponding β = 0160, 0167 and 0120 Factors of financial strength, product quality play a minor role with β = 0.002 and 0036 Chapter 5: SOLUTIONS OF IMPROVING THE COMPETITIVENESS COMPETENCE FOR VIETNAMESE SECURITIES COMPANIES 5.1 ORIENTATION OF DEVELOPMENT OF VIETNAM'S SECURITIES MARKET Technology Scale General Cronbach's alpha coefficient of the scale is the 0.888 greater than 0.7, which suggests that the scale has high reliability Corrected Item - Total Correlation is greater than 0.4, so Technology Scale is a reliable scale All four observed variables have results of Cronbach's Alpha if Item Deleted lower than 0.888 so all the observed variables are consistent with the reliability of the Technology Scale General Cronbach's alpha coefficient of the scale is the 0.875 greater than 0.7, which suggests that the scale has high reliability Corrected Item - Total Correlation is greater than 0.4, so Competition Scale is a reliable scale In three observed variables, CT3 variable has (i) Develop the securities market consistently with the development of economy and society; (ii) Expand listed securities market and downsize the OTC market, focus especially on the quality and the safety of the market, approach step by step with the international practices and standards; (iii) Link the development of securities market with the reform and acquisitions of SOE sector to motivate the growth of enterprises in both financial capacity and corporate governance; (iv) Execute State management by legal instrument and supporting policy to facilitate the stable and strong development of market; promote the role of organizations and associations in order to ensure the legitimate rights and interests and encourage actors to join the market 17 18 Competition Scale 5.2 POLICY ABOUT RESTRUCTURING BUSINESS ORGANIZATIONS IN THE SECURITIES MARKET Stable executive leadership team; (vi) Special promotion to recruit valuable human resource a) Classify the business organizations in the securities market with four (04) groups based on the level of risk for the market to take appropriate solutions Investment for Research and Development (R&D) b) Type of solutions: (i) Solution for effective business organizations; (ii) Solution for normal business organizations; (iii) Solution for business organizations under control; (iv) Solution for business organizations under special control c) Other supporting solution: the tax exemption; facilitation for foreign organizations in the field of M&A; licensing regulation; supporting policies for financial groups and State corporations which are not in the field of securities market d) Renovating activities of business organizations in the securities market, enhancing financial capacity, risk management according to international practice and competitiveness e) Enhancing the capacity and efficiency of management and supervision of business organizations in the securities market Some of the criteria required in this work include: (i) Establishment of R&D department/division; (ii) Financial investment for the operation of R&D department/division; (iii) Preparation of infrastructure for testing and completing products before launching; (iv) Building the evaluating system for products and services for planning to develop products consistent with the development of the market, customer needs while ensuring compliance with the provisions of law Develop technology system in depth Including the following factors: Securities Company has core software to provide securities products and services for customers Based on study results, with the results obtained, the authors divided basic solutions for the securities in order to improve competitiveness into 03 groups including: This is a fundamental factor, which help securities companies provide advanced securities products with high performance as well as good risk management The core software meets requirements like compatibility in case of changes in authorities’ structure, ability to connect with banks, parameterization, ability to supply products for customers, ability to calculate and set up level of supervision, speed of processing transaction Direct solutions: Securities Company regularly upgrades, applies new technology: Improve intellectual capacity in securities company The author proposes four groups of solutions for improving intellectual capacity in securities company including: (i) The company announces information about upgrading and applying new technology to customers; (ii) the company updates guidelines for updating information technology applications to customers; (iii) the company has staff to guide customers; (iv) the company has technological application updates on product at the request of authorities Reasonable operation structure of securities company: Online transactions of Securities Company proceed smoothly and safely A reasonable operation structure shows the vision and strategic governance of highlevel managers of a securities company A good operation structure helps to increase the efficiency of this company Combined with the legal regulations about risk management in the securities market, the author proposes solutions to create a model of risk management including 03 defensive measures (i) System of Securities Company can support the integration of online features; (ii) The system can 5.3 SOLUTIONS TO IMPROVE SECURITIES COMPANIES COMPETITIVENESS OF VIETNAM Qualified human resource: Staff qualifications expressed in the basic criteria: (i) Educational degree; (ii) Ability to control the process and implement jobs; (iii) Ability to compile, adjust or review procedure; (iv) Ability to co-operate internally and externally; (v) Language skills; (vi) The ability to work independently or teamwork Attractive recruitment policy: Some requirements to develop an attractive recruitment policy include: (i) Consistent criteria for staff evaluation; (ii) Recruitment quotas for each operational division; (iii) Annual recruitment plan; (iv) Policies on training and development of human resources; (v) 19 Support customers to change and customize online application; (iii) for the web interface, the system must have solutions to support popular browsers like Internet Explorer, Firefox, Google Chrome, Safari, etc ; (iv) the system has to integrate securities solutions of third party in order to ensure safety of customers while using products and services; (v) the system has to support tools or encryption of third party to provide services with the best security for customers Products of Securities Company have to meet demand of customers during 24/24 The author offers some solutions for systems to meet 24/24 trading demand of customers: support customers in upgrading real systems; integrating new products and services self-developed or purchased in the future to help customers understand and be familiar with new products and services; 24/24 customer support 20 Group of indirect solutions Providing appropriate products, services for each group of customers The nature of securities products and services is similarity in general Therefore, competition among securities companies will be formed by providing suitable products, services for each group of customers, which relates to services’ quality, innovation culture, and marketing documents for potential customers Building proper network To provide products and services promptly, securities companies need to build a long-term plan to expand the scope of operations in all three regions, which focuses on financial centers in Hanoi, HoChiMinh and Danang It is essential that securities companies need to develop based on their advantages in each region in order to reduce operational cost and increase business efficiency operations, revenue/profit segment in securities companies need allocating reasonably for three sectors: proprietary trading, brokerage and finance advisory for stable development of securities companies In general, activities of securities companies should be maintained and developed well, deeply Forecasting and Business planning According to suggestions above, leaders of companies have to make detailed business plans to boost business, which should be overall and include all fields like customers, products and services, marketing, sales and trading, research, human resources, technology investment, cost and others Business plan should be implemented within a corporate mission framework as well as a code of conduct as many leading companies in other countries have done 5.4 RECOMMENDATION FOR STATE SECURITIES COMMISSION – MINISTRY OF FINANCE Need to develop mechanism ensuring quality of recruitment at securities companies Build up brand for securities companies Securities companies which have and develop brand identity soon will enhance their effect and position in securities market Research results showed the degree of brand’s impact to competitiveness competence of securities companies, therefore securities companies need to establish and build up a brand development division, which is an important contribution to the success of securities companies at present and especially in the future Other group of solutions Provide high quality products to customers Model of full service is intrigued by benefits like revenue diversification, high profit margin, reputation and brand enhancement through providing high-class services such as IPO and M&A, which helps to realize potential companies before IPO and have time to strengthen customers’ relationship Some domestic securities companies can specialize on area of Small and medium enterprises (SME), in some cases they can cooperate with foreign securities companies to consult for SME about good practices on business management analysis and risk management or introduce foreign investors The mechanism required for highly qualified human resources to ensure operations quality of securities companies; detailed requirements about professional segments with the assessment process and required certificates, consistent with the development trend of securities market, especially human resources with foreign language skills as well as professional skills consistent with the international development trend Technology requirements when establishing securities companies Technology requirements are needed when establishing securities companies State Securities Commission or through the Stock Exchange should have requirements about common standards for technological connection Domestics and Foreign securities companies which want to establish and run business on Vietnam stock market must meet the connection standards, encryption standards of products and product governance It ensures transparency, fair, competition among securities companies joining Vietnam's stock market Build a route of fiscal autonomy for the development of market Risk management in full system, especially financial safety indicator: it is essential to running business together with ensure financial safety indicators Regular, continuous review and adjustment at securities companies in short term and long term is needed Raising capitals effectively: the companies need to have plan on raising capitals in order to ensure adequate capitals for business activities, development plan and allowance for losses The companies need to determine that source of capitals is from existing shareholders or new ones, confirm funding and commitment of new shareholders Boost revenue/profit structure properly in product and services sectors: based on realistic assessment of 21 22 CONCLUSION Providing securities services and products are activities that bring high profits but also contain high risks Meanwhile, the strong growth of the securities market and the increasing number as well as quality of securities companies in the market have made the competitiveness within Vietnam stock market become more tense Securities companies will face issues of losing market shares, customers and business efficiency if they don’t have enough intrinsic competitiveness nor find ways to improve that competitiveness Therefore, how to enhance the competitiveness of securities companies during this critical time is one of the important issues of securities companies on the Vietnam Stock Exchange today Based on the urgent needs of the research, findings and offering solutions to improve the competitiveness of securities companies, the author has done a fairly complete system of theories on the competition and competitiveness of securities companies Based on the integrated analysis of competitiveness research methods at the related level, the author has developed the internal factors that have direct impacts to the competitiveness of securities companies, also has evaluated and recommended solutions to improve competitiveness in general and in securities business in particular From the basis of the reasoning, the author has focused on analyzing the current status of the Vietnam’s securities companies’ operations; evaluate objectively internal factors affecting the competitiveness of securities companies Combining theoretical and practical basis, also from the results of the research model, the author proposes a number of direct as well as indirect measures, and in the long term for Vietnamese securities companies to enhance its competitiveness in order to ensure the sustainable development of Vietnam stock market This research was conducted profoundly and broadly on the issue of competitiveness for Vietnamese securities companies with in hope of offering useful solutions for enhance competitiveness of Vietnam securities companies in the context of liberalization of financial markets, including the stock market Due to the lack of time and to the limit of technical ability of the author, errors in this thesis are inevitable Look forward to the sincere advice of scientists, teachers and readers quarter to complete this thesis 23 ... profitability of the Vietnam Securities Competence of governance – quality of human resource Revenue: From 2011 to 2013, the growth rate of revenue declined due to the difficulties that Vietnamese... requirements like compatibility in case of changes in authorities’ structure, ability to connect with banks, parameterization, ability to supply products for customers, ability to calculate and set... third party in order to ensure safety of customers while using products and services; (v) the system has to support tools or encryption of third party to provide services with the best security for