Building a China fund business:
Competitive forces on the rise
For global asset managers, entering China is now only a question of when. And for those firms already up and running, the focus is on the growing competitive forces and how to successfully execute in a market as unique as China.
Throughout the year, Z-Ben Advisors has fielded numerous requests to provide business-relevant direction. The majority of the questions posed were similar in nature so, with this in mind, we’ve returned with a fully updated report addressing key issues facing global managers entering and/or operating in China. Highlights are provided below:
- There will continue to be a rapid expansion and adoption in the number of global managers building an onshore China business with a total of 50 projected by end-2018.
- The choice to build onshore in China must be a strategic decision. Tying internal decision making too closely to near-term business planning and budgetary considerations is ill advised.
- For global managers already operating in China, sourcing and retaining local hires will define early success as the industry is already operating with a shortage of qualified professionals.
- Most firms are building in China solely to target expected outbound demand (QDLP, QDII, QDII2). While understandable, the onshore market is larger, faster growing and operates with better economics.
- Contrary to the conventional thinking, global managers have real competitive advantages in China. The focus will need to be narrow, refined and client-centric.
- Early mover advantages have been identified for global managers positioning themselves to access the onshore retail mutual fund space. Late adopters could encounter delays out to 2022 and even beyond.
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