Recently, the state has intensively issued policies and plans for the construction of international financial centers. On August 24, the Shanghai Municipal People’s Government issued the “Fourteenth Five-Year Plan for the Construction of Shanghai’s International Financial Center”, focusing on the “scale of financial market”, “direct financing function”, “degree of financial openness”, and “financial technology development”. The dimension has developed 7 expected indicators. The "Comprehensive Deepening of the Reform and Development Plan for the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone" (hereinafter referred to as the "Plan") announced on September 6 also emphasizes the use of Qianhai as a pilot demonstration window and innovation for the country to expand the opening up of the financial industry. test area. Building an international financial center that conforms to my country's national conditions is a bold attempt to open up my country's finances to the outside world, and the corporate governance model of the City of London may be able to bring us some enlightenment.
London has always been one of the world's largest international financial centers and maintains a strong competitive advantage. In 2006, the London self-government institution was renamed The City of London Corporation (The City of London Corporation), officially called Mayor of London, legal entity and citizens. The new name represents the corporate governance model of and the city of London. structure. Because of the gathering of financial institutions in this area, it is also known as the Financial City. Compared with other autonomous regions in the London metropolis, the City of London enjoys a high degree of autonomy. Although there are many management functions, the main responsibility is to maintain and enhance the international competitiveness of the UK financial services industry. The financial services industry in the UK is highly developed, and the City of London has made a great contribution. In 2019 (2019 is a normal business year), UK financial services exports reached 60 billion pounds (equivalent to 76.6 billion U.S. dollars), of which the City of London financial services exports accounted for approximately 56% of the country.
In addition to business volume, London ranks first in all previous evaluations of international financial centers. According to review conventions, the evaluation indicators of a city’s international financial competitiveness include six categories: business environment, human resources, infrastructure, taxation policies, city reputation and development level. The business environment refers to the regulatory environment (core issues), regulatory efforts, anti-corruption and honesty, innovation and development, transparency, and scientific and technological regulatory practices. Human resources include talent think tanks (including IT talents), remote work and flexible job market. Infrastructure includes traditional infrastructure and modern infrastructure,The former refers to facilities such as telecommunications, electricity, public utilities, home office, life and entertainment, and the latter refers to digital infrastructure (computing cloud, visualization, full-process automation, continuous delivery, etc.). Tax incentives are a common competitive strategy adopted by major financial centers, and they are also the main method to attract enterprises and talents. The reputation of an international financial center city can enhance investor confidence and is also the main indicator for investors to consider when choosing a financial center. City reputation, brand effect and marketing methods are conducive to attracting all kinds of talents and enterprises to join. Various assessments have shown that the City of London's financial service capabilities and comprehensive strength are at the world-class level. After sorting out the data and information, we believe that among the many positive factors, the governance model is the main reason why the City of London has maintained the world's largest international financial center for a long time.
Financial City Unique governance structure
The city of London with a history of more than two thousand did not decline with the decline of the British Empire. On the contrary, this ancient city has always been in an environment of fierce international financial competition. Leading position, and the management insists on studying the dynamics of competitors and formulating strategic plans to consolidate its competitive position in a timely manner. Compared with other autonomous regions in the London metropolitan area, the City of London enjoys a number of autonomy, such as independent police power and judicial power, self-determination of corporate tax rates, public administrative costs (paid by the London City Corporate Fund), and management of commerce The market is responsible for the operation of the city, the approval of entertainment land, and the maintenance of the four bridges on the Thames, but the main responsibility is to maintain and promote the sustained and healthy development of the high value-added industry of the British financial services industry.
City of London ’s principal officials are all elected, and the electoral system is designed to give individuals and businesses in the city an equal opportunity to fully express their wishes, and use their votes to determine the Court of Common Council and Candidates for local councillors of the Court of Aldermen. Urban residents who meet the qualifications can vote, and enterprises and organizations in the district get the corresponding number of votes based on the number of employees. Any institution or organization whose office is located in the City of London can assign a certain number of voters based on the number of employees in the company. There are 7,700 urban residents (2017),With more than 24,000 corporate votes, the election system fully takes into account corporate interests, allowing companies to have a greater say in corporate governance matters in the City of London.
Elected members, counselors and mayors perform their duties and work together to maintain and enhance the international competitive position of the City of London financial services industry. Elected councilors (Councilors) join the City Council of London (the main decision-making body), serve as members of various committees and sub-committees, and manage the daily affairs of the City of London. The term of office of members is four years. The Chamber holds a meeting every four weeks to listen to committee reports and members’ questions and motions. The elected counselors (Aldermen) have a total of 25 (one counselor for each constituency), and the term of office is at least 6 years. Counselors attend 8 meetings presided over by the mayor each year, serve as members of committees under the Council, and concurrently serve as directors and trustees of schools, hospitals, charitable funds, and trust institutions. Candidates for the mayor of London must be current counsellors and have served as judicial directors. The trade association shall send representatives to vote to finally determine the mayor. The mayor serves for one year, and is generally not re-elected. The mayor holds several positions, but his main responsibility is to serve as an international ambassador for the UK's financial and related service industries, to support and enhance the industrial development of the City of London, and to consolidate the City of London's status as an international financial center.
After more than two hundred years of development, the City of London has accumulated rich experience in financial affairs management and formed a series of rules and regulations to guide the company's operation and decision-making to ensure fair, efficient, transparent and accountable decision-making. In the more than 70 years since the end of World War II, major changes have taken place in the fields of international politics, economy, finance, and technology. However, London still maintains a strong competitiveness and stands proudly on the international financial arena where there are strong players.
Governance model and competitive advantage position
Agglomeration of high-end elements is the basic condition for the development of financial centers, among which the most important elements are talents and corporate resources. The City of London is no exception. In the course of more than two hundred years of development, the City of London governance model has continued to attract many high-end talents and well-known companies in the world. According to the "City Data Bulletin" in February 2021, the number of employed people in the City of London in 2019 reached a record 542,000, accounting for 10% of the total employment in Greater London, of which 386,000 were employed in financial, professional and business services , Respectively accounting for 35%, 24% and 12% of the total; employed persons in the science and technology service industry accounted for 7%.In 2019, there are 24,020 companies of various types in the city, 99% of which are small and medium-sized enterprises, and 300 large companies with more than 250 employees, providing more than half of the employment opportunities.
The talent pool of the City of London is second to none in Europe, with outstanding features that provide a steady stream of impetus for urban development. Internationalization is the biggest feature of the London City job market. 40% of employees were born outside the UK, 16% of which are from Europe, and 24% are from other parts of the world. By country, employees born outside the UK are mainly from France, Ireland, India, Australia, South Africa and the United States. In terms of industry, the proportion of foreign employees in banking, management consulting, technology, legal affairs, insurance and pension and accounting services are 50%, 36%, 35%, 27%, 27% and 26% respectively. Secondly, the proportion of high-end talents is high. In 2020, 72% of employees in the city are engaged in high-skilled jobs, compared to only 49% in the UK. Third, the employed people are getting younger. According to the earlier census data (2011), the proportion of employees aged 22-39 who work in the City of London is 61%, while the proportion of England and Wales is 40%. Fourth, the ratio of men to women in urban employment is 63:37, but the proportion of women is increasing. The financial services industry is one of the industries with the highest labor productivity, with an average output of 130,000 pounds per job in 2018, which is not unrelated to the diversity and inclusiveness of the job market.
The density of companies in the City of London is the highest in the world's financial centers. Large enterprises are like the gravitational center of the City of London, and small and medium enterprises are scattered in the surrounding areas. In addition to the Bank of England (the Central Bank of the United Kingdom) and London Stock Exchange, 5 of the world's 100 largest banks are headquartered in the City of London, where other British banks and approximately 250 foreign banking institutions engage in international banking business; Ed Financial Group, Allianz Insurance Group, Hannover, Chubb Group and other insurance giants are engaged in insurance and reinsurance business. In 2003, Loughborough University cooperated with several professors from Manchester Business School to investigate the corporate density of major industries in the City of London (defined as 10 peer companies within 100 meters of the company’s office).The results found that the density of insurance, recruitment, banking, business, and legal services companies were 0.574, 0.559, 0.554, 0.534, and 0443, respectively. In 2003, the number of financial services and related companies in the City of London was 23,000, and there were an increase of 1,020 in 2019. Enterprises, so the research conclusions still apply to the present.
In theory, global economic integration has a decentralized effect, but international financial centers like the City of London have gathered more and more factor resources. An international financial center can be simply defined as a place where various institutions in the world use global financial products to conduct transactions. In other words, the international financial center is the place where the world's financial enterprises and transactions are highly concentrated. It is precisely because of the interconnection between the City of London and the rest of the world that it can become the world's largest international financial center city.
As shown in Table 1, benefiting from the huge advantages of the City of London, the British financial service industry has a strong external function and maintains close financial service trade relations with major economic powers and regions in the world. The largest market for UK financial services exports is the United States, followed by the European continental market, but the market share of the Asia-Pacific region has grown rapidly. At the same time, the advantages of the British financial services industry have attracted direct investment from many countries and regions in the world (see Table 2). According to the foreign direct investment stock, the six major investment countries are the United States, Switzerland, Belgium, Spain, the Netherlands and the Netherlands. Germany.
Table 1 The main export markets of UK financial services trade in 2019 (unit: £100 million)
(Source: City of London February 2021)
The biggest feature of the London City governance model is the expansion of country and Regional markets continue to expand the level of financial opening to the outside world and increase the volume of financial business transactions. According to a survey conducted by Bank for International Settlements in 2019, London is the world’s largest foreign exchange market with a market share of 43.12%, 26.6% higher than the second-ranked New York; the world’s largest interest rate derivatives market, its market share reached in 2019 A record high-50.11%. London is also the world’s largest international (offshore) bond issuance market, and has maintained a leading position since it surpassed the United States in the second quarter of 2006.The London Stock Exchange is the largest stock exchange in Europe. In terms of insurance services, London has taken over 60% of the global aviation insurance business, 50% of the global energy insurance business and 33% of the marine insurance business. It can be seen that the City of London has incorporated more and more countries and regions into the international financial ecology.
(Source: City of London, February 2021)
Governance structure and key planning for the next five years
London's financial services industry has been far ahead of other financial centers, but London City Corporation has not settled The status quo, but constantly thinking about the blueprint for future development. Based on the relevant information and reports released by the City of London, the City of London is expected to consolidate its competitive position in five aspects in the next five years.
First, create an innovation ecosystem in strategic industries and lead the world in innovation and thought, such as green finance, financial technology, artificial intelligence and biotechnology. To this end, the City of London will formulate ecological development goals, set up space areas that focus on innovation, join hands with industry rookies, and promote technology sandboxes.
Second, empower all kinds of enterprises to develop and transform, making London the best place for enterprises to start up, grow and transform. The City of London will focus on improving the resilience of small and medium-sized enterprises, help enterprises to transform and grow, support small and medium-sized enterprises and artists to make the city center full of vitality, and facilitate green transformation.
Third, the City of London provides equal opportunities to everyone. The City of London is a very inclusive city, but we still have to constantly challenge ourselves to make the City of London more diverse and inclusive. The City of London will speed up the introduction of talents, promote the inclusiveness of digital finance , and simplify urban planning to adapt to changing needs.
Fourth, investing in infrastructure for tomorrow. The City of London must ensure that its infrastructure assets can define a truly sustainable, modern city that can stand the test of time, and strive to become a model for the world. The future direction of the City of London is as follows: apply key technologies, promote voluntary data sharing, and unify financial services and technology regulatory standards.
Finally, let London become an inclusive and outward-looking city. Everyone in London, whether working, studying or visiting, should have a sense of belonging. London will continue to promote the central government to improve its regulatory competitiveness, unify the UK’s voice in the international business community, and learn from other cities.
The city of London’s five-year plan for the next includes three important contents: creating a world-class business environment, providing high-quality supporting facilities, and building a livable environment. The first-class business environment aims to help companies start their own businesses, adapt and grow, cultivate talents, help people grow, and create a vibrant ecology. Where there are people working, there must be high-quality supporting facilities, including shopping, entertainment facilities, cultural venues, and tourist facilities. These supporting facilities can retain employees, companies and service providers. Livable environment refers to sustainable, flexible buildings and infrastructure, as well as streets, parks and public places. The City of London is not only an international financial center, but also a place full of fun in life.
Reference Significance of London City Governance Model to Qianhai
The "Comprehensive Deepening of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Reform and Development Plan" proposes detailed deployments for the development of modern service industries, among which the development of the financial service industry is intense One stroke. Among the many favorable policies, the policy implications of the section on the innovative governance model of the cooperation zone in Chapter 7 of the "Plan" are particularly rich, indicating that the central government has an insight into the changing trend of governance models and has planned the governance model of the Qianhai Cooperation Zone with foresight.
The “plan” clearly stated that “promote the use of statutory institutions to carry part of the government’s regional governance functions, optimize the governance structure, function settings and management models of statutory institutions. Actively and steadily formulate relevant system specifications, study the work of Qianhai Cooperation Zone , Hong Kong, Macao and foreign residents residing in the Qianhai region will participate in the governance of Qianhai, exploring ways to allow qualified Hong Kong, Macao and foreigners to serve as statutory institutions in the Qianhai Cooperation Zone. Promote the self-discipline and self-sufficiency of industry associations, and build a Guangdong, Hong Kong and Macao professional community exchange and development platform." A few words mean that the Qianhai Cooperation Zone will boldly explore innovative governance models in order to integrate international rules as soon as possible: enterprises will assume part of the management functions to better give play to the professional level of the industry; Hong Kong, Macao and foreigners working and residing in Qianhai District will participate Governance of the cooperation zone to demonstrate the inclusiveness of the Qianhai Cooperation Zone; build a career exchange and development platform to promote the collision of new ideas and creativity and enhance the innovation capabilities of the cooperation zone; integrate the wisdom of the government, industry, enterprises, and employees to create a public governance Good ecology.
How does the Qianhai Cooperation Zone build an innovative governance model that suits its own development characteristics? on the basis of,How does the management of Qianhai Cooperation Zone define technological innovation? How to retain and support domestic and foreign enterprises and high-end talents in the region? How to allow foreign employees and companies to participate in the management of the cooperation zone? How to expand the opening up of the financial service industry?
Opening to the outside world is the biggest advantage of the City of London, and it has also contributed to the current governance model. This governance model has been proved to be a successful model in practice.
The "Plan" has pointed out the direction of efforts to create an innovative governance model, build an experimental platform, and expand opening up. Perhaps some reference or answers can be found from the London City corporate governance model regarding the implementation of innovation policies.
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