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Global heavyweights quietly setting up in China

Seven of the world's ten biggest asset managers have entered mainland China so far, by setting up an investment management wholly foreign owned enterprise (IM WFOE), according to a report by Shanghai-based Z-Ben Advisors.
Global heavyweights quietly setting up in China

Four of those seven also have joint venture firms in China: Blackrock, Allianz Global Investors, JP Morgan Asset Management and Axa.

However, three of the 10 biggest firms have no joint venture or IM WFOE strcuture, according to the report. They are: State Street Global Advisors, Capital Group and Goldman Sachs.

Top 10 global asset managers

Source: Z-Ben Advisors


Currently, there are 22 joint venture firms and 13 IM WFOEs established by the to 50 largest asset managers, according to the report. Nine firms have both a joint venture and an IM WFOE.


Top 11-50 largest global asset managers

Source: Z-Ben Advisors


Opening the door

Establishing an IM WFOE is the method preferred by managers who would like to have 100% ownership of their firms in China. However, Chinese regulators announced in November that they would relax foreign ownership limits for JV fund management firms. Initially, the ownership cap will be raised to 51% from 49%, and then the limits will be completely removed in three years.

The new rules present opportunities for foreign managers wishing to tap the retail market. However, big distribution challenges await foreign players that want to enter the market.

At least 25 IM WFOEs have been established in the country. Among them, 10 firms have registered with the Asset Management Association of China to run a private fund business, which caters to institutional and high net worth investors. So far, six onshore products have been launched by four firms, the latest being Value Partners.

Firms that have set up IM WFOEs have also encountered challenges, particularly with keeping up with local regulations, branding and distribution.

Part of the Mark Allen Group.