(Yicai) Dec. 12 -- Guosen Securities and a number of other Chinese securities companies are closing or merging branches to remain competitive in a shifting business landscape, as outlets will be increasingly concentrated in areas with flourishing economies, industry insiders told Yicai. 

Guosen Securities said it was shuttering 10 branches in different parts of the country on Nov. 29 due to ‘business adjustments and service upgrades.’ Then on Dec. 9 the Shenzhen-based company said it will close another eight. Customers of the closed branches will be transferred to neighboring outlets. 

Guosen Securities only started to close branches in the fourth quarter. As of Sept.30 it had kept its outlet number at around 240 for at least three years. 

In addition, Pacific Securities has shut down eight branches since August, Everbright Securities has shuttered 10 branches since May, and Guolian Securities has closed seven since the beginning of the year. 

When the economy was booming, outlets that were not performing well but had good local influence and customer resources were usually kept open, analysts said. However, as the pressure to reduce costs and improve efficiency increases, it is inevitable that those outlets that have not met operating performance standards for a long time will be closed. 

The rise of the Internet also contributes to the closure of branches as it has made online transactions more common, so brick-and-mortar outlets are playing less of a role, an industry insider added. Therefore it is not unusual for branches that are not profitable to be shut down or merged. 

"By closing some branches, securities firms can reduce their salary and rental outlays while still retaining the same number of clients,” a senior executive in a brokerage said. 

"Of course, if the stock market improves, this should stem the losses of various outlets leading to fewer closures,” the person added. 

Mergers and acquisitions are another reason for the reduction in the number of business outlets, analysts said. Before and after M&As, brokerages need to optimize their business layout. 

As a result, brokerages’ outlets will be increasingly concentrated in economically developed areas, and those in areas where the economy is weak will be gradually phased out, they said. 

Editors: Tang Shihua, Kim Taylor