(Reuters) - Wang Dongming, chairman of China's biggest brokerage CITIC Securities Co Ltd, was so impressed by the Charles Ellis bestseller "The Making of Goldman Sachs" that he called for a Chinese translation and urged his employees to read it.
Wang is now busy remodeling his Beijing-based brokerage after Goldman Sachs Group Inc by expanding into asset management, trading complex derivatives instruments and nurturing overseas businesses.

Hit by a languishing Chinese stock market and a freeze in initial public offerings since last year, mainland securities firms are diversifying away from their traditional businesses of stock broking and underwriting.

"For Chinese investment bankers, what Goldman has experienced in the past is very likely what we will go through in the future," Wang said in the foreword of the book's Chinese edition published by a CITIC affiliate, referring to Goldman's international expansion since the 1970s.

It will launch a host of alternative investment funds, a category that includes hedge funds, and increase market-making trades in fixed income and equity products, the sources said, declining to be identified because they are not allowed to speak to the media.

"These businesses are not new for Wall Street banks but have barely taken off in China," said one of the sources. "Expanding those businesses would improve CITIC's revenue structure and give the company an edge over domestic rivals once the mainland market is deregulated."

In a sign of changing times, CITIC leapt to the No.1 spot as Asia's top mergers-and-acquisitions adviser in the first quarter from 18th a year earlier, data by Thomson ******* shows, knocking Morgan Stanley from the top slot and ranking ahead of Goldman itself.

The firm last year agreed to buy Credit Agricole's entire stake in Asia-focused brokerage CLSA for $1.3 billion. It also set up a brokerage unit in the United States.

Their global ambitions come at a time when even Wall Street giants such as JPMorgan Chase & Co are struggling to navigate a post-crisis world where clients trade less and regulations and capital rules squeeze margins.

One of the challenges facing Chinese securities firms competing in overseas markets is their domestic corporate culture and lack of connections with prominent local business executives.

Unlike major Wall Street banks, most of the staff are Chinese nationals and many of their top brass have little or no experience working for global banks.

State-controlled investment banking venture China International Capital Corp ventured into the U.S. market in 2007, but has remained a niche player there.

CITIC has tried to overcome this problem by hiring a number of foreigners.
While CITIC still faces a long road ahead before it can compete with global rivals, its moves into new businesses such as derivatives will give it a key advantage in its home market when Beijing further loosens its grasp on capital markets.

"CITIC won't be able to challenge the dominance of Western banks in this area, but such a move would enable the company to accumulate experience," said Lian Ruiqing, analyst at Xiangcai Securities Co. "That would give CITIC a first-mover advantage when the derivative market at home is further deregulated."
Rest at: http://www.reuters.com/article/2013/03/26/us-citicsecurities-expansion-idUSBRE92P1BM20130326