(China Alert) China WFOE: Three is the magic number
·Global managers need a WFOE to run mainland money
·Three WFOE structures currently exist
·Firms are using all three structures to pursue their China strategy
Update: As an indication of its China intent, Schroders has submitted a WFOE name registration to the Shanghai Commercial Bureau for approval. This follows recent, similar moves by Fidelity, BlackRock, Aberdeen AM and Value Partners. However, each firm is attacking the market differently and this is reflected in their WFOE strategies. Readers should be aware that there is no single WFOE that accomplishes all asset management purposes and managers must pick carefully. Complicating that choice, the regulatory environment is changing rapidly and managers’ actions today may either expand or curtail the future scope of their business: choosing the right WFOE now can help mitigate this risk. Here, Z-Ben Advisors assesses the new variety of WFOE strategies available. In our view, any reader for whom China is now on the radar should be considering which WFOE is most suitable for their near- and long-term plans.
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