According to statistics, Investment and Asset Management in China have grown immensely in the last five years, increasing by 8.8% to reach revenues of $15 billion in 2018
. The rising industry demand is a result of ongoing economic and financial development in the country.
Moreover, the shift from conventional banks to private funds and trusts has further contributed to the growing demand for asset management services.
This presents a unique opportunity and incentive for investment bankers and asset managers to start their own ventures in the lucrative asset management market in China.
Here are a number of ways to set up an asset management company in the Chinese market:
Onshore private funds
You can set up an investment management wholly foreign-owned enterprise
(IM WFOE). After you set up your onshore private fund company, you’ll be able to operate a private securities fund management business in China.
Onshore public funds
You can also opt for a joint venture (JV) arrangement with mutual fund management companies. However, there’s a 51% cap on the percentage of ownership that a foreign individual can own in such an arrangement. The good news is that this cap will end in the next couple of years.
Offshore investments into China
There are several programs available that allow you to bring investments into China using an offshore company.
They also add an additional layer of protection to your investment. Some of the quota programs include:
Qualified foreign limited partners
Qualified foreign institutional investors (QFII)
Outbound investment for Chinese investors
You can opt for quota programs where you can offer advisory or investment products to Chinese investors in offshore assets. Some of the common quota programs include:
Mutual recognition of funds programs
Qualified domestic limited partners
Alternatively, you can provide advisory services to qualified domestic institutional investors.
Things to consider
You can use a combination of these four routes to successfully establish the presence of your asset management business.
Arguably, the best and smartest route for global asset managers to start an operative asset management business in China is through onshore private funds. They can set up an investment management wholly foreign-owned enterprise (IM WFOE) and conduct their operations while keeping full control of the business.
The key to establishing a presence and successfully penetrate the private securities market is the timely classification and identification of target investment opportunity in the Chinese market and understanding how to leverage those opportunities using global competence.
Some asset manager may use QFII share funds to start their company, while others rely on their global strengths in quantitative strategies to fuel their business. To conclude, entering China and setting up an asset managing company is not an easy feat to achieve—even for global players. However, it has unlimited potential provided they play their cards right.
At Business China, we offer expert legal advice to all our clients, which can help them set up a WFOE investment management company while ensuring compliance with local laws.
From WFOE formation to registration, we help our clients to navigate through intricacies of opening a Business in China by providing assistance and all the information they need to start their own venture.
If you want to set up an asset management company in the Chinese market or find out more about this subject, feel free to give us a call on +86-020-2917 9715 or email to firstname.lastname@example.org