Shanghai-based Huaan Fund Management, one of the so-called 'old 10' fund houses that founded the Chinese fund management industry in 1998 and now boasts Rmb80 billion ($11.73 billion) in assets under management, is in a global recruiting drive for a new CEO. The hire will replace current CEO Yu Miangen, who will remain at Huaan on an interim basis but will gradually step back from active duty to a non-executive chairman role.

On paper, the job description appears straightforward: Huaan wants a proven leader with at least eight years of experience in the finance industry, and at least three years of experience in the fields of management, investment, sales, marketing and backoffice. The right candidate should show a high sensitivity to policies and regulations related to fund management, have a strategic mindset and strong business acumen.

In Shanghai, discrimination against age or disabilities is not something to hide. Huaan has stated in its brief that it wants only candidates under the age of 50 and in good health.

The unwritten part of the job description, however, is that the candidate faces the difficult job of trying to revive the Huaan brand after three problematic years.

Huaan is one of the few Shanghai-based fund houses to play at the top rank, along with Beijing-based giants such as China Asset Management or Harvest, or Shenzhen-based Bosera or China Southern.

The Shanghai city government once took pride in the pioneering spirit of its home-grown fund house which, in 1999, was the first fund management company to enter the inter-bank market; and two years later was the first to launch an open-ended fund. In 2005 its AUM hit an industry record of Rmb60 billion.

Then in 2006 it scored yet another victory, as the first fund house to launch a QDII fund, a structured notes-based strategy sub-advised by Lehman Brothers Asset Management (now Neuberger Berman). This would turn out to be an innovation too far.

That same year, then-CEO Han Fanghe was caught manipulated stock prices in a massive pensions embezzlement scandal that tainted the city; the mayor and the city's Communist Party chief were also entangled -- and were ultimately executed. The director and finance head at the Shanghai branch of the National Social Security Fund went to jail. Several entrepreneurs who helped the culprits invest pension money into dodgy real-estate ventures were also shot or remain fugitives. By these standards, Han got off lightly with a sentence of 18 years in prison.

The scandal was a disaster for Huaan. Its investment executives took flight; investors felt cheated. For a while Huaan's sales performance slumped to its all-time bottom.

Current CEO Yu Miaogen was appointed by shareholder Shanghai International Trust (an investment arm of the Shanghai city government) in November 2006 to salvage the mess. He tried. However, government intervention and mistrust by investors did not make his job of fixing the brand easy. It got even harder as the global markets peaked in late 2007. Investor sentiment across the Chinese fund market began to tumble. Then Huaan's investment performance went south as its well-respected and long-serving CIO Frank Yao got poached by Lehman Brothers.

Yu's nightmare did not end there. By the autumn of 2008, Lehman Brothers collapsed. Huaan, like hundreds of institutions and retail investors around the world, was caught in the grip of the crisis and today still has no idea when it will recover the money it had mandated to Lehman. Huaan's management decided to fully indemnify investors' losses from the failed QDII product, but investors have yet to receive that pay cheque, because of a series of ongoing lawsuits.

These days, on paper, Huaan is still a big player. According to Z-Ben Advisor's data, as of end of September, it has a 3.28% market share and is the eighth largest player in the industry of 60. That's mostly thanks to its legacy assets (buoyed by closed-end funds) and this year's market rebound in A-shares.

Huaan wants to reinvent itself and it's doing so in classic fashion: Huaan is now the first 'old 10' fund house to look beyond the cadre of former CSRC executives to lead it. This is a move led by senior politicians in Shanghai who want to turn the city into a regional centre for asset management. They want to find a chief executive from the private sector; a businessman, not a bureaucrat.