外資投資管理機構如何贏取中國市場

1、Opportunity knocks | How global asset managers can win in China1Opportunity knocks | How global asset managers can win in ChinaExecutive SummaryChinas asset management market is expected to be the second biggest in the world, and is projected to reach about USD10 trillion by 2025. It stands out as t

2、he only at-scale asset management market with double-digit organic growth. The COVID-19 crisis may further extend the growth gap between China and western markets, making China an even more important strategic arena for global asset managers.Foreign managers have long been interested in the China op

3、portunity, but until recently have had limited options for accessing this market, either via a minority joint venture (JV) with a local Fund Management Company (FMC), or aWholly Foreign Owned Entity Private Fund Manager (WFOE PFM). Both of these options held significant constraintsminority FMC JVs o

4、ffered limited control over the company, while WFOE PFMs excluded access to the promising retail market.However, this all changed with the 11 Measures1 announced in 2019. Foreign managers now have access to multiple additional venues to tap into Chinas asset management market, effectively giving the

5、m access to all client segments through vehicles in which they can have controlling stakes:There are no longer limits on foreign ownership of FMCsForeign managers are encouraged to form JVs with local banks, with local banks required to carve out their Wealth Management Product (WMP) activities into

6、 separate subsidiariesThere are no longer limits on foreign companies share ownership in securities houses and insurance companies, enabling foreign players to establish Securities Asset Management or Insurance Asset Management companiesChina is a long-term play, and foreign managers aiming to reap

7、its vast market potential must also come to terms with the significant resource expenditure required.1. https:/ HYPERLINK /2019/07/21/beijing-launches-11-measures-for-further- /2019/07/21/beijing-launches-11-measures-for-further-opening-of-chinas-financial-sector/1Opportunity knocks | How global ass

8、et managers can win in China2Opportunity knocks | How global asset managers can win in ChinaWith no proven successes and uncertainties along the way, there is no silver bullet. However, there are five good practices foreign managers should follow:Invest in regulatory relationshipsRelationships with

9、regulatory bodies help to navigate a changing regulatory landscape; leading firms can take active roles in shaping future regulations and policy changesFocus on investor educationHealthy growth of the Chinas asset management market will rely on having a mature investor base; leading foreign managers

10、 are contributing to investor education, getting them to understand risk-return, and investment time horizonsExploit opportunities in digital distribution innovationThe emergence of a variety of distribution channels allows foreign managers to innovate outside bank-controlled mechanisms; leading man

11、agers are leveraging data and technology to redefine their relationships with investorsIdentify a differentiating product or value propositionA differentiated product set is needed to stand out in a crowded market; leading managers are leveraging their strengths in overseas investment, retirement fu

12、nds, smart beta, environmental, social and governance (ESG) investing, to gain an edgeEmpower local teamsAsset management in China requires strong, on-the-ground personnel; empowered local teams help attract and retain talent, allowing firms to be agile in response to a highly dynamic local market e

13、nvironmentFor many foreign asset managers, venturing or expanding in China can be daunting. Those with the appetite to do so, and are willing to commit to the market can use these five good practices to help them build a profitable and successful franchise.2Section 1:The China opportunity continues

14、to growAsset management firms globally have faced a number of challenges in recent years, including slowing organic growth, fee pressure and increasing costs. In this world of increasingly challenging economics, China continues to stand out as the only at- scale asset management market withcontinued

15、 double-digit organic growth. Consistent with what we wrote in our paper Leadership in Times of Plentyback in 2017, we expect China to be the worlds second largest market by 2022, and to reach about USD10 trillion by 2025.Strong economic growth, increasing personal wealth, and growing fund penetrati

16、on have driven Chinas asset management market to grow at double-digit rates for many years,but recent regulatory changes around Wealth Management Products (WMPs) are providing another boost, as a large portion of assets fromthe USD3.1 trillion WMP market are migrating to the asset management sector.

17、Exhibit 1China is the only at-scale market globally that will experience double-digit organic growth.Global vs. China assets under management (AUM) & net new flows (NNFs)By Region, 2019 AUM in USD $T, 2020-2024e average NNF as % of BoP AUM$45T$40T$35T$30T$25T$20T$15T$10T$5T$0T12%$40.3T$14.3T$5.4T$3.

18、9T$3.8T$5.7T$6.0TUSEuropeex-UKUK ChinaJapanRest ofAPACRest ofWorld10%8%6%4%2%0%-2%Average NNF as % of Beginning of Period AUM (2020-2024e).accounting for 40% of new assets globally over the next 5 years5-Year Cumulative NNFBy Region, 2020-2024Japan6%China40%Rest ofAPAC18% -1%US16%Europeex-UKUK12%Res

19、t of World1. externally managed AUMSource: Casey Quirk Global Demand Model, Casey Quirk AnalysisSection 2:The door is now fully openForeign asset managers have been interested in the China opportunity for decades, and many have long- established footprints in the country. Until recently, however, re

20、gulations strictly limited the scope of foreign managers participation in the Chinese market. Foreign managers that have established presences in China generally followed one of two routes: minority ownership in an FMC JV or WFOE PFM.Foreign managers have been buying minority stakes in Chinese asset

21、 management firms since the early 2000s. Some of these JVs have evolved into successful asset managers,while others have exited the market. As minority shareholders, foreign participants have had little operational or strategic control over the direction of joint ventures.Exhibit 2Foreign managers h

22、ave already captured as much as 53% of FMC AUM through JVs, but in most cases are financial shareholders with little control over the JVsFMC AUM by ownership type2019, % of AUM, fully Chinese owned vs. foreign-invested JVsFully ChineseJV with Foreign Owned Partner47%53%Source: WIND, Casey Quirk Anal

23、ysisIn 2016, the China Securities Regulatory Commission (CSRC) allowed the establishment of Wholly Foreign Owned Entity (WFOE) Private Fund Managers (PFM). The regulation attracted alternatives-focused firmsto the Chinese institutional and high net worth (HNW) segments. But many traditional asset ma

24、nagers whohoped to expand their local knowledge and on-the-ground relationships also jumped on the opportunity to setup WFOE PFMs. To date, due to low brand awareness, lack of a distribution networks and customer preference differences, most new WFOE PFMs have failed to raise any meaningful assets.E

25、xhibit 3WFOE PFMs have grown steadily, but have only a small share of the PFM market at about 0.3%Share of PFM AUM by ownership typeApril 2020, % of AUM, local managers vs. foreign managers0.3%Local Managers Foreign Managers1. Includes only AUM of Private Securities Funds Source: WIND, Casey Quirk A

26、nalysisIn 2019, the Chinese government introduced 11 measures that bring substantial opportunity for foreign asset managers. For the first time, foreign managers are allowed to fully own FMC, with access to all client segments. The government alsoencouraged newly established Wealth Management Subsid

27、iaries (WMS) that are owned by domestic banks to partner with foreign managers. This has opened the WMP and local banks distribution networks to foreign firms.Exhibit 4The 11 Measures announced by the Chinese government in 2019 open up new routes for foreign managers to access Chinas asset managemen

28、t market New routes for foreign managers after the 11 MeasuresWFOE FMCForeign asset managers can fully own fund management companies from April 2020Wealth Management SubsidiaryForeign asset managers can now establish majority-owned JVs with wealth management subsidiariesInsurance Asset Management Co

29、mpaniesForeign firms can set up its wholly-owned insurance asset managers, and will no longer be limited to 25% ownershipSecurities Asset Management CompaniesForeign firms can take 100% ownership of a securities firm and apply for a wholly-owned securities asset management companySource: 11 Measures

30、Exhibit 5.effectively, foreign managers now haveunfettered access to all segments of the marketChina AUM1 by asset manager type2019E, %Addressability for foreign managersPre-11 MeasuresPost-11 MeasuresNot addressableOwnership capped at 51%Addressable through WFOE PFMOwnership capped at 25%Ownership

31、capped at 51%Private Securities FirmsAddressable through WFOE PFMAddressable through a majority owned JVAddressable through a WFOE FMCAddressable through WFOE PFMAddressable with no cap on ownershipAddressable with no cap on ownershipAddressable through WFOE PFM4%6%7%15%32%35%Bank WMPSecurities Asse

32、t ManagementInsurance Asset ManagementPrivate Equity & Venture CapitalFMCexternally managed AUM, excludes principal guaranteed WMP, trust asset manager, futures asset manager, and other private fund licensesSource: Casey Quirk Global Demand Model, AMAC, WIND, NSSF, China Wealth, IAMAC, CICC, HWABAO

33、Securities, Casey Quirk AnalysisSuch significant regulatory and industry changes have not gone unnoticed by foreign managers, and they are moving swiftly to takeadvantage of this growing opportunity. J.P.Morgan has announced its intention to increase ownership of its FMC JV to 100%, and Blackrock, V

34、anguard andFidelity have applied for fully-owned FMC licenses. Several asset managers, including Blackrock and Amundi, have announced new WMS JVs with leading local banks. We expect this uptickin activity to continue in the coming months.Exhibit 6Foreign managers have begun to capitalize on opening

35、up policiesActions taken by foreign managers in China since the 11 MeasuresFirmFMCWMSPension/InsuranceBlackRockFidelityApplied for licenseApplied for licenseMajority JV with Temasek and China Construction BankNeuberger Berman AmundiStandard Life AberdeenApplied for licenseMajority JV with Bankof Chi

36、naEqual JV with Tianjin TEDASource: Casey Quirk AnalysisEach option has benefits and drawbacks, and managers should consider their medium- and long-term goals in China when considering their method of entry. The most suitable long-term option for a manager might not be the most suitable medium-term

37、one. For example, an asset manager might aim to fully own an FMC in the long term, but choose to leverage a partnership in the medium term.Whilst the door is open for foreign companies, the Chinese government is likely to be selective in approving licenses and potentially pace them over time. Regula

38、tors will want to strike a balance between promoting competition and maintaining stability.Not all foreign applicants would be granted these licenses, and thebarriers for entry could become higher over time.Section 3:How can global asset managers win?The path to success in China will be a long, non-

39、linear one, and foreign firms will face constant uncertainties throughout the journey. In addition, with no stories of true success in China by foreign asset managers, growth in the region means covering largely unchartered territory, andfirms will have to accept the risks and uncertainties that acc

40、ompany the potential rewards.China is a long-term play, and foreign managers that wish to reap the vast potential of its market must also come to terms with the significant resource expenditure required. Post- COVID resources will likely be more constrained than they were before, and not all firms w

41、ill have the appetite to take on the cost of tackling the Chinese market. In 2017, our team published the whitepaper, Leadership in Times of Plenty: Future Winners in Chinas Asset Management Industry, in which we estimated that foreign firms will account for 6% of the market by 2030. The penetration

42、 of foreignfirms will remain limited, but those thatchoose to commit to the market now are likely to be rewarded handsomely for addressing the substantial market opportunity that China brings.China is a new, untested battleground for most global asset managers. Itis a place where foreign players can

43、 bring in their areas of expertise, but at the same time is one where foreign firms will need to experiment with new business models. Competing in China requires innovation in an age of uncertainty. Foreign managers need to be prepared to test new business models, and be agile and responsive to a co

44、nstantly changing market environment.Although there is no silver bullet, five good practices can help foreign firms differentiate themselves, reduce risks, and maximize their chances of success.Invest in Regulatory RelationshipsRegulatory relationships are key in China, and developing a strong relat

45、ionship with regulators the China Banking and Insurance Regulatory Commission (CBIRC), CSRC, Peoples Bank of China (PBOC) and State Administration of Foreign Exchange (SAFE) should be a priority for any foreign manager looking to establish a presence in China. Licensing conditions can be difficult t

46、o interpret and regulators can have unspoken rules, so relationships with regulatory bodies can not only help managers navigate a challenging regulatory landscape, but also help expedite licensing approvals. In our experience, regulators such as the CSRC and CBIRC, in line with new policies, are inc

47、reasingly operating an open door policy under which they are very willing to have ongoing dialogue and communication with foreign managers.Leading foreign managers have not only developed regulatoryrelationships to help navigate Chinas difficult regulatory environment, but are also helping regulator

48、s form new regulations as the Chinese asset management market continues to develop. Leading foreign managers have been speaking with Chinese regulators on pension reform for years, including introducing tax benefits for pension contributions. Regulators in China have often rewarded managers that hav

49、e shown a commitment to the market, with first access to licenses as regulatory barriers recede, and it is not difficult to imagine that firms which contribute to shape the pensions landscape will also be among the primary beneficiaries.Focus on Investor EducationForeign managers have chased the lar

50、ge, high growth mass affluent and high net worth channels for years, but Chinese investors have different preferences and expectations to their global counterparts. China is marked by high churn, and investors have historically chased short term, attractive yet unsustainable market returns over prod

51、ucts with long-term financial goals.WMPs are a key product that has shaped Chinese investors psychology. WMPs have long dominated the Chinese landscape, boosted by the strong distribution networks of local banks and high guaranteed returns, which foreign asset managers have found it difficult to com

52、pete with.Regulators have greatly increased regulation of WMPs in recent years, including banning guaranteed returns and capping allocations to non- standard debt.Resourcefully, some WMPs have moved from having an explicit guarantee to an implicit one. However, with a cap on allocation to non- stand

53、ard debt, as shown in Exhibit 7, there has been a steady decline in the average return offered by WMPs.Increasing regulation, rising defaults on products sold with implicit guarantees, and improving investor education, will gradually shift demand from WMPsto NAV-based asset management products that

54、are more familiar to foreign managers. This will create a more level playing field as returns on WMPs decline and investors become more aware of their true risks.Exhibit 7Increased regulations of WMPs will create a more level playing field, allowing foreign managers to capture a bigger share of the

55、asset management marketAverage return of bank WMPsDecember 2016 February 2020, %5.0%4.8%4.6%4.4%4.2%4.0%3.8%16/1217/1218/1219/12Source: Rong 360, Puyi Standard, China Wealth, Casey Quirk AnalysisChinese investors will start to understand risk-return, and the investment time horizons that come with t

56、hem. There is a shift, albeit a slow one, towards more long-term, solutions-based investing, and foreign managers should play a key role in this movement.Leading foreign managers are investing substantial resources in educating retail investors in a vast variety of investment topics, from retirement

57、 to ESG, through leading digital channelssuch as WeChat and Ant Financial. Foreign managers should leverage such digital channels to drive investor education, but can also consider innovative new channels, such as providing financial literacy education in universities and high schools. Financial lit

58、eracy remains low worldwide, but China is known for leapfrogging other countries when it commits to an idea. Being a part of the conversation will give foreign managers a platform to build their brands.Exploit Opportunities in Digital Distribution InnovationIn a market where domestic brand names and

59、 distributors dominate, it is difficult for foreign managers to achieve large market shares without forming strong distribution relationships. Bank partnerships are the obvious place to start, as local banks have long dominated the mutual fund distribution space in China. But competition is tough, w

60、ith shelf space highly competitive and often dominated by banks own products.Foreign managers will have to show the distinct value propositions they offer.Foreign managers can also consider independent wealth managers and growing digital channels. Online third- party distribution channels (e.g. Ant