SOLUTIONS & PRODUCTS INSIGHTS ABOUT US CLIENT SUPPORT | TALK TO US
BR (NYSE) 117.6 -0.24
SOLUTIONS & PRODUCTS INSIGHTS ABOUT US CLIENT SUPPORT | TALK TO US
BR (NYSE) 117.6 -0.24
Accessing China Growth:
Thrive with Optionality
Broadridge Distribution Insight
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This table shows the competitive landscape amongst foreign managers but the race will increasingly be against domestic managers and not just your foreign peers.
Competitive Positioning - China Power Ranking
There are costs and benefits attached to each decision, be it applying for a license, a quota or setting up a JV with local partner.
The five main business models in China
All access model
Incremental model
Remote model
Leverage model
Collaboration model
Optionality is key to thriving in a dynamic environment like China.
It requires one to have a flexible mindset, scalable operations
and elasticity to evolving investor and regulatory demands.
Business plans need to be fluid and adapt to
new developments
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Extract greater opportunities from greater data and intelligence
Bank WMP
Mutual Funds
Private
Funds
Securities
Products
NSSF
NSSF
SAFE
CIC
Other
MRF
MRF
Other
QDII/
RQF1
QDII
QDLP
Stock/
Bond Connect
Stock/
Bond Connect
EA
Other
Sep
Acc
ETTS
China Domestic
U.S. $15.0T
China Outbound
U.S. $0.7T
China Inbound
U.S. $1.2T
The typical approach does not always work as access to different parts of Chinese business is restricted by licenses and quotas. There are three key types of business in China and bulk of the assets reside in the domestic bucket.
China requires a new playbook
Vision
Progress towards
Resource allocation
Full fledged office targeting all client segments
Expansion beyond sales team to bring in other capabilities, e.g. marketing, product, investment
Expansion of sales team to target Tier 2 institutions and HWNI (via private banks/family office)
Small sales presence targeting institutional clients
Global managers have typically used a staircase approach for business expansion, starting with institutional clients before targeting the retail segment.
A staircase approach to business expansion
In this fast-changing and disruptive era, we have seen a sharp increase in the number of clients who rely on fact-based insights to power their business. This need is particularly strong in China, where new opportunities regularly open up due to the fast-evolving regulatory landscape. In the face of a widespread change, our Analytics services help our global asset management clients adapt their China strategy to navigate a complex marketplace.
Data is the foundation of business transformation. We help you stay ahead of the competition by delivering consistent and timely data via our Global Market Intelligence (GMI) platform; platform; as well as providing an understanding of fund selectors though the Fund Buyer Focus Intelligence (FBFI). We also leverage our Insights and Advisory services to guide asset managers through real world scenarios.
Take a focused staircase approach to growing assets
Embrace an all-options approach to maximize asset gathering potential
Largely uses a JV or minority stake model for asset growth
Does not commit to a full-fledged domestic presence focused on outbound and inbound opportunities
Leverages on a parent group to guide expansion strategies
First Mutual Fund
JV approved
Hong Kong —
China Mutual Fund
Recognition
Wholly Foreign Owned Enterprise Investment Management (WFOE IM) and Private Fund Management (PFM) allowed
100% foreign owned Fund Management Company (FMC) allowed, also able to have majority ownership in Bank Wealth Management (WM) Subsidiary
Greater Bay Area
(GBA) Wealth
Connect
The only way that global managers can participate in China domestic asset management growth is via a minority stake (49% or less) JV with a local partner
Global managers can setup 100% foreign owned firms to manufacture Chinese products for non-retail Chinese clients
Global managers are now able to setup 100% owned units to access retail clients
Key considerations when designing your China Strategy
2002
2016
2021
2019
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Despite persistent headwinds including the COVID-19 pandemic and geopolitical tensions, China’s asset management industry remains too big to ignore for global managers.
The asset management industry in China has grown to a size that has attracted the attention of many global asset managers. Broadridge estimates the country’s vast trifurcated asset management industry soared to almost US$17T in total assets under management (AUM) achieving a CAGR of 16% over the last five years.
There are many ways of defining success and it is important to know your goals. There are also significant costs and benefits attached to each decision that needs to be weighed.
Designing a successful China strategy –
what should I do?
Business goals: Defining Success
Maximize AUM growth
China is one of the largest and fastest growing AM opportunities
Domestic managers are witness-
ing doubling of profits YOY
Maximize profit growth
China can achieve tangential growth to other global markets
Business diversification
Risk in China
• Should I rely on organic growth or
pursue equity stakes purchase?
• Am I looking for it to be a key
significant part of overall AUM or is
there no hard asset target?
• Should I be focused on one access point/
license, or should I diversify my business?
• Who can I leverage on for China growth,
both internally as well as externally?
• How does it fit into my existing business model?
• Are there opportunities for Chinese fund
sales to global investors and vice versa?
• Can I achieve brand leverage with this
expansion move?
• How much do I understand the M&A
landscape in China?
• What are the risks to my existing business if
the M&A/partnership fails?
• What is my investment horizon? Am I able to
invest for >10 years before seeing results?
• Will my cost approach be growth at all cost or a more
measured approach aligned to growth targets?
• How does my desired growth model align with leadership
plans and firm culture• Do I have the right team and
products to operate locally?
• What are the other potential risks to my business?
Eg. Geopolitical, reputational, data disclosure?
• To what extent can it help diversify my existing
clientele/ market and product mix vs. diverting
resources away from existing developments?
Opportunities in China
Advisory
Our expert Advisory team will work with you to design practical and realistic distribution strategies that lead to real world results.
Insights
Insights
Our global research focuses on product and channel – spanning APAC, Europe, LATAM, and US – and covering core trends and topics such as retirement, product innovation, the growth of China and ESG.
Analytics
Analytics
We offer the most comprehensive suite
of analytical toolkits spanning asset management sales, client, product, regulatory, and finance.
Our Analytics solutions track over $100trn in assets across institutional and retail markets globally: providing unique channel and named distributor data and tracking key brand and perception metrics amongst global
fund buyers.
Manager
China Power Ranking (Bi-annual)
Rank
Points
2
8.5
7
6.8
6
5.9
5.8
5.6
5.5
5.5
5.1
UBS Global AM
JP Morgan AM
BlackRock
Invesco
Schroders
Fidelity
AXA IM
DWS
Eastspring/Prudential plc
Allianz Global Investors
Domestic Licenses
Inbound/outbound Schemes
Oct-21
8.0
7.8
7.2
6.3
5.4
5.2
5.1
5.0
4.9
4.8
Apr-20
Points
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Inbound
investment
Avenues
Outbound
investment
Avenues
Rank
1
4
5
6
7
8
9
10
H1 2020
H2 2021
H1 2020
H1 2021
H2 2020
H1 2020
H2 2021
2015
2015
2016
2019
2021
Domestic managers are witnessing doubling of profits YOY
Maximize profit growth
• Should I be focused on one access
point/license, or should I diversify
my business?
• Who can I leverage on for China
growth, both internally as well
as externally?
• Will my cost approach be growth at all cost
or a more measured approach aligned to
growth targets?
• How does my desired growth model align
with leadership plans and firm culture
• Do I have the right team and products to
operate locally?
Opportunities in China
Risk in China
Business goals: Defining Success
China can achieve tangential growth to other global markets
Business diversification
• How does it fit into my existing sales
to global investors and vice versa?
• Can I achieve brand leverage with this
expansion move?business model?
• Are there opportunities for Chinese
fund sales to global investors and
vice versa?
• Can I achieve brand leverage with this
expansion move?
• What are the other potential risks to my
business? Eg. Geopolitical, reputational,
data disclosure?
• To what extent can it help diversify my existing
clientele/ market and product mix vs. diverting
resources away from existing developments?
Opportunities in China
Risk in China
Business goals: Defining Success
Download the white paper
China Power Ranking (Bi-annual)
Rank
H1 2021
H2 2020
H1 2020
JP Morgan AM
This table shows the competitive landscape amongst foreign managers but the race will increasingly be against domestic managers and not just your foreign peers.
Competitive Positioning - China Power Ranking
Manager
Invesco
1
4
3
8
7
6
5
10
9
10
9
8
7
6
5
4
1
2
UBS
Global AM
Blackrock
Schroders
Fidelity
AXA IMs
DWS
Eastspring/
Prudential plc
Allianz Global Investors
10
9
8
7
6
5
4
3
2
1
Manager