The Future of Asset Management in China

The gradual liberalization of mainland China capital markets and the opening up of the investment management industry for overseas firms mark the start of a new phase. Over the coming years, these policy changes could yield tremendous opportunities for overseas firms. As things stand, foreign asset managers and other types of financial services firms will be able to pursue full ownership of their onshore joint ventures as early as in the first quarter of 2020. For wholly foreign owned enterprises (WFOE), next year could also bring the long-awaited access to the domestic retail fund market.
To better understand these trends – and how companies should respond to them and plan for the years ahead – FleishmanHillard surveyed 250 sophisticated investors in China. This survey, together with our research effort, helped us produce a report to help guide communicators in this next phase.
Our report, “The Future of Asset Management in China” offers insights into investors’ behaviors and expectations:
• Credibility and performance are key. Investors emphasized that asset manager brand credibility (74%) and investment performance (64%) are critical. It’s not surprising that Chinese investors (like those elsewhere in the world) make investment returns a priority, and the fact that they will invest in a credible global brand over one offering better returns is notable. This clearly demonstrates the importance of reputation equity for firms operating in China.
• Strategy and performance of WFOE private fund products attract the vast majority of respondents. In a competitive and crowded marketplace, a very positive indicator for foreign fund managers is that 91% of respondents said they already invest in WFOE private fund products, despite these products only recently becoming available in China. Respondents said they liked these funds’ strategies above all (93%), with a slightly smaller, but still dominant, proportion citing their performance (87%) as a key factor.
• Environmental, social and governance (ESG) themes are on the rise for mainland investors. Fifty two percent of respondents said ESG expertise is a very important requirement for fund managers, with 94% overall considering it either very or somewhat important. While not at the top of the list of key qualities, the interest in ESG was far higher than expected. It points to the immense potential for sophisticated global firms to conquer thought leadership in this space based on their global expertise.
• Multi-channel communications critical to engage mainland China investors. In a market that is considered far ahead in its adoption of digital strategies, online patronage for funds was rated the second most popular channel (76%), trailing IFAs and intermediaries (88%). The findings show that digital strategies need to be a core component of any sales and marketing effort in China, while the popularity of IFAs shows the ongoing importance of person-to-person relationships and the need for trusted figures when it comes to important investment decisions.
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