Of the first 10 Chinese fund management companies, six were located in Beijing. This was partly due to happenstance: many of their shareholders were Beijing-based securities firms. But it was also because Beijing offers close access to wealthy institutions that are potential customers. It is China’s second-largest centre for high-tech companies, another vein to mine. But ultimately Beijing has been a useful place to be because it is close to the China Securities Regulatory Commission (CSRC) and other key regulators. Little gets done in China without the official go-ahead – at least not above board – and proximity to mandarins is a competitive edge.

Nonetheless, this year Beijing will lose its fund management industry. Fuguo (in English, Fullgoal) has just decamped for Shanghai. “Shanghai is a financial centre,” explains Cary Zhang, Fullgoal’s chief strategist. It may not be near CSRC but it is near the Shanghai Stock Exchange and many publicly listed companies. Fullgoal now joins China Guotai and Huaan in this bustling commercial city.

But the biggest winner is Shenzhen, the founding place of the fund industry and currently home to Nanfang (China Southern) and Penghua. They are to be joined over the next 12 months by Boshi, Changsheng and Dacheng, while Jiashe (Harvest) is thinking about it.

They are lured by Shenzhen’s low corporate taxes – 18% versus 33% in Beijing – says Wei Shang-yun at Dacheng. Other advantages include the proliferation of many high-tech companies, which they invest in and also solicit business from.

Because many fund management companies have roots in Shenzhen, many of their top personnel have personal connections with southern China, says Li Quan, executive vice president at Boshi. Like Shanghai, it has a stock exchange, and a large pool of talented people, he adds.

Crucially, Shenzhen is close to Hong Kong, where many fund managers now have foreign partners.

There is another reason for the flight from Beijing, which fund managers mutter only privately, and that is to escape the heavy hand of the authorities. Being close to CSRC, instead of conferring advantages, can prove stifling. Shanghai and especially Shenzhen are far away and much more freewheeling. The quality of the local regulators is also better.

The odd man out is Huaxia (China Asset Management), which is perfectly happy to remain in Beijing. “We are established here, and we emphasize stability,” explains an official there.