(China Alert) Fidelity expands in China: The new normal

·Fidelity has applied for a new WFOE
·The directionality of China access and onshore business is clear
·WFOE strategy is becoming ever more critical

Update: Last Thursday, Fidelity announced that it has been approved to establish a WFOE on the Mainland (widely expected and discussed to be an investment management WFOE). This would be the second such entity, following on the heels of Aberdeen Asset Management. The WFOE is an extremely flexible platform, soon to be inclusive of allowing foreign managers to raise and run money on the Mainland. Whilst Aberdeen AM’s announcement was released with great fanfare as part of the UK-China Economic and Financial Dialogue (EFD), Fidelity’s announcement went relatively overlooked, which comes as a surprise to Z-Ben Advisors. We believe that both are equally important, but this recent move by one of the world’s largest managers underpins the strategic importance of the WFOE. We believe that future directionality is clear: whereas one approved WFOE is a data point, two is a trend.

With both Aberdeen AM confirmed and now Fidelity looking next in line to have been approved to establish investment management WFOEs, rival firms are now questioning what has changed. Whilst the process remains opaque, Z-Ben Advisors has gained additional insight. Furthermore……

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