德勤-机会在即-外资投资管理机构如何赢取中国市场_24页_1mb

Summary of "Opportunity Knocks: How Global Asset Managers Can Win in China"

Core Content

The document outlines the growing opportunities for global asset managers in China's asset management market, emphasizing that China is expected to become the second-largest market globally, reaching about USD10 trillion by 2025. It highlights the unique position of China as the only at-scale market with double-digit organic growth, and how recent regulatory changes have opened new avenues for foreign firms to enter and operate in the market.

Key Market Trends

• China's Market Growth: China's asset management market continues to grow rapidly, driven by strong economic performance, increasing personal wealth, and rising fund penetration.
• Regulatory Shifts: The 2019 introduction of the 11 Measures significantly expanded foreign access to the market, allowing for full ownership of fund management companies (FMCs), majority ownership in wealth management subsidiaries (WMS), and the establishment of insurance and securities asset management companies.
• Market Penetration: Despite these opportunities, foreign firms have limited market penetration, with WFOE PFMs only accounting for about 0.3% of the PFM market in 2020.

Main Strategies for Success

1. Invest in Regulatory Relationships

• Regulatory relationships are crucial for navigating China's complex and evolving regulatory landscape.
• Foreign managers should prioritize building strong ties with key regulatory bodies such as CBIRC, CSRC, PBOC, and SAFE.
• These relationships can help expedite licensing approvals and allow firms to influence policy development.

2. Focus on Investor Education

• Chinese investors have historically favored short-term, high-return products like WMPs.
• There is a gradual shift towards long-term, NAV-based products, which foreign managers are better positioned to offer.
• Investing in education about risk-return and investment horizons is essential to align with investor expectations.
• Digital platforms like WeChat and Ant Financial are effective tools for investor engagement and education.

3. Exploit Opportunities in Digital Distribution Innovation

• Digital distribution channels, especially third-party online platforms, are becoming increasingly important.
• These platforms have grown to capture 25% of the mutual fund market and are expected to continue growing in popularity.
• Foreign managers can leverage data and technology to redefine their relationships with investors and bypass traditional bank networks.

4. Identify a Differentiating Product or Value Proposition

• A differentiated product set is necessary to stand out in a competitive market.
• Leading foreign managers are leveraging their strengths in areas such as overseas investment, retirement funds, smart beta, and ESG investing to gain a competitive edge.

5. Empower Local Teams

• Strong, on-the-ground teams are essential for success in the dynamic Chinese market.
• Empowering local talent helps in attracting and retaining skilled professionals and adapting to local conditions.

Regulatory and Market Access Changes

• WFOE FMCs: Foreign managers can now fully own FMCs starting from April 2020.
• WMS JVs: Majority-owned JVs with domestic banks are now possible, opening up access to wealth management distribution networks.
• Insurance and Securities Asset Management: Foreign firms can establish wholly-owned insurance and securities asset management companies, with no longer restrictions on ownership.

Challenges and Considerations

• The regulatory environment is still complex and evolving, with potential delays in license approvals.
• Foreign firms must be prepared for long-term commitment and significant resource investment.
• The market remains highly competitive, and not all foreign applicants will be granted licenses.
• The growth of the market is largely uncharted, requiring innovation and adaptability.

Conclusion

China represents a significant long-term opportunity for global asset managers, but success will require a strategic approach, including regulatory engagement, investor education, digital innovation, differentiated products, and strong local teams. While the market is growing rapidly, foreign firms must navigate the unique challenges and embrace the evolving landscape to capture a meaningful share.