Mutual Fund Industry in China - Porter's Five Forces Strategy Analysis

With China's entry into the World Trade Organization, its financial system faces enormous changes and increasing pressure from foreign competition in the coming years.

The mutual fund market in China is expected to experience increasing growth rates. China will also step up the development of its mutual fund market, and help cultivate institutional investors in the securities market. The continuing stock market correction and tightening of money supplies may cast a cloud over new mutual fund IPOs in the short term, but fund managers are still optimistic about the future and will proceed with their expansion plans.

Aruvian Research analyzes The Mutual Fund Industry in China in Michael Porter's Five Forces Analysis. It uses concepts developed in Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macro-environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.