Chinese fund houses wary of foreign competition

As US-based Neuberger Berman unveils its China head of institutional business, local players are voicing worries about the growing onshore challenge from overseas rivals.
Chinese fund houses wary of foreign competition

The growing number of global fund managers that have – or are seeking a licence for – an onshore business in China has domestic players worried. 

Yesterday it was the turn of US firm Neuberger Berman, which unveiled the new head of China institutional business for its wholly foreign-owned entity (WFOE) in Shanghai.

Meanwhile, some of the biggest Chinese asset managers have privately expressed concerns to AsianInvestor about overseas rivals moving onto their turf.

A marketing head of a large mainland house said she saw a challenge from global fund managers, given their strong brands and attractiveness to clients.

Another marketing officer at a big local player said she felt a sense of crisis at the setting up of onshore investment management WFOEs by global firms. This is “a test for the domestic players and spurs us to constantly improve our research and investment capabilities”, she added.

Beijing has steadily opened up the market to the extent that overseas financial institutions can now set up 100%-owned asset management firms in Shanghai’s free trade zone with the same advantages as domestic players.

William Hui

Neuberger Berman set up its own WFOE in November and brought in William Hui in Shanghai in January to oversee its institutional business in China. He previously led the development of the mainland retail and institutional business at Deutsche Asset Management, as China head of the global client group.

Hui will work alongside Marco Tang, head of China retail business. Both report to Patrick Liu, who joined the firm in February as head of China and general manager of the WFOE, Neuberger Berman Investment Management (Shanghai). Liu was previously CEO of Shanghai-based fund house HFT Investment Management.

The WFOE will allow NB to operate an onshore investment management business in China, subject to registration with the Asset Management Association of China. The US firm will then be able to manage and distribute private funds to local clients.

Nick Hoar, Asia-Pacific head of Neuberger Berman, told AsianInvestor it would look to launch its first product shortly after the registration.

While he expects to see competition grow among WFOEs and the wider private fund space in China, Hoar said the domestic asset management industry’s capacity was large and would expand further.

He declined to go into more detail about the firm’s plans or how many people it would hire for the WFOE.

In addition to Neuberger, the list of firms plotting onshore businesses includes the likes of Aberdeen, Bridgewater Associates, Fidelity, Franklin Templeton, Invesco, Manulife, Mirae Asset, Schroders and UBS.

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