China investment management


China’s investment management opportunity

Reforms could create a multitrillion-dollar market for foreign firms

Author: Doug Dannemiller (US)

China's reforms have opened a $30.2-trillion opportunity for foreign investment managers. To win in this complex market, foreign firms should develop segment-specific strategies, alternative data capabilities, and partner with online wealth platforms.

Key takeaways

  • The Chinese government is reforming the country’s pension system, capital markets, and investment management industry as a part of a bigger plan to curb an anticipated retirement savings deficit.
  • Foreign investment managers have the opportunity to play a greater role in the tightly regulated industry, potentially managing a sizeable chunk of the US$30.2-trillion addressable retail financial wealth by 2023.
  • Foreign firms looking to enter the market should develop investor segment-specific strategies, alternative data capabilities, and partner with online wealth platforms to achieve success.
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China: Investment management’s next big opportunity

With the Chinese government set to eliminate restrictions on foreign ownership of fund management firms in 2020, many investment managers worldwide are eagerly eyeing China as their next big growth opportunity. The potential market is vast: By 2023, the country’s total addressable retail financial wealth is expected to reach US$30.2 trillion, with US$3.4 trillion in retail assets under management (AUM) in Chinese publicly registered funds.

But these market size statistics—enticing as they may be—don’t guarantee success for any particular firm. The future of investment management in China could largely depend on its prospects for economic growth, the reliability of regulatory reforms, and the spread of cultural changes that accompany individual economic prosperity. Investment managers hoping to expand to China should, therefore, consider a host of marketplace, regulatory, and cultural complexities as they establish a foothold and pursue market share. This article explores some of these complexities, aiming to arm investment management company leaders with insights to help them plan for what might lie ahead.

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Vincent Gouverneur
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