It’s not quite working for free, but it’s pretty close.

Competition among Chinese investment banks has become so intense that five firms recently agreed to split a 0.001 percent fee for arranging a private share placement. That compares with the more than 5 percent that’s usual for follow-on stock offerings on Wall Street, data compiled by Bloomberg show. It’s the latest example of a price war in China that helped cut average equity underwriting fees in half last year and prompted a trade group to call for measures to prevent “vicious competition.”

The industry’s struggles are one of the biggest issues facing Yi Huiman as he takes on his new role as chairman of the China Securities Regulatory Commission: too much supply and not enough demand, with about 120 firms competing amid a plunging market and slowing economy. Brokerages have cut pay, reduced staffing and sued clients, and consolidation is likely in the longer term, according to David Yuan Wei, associate partner with McKinsey & Co.

“In three to five years, I will say 20 big, full-service brokers in China will be more than enough,” he said. “Smaller players need to find a niche market they specialize in and shift to boutique broker to survive.”

Things could get worse before they get better, with recent rule changes opening the way for foreign securities firms to enter China or, for those already there, to bulk up their local presence.

In the latest example of cutthroat competition, five of China’s biggest investment banks underwrote a 29 billion yuan ($4.3 billion) private placement for Huaxia Bank Co. earlier this month, and earned a combined 418,948 yuan, or 0.001 percent of the deal size. That was less than the 500,000 yuan Huaxia paid for publicly disclosing the transaction in newspapers, filings showed.

In November, three firms won their bids to work on an initial public offering mandate from Shanghai Rural Commercial Bank Co. for a combined 0.78 percent of the deal value, according to a statement. One of the three banks, Haitong Securities Co., agreed to work for just 50,000 yuan — 0.05 percent of the total.

Brokerages sometimes take on low-paid deals, especially from large issuers, because being involved could help them climb underwriting league tables, according to industry professionals.

“Deals are so few, but life has to go on,” said Ge Shoujing, a Beijing-based senior analyst at the Reality Institute of Advanced Finance. “Bankers have no choice but to bid for lower fees to keep things going. Meanwhile, issuers are reluctant to pay high commissions under the current economic conditions.”

Average fees for all equity deals in China last year tumbled to a five-year low of 3.9 percent, according to data compiled by Bloomberg. The amount raised by IPOs in the country fell by 40 percent compared with 2017 and may decline at least 10 percent this year, according to PricewaterhouseCoopers.

The effects are becoming increasingly clear, with four companies issuing profit warnings in recent weeks. GF Securities Co., one of the largest firms, said last week it cut compensation expenses for 2018, while about a dozen brokerages are suing clients to recover billions of dollars of loans taken out using shares as collateral.

The Securities Association of China said on Jan. 23 that at a meeting with firms it advised them to set up a reasonable pricing mechanism to help prevent “vicious competition.” Despite such calls, it’s unlikely that fee pressures on the industry will ease any time soon.

“The pie for bankers was so small last year that they had no choice but to fight for a mandate at any cost,” said Bifan Shen, chief strategist at Shenzhen Spruces Capital Management Co. “Conditions may improve a little, but only the top-tier banks will benefit from a bigger pie; smaller players may still have to pitch deals at a bargain.”