Deutsche Asset Management (DeAM) has signed a letter of intent with Da Cheng Fund Management to co-operate strategically in the China fund management market.

"With China's anticipated entry into World Trade Organization (WTO), the China asset management industry will be integrated into the global financial system," says Long Xiao Bo, chief executive officer of Da Cheng. "This letter of intent would enable Da Cheng to step toward that direction. Da Cheng and DeAM will be able to cooperate in many areas including investment management, product development and marketing strategy."

Under the terms of WTO entry agreement, China will permit minority foreign-owned joint ventures to engage in fund management on the same terms as Chinese firms. In addition, as the scope of business expands for Chinese firms, foreign joint venture securities companies will enjoy the same expansion in scope of business. 

According to DeAM, after China's WTO entry, both companies will consider entering into a joint venture together, should the appropriate opportunity arise.

Choy Peng Wah, chief executive officer of Deutsche Asset Management (Asia) says DeAM and Da Cheng are natural strategic partners given similar strategy to deliver investment opportunities to clients globally and in China. "Da Cheng brings a strong market position and a highly respected management team, while DeAM brings its global systems and experience," Choy comments. "In the long term, we believe the Chinese fund management market offers significant opportunities both in mutual fund development and pension reforms."

Globally, DeAM has approximately $600 billion under management, and over $53 billion under management in Asia Pacific alone. It is a wholly owned subsidiary of Deutsche Bank.

Da Cheng is one of the largest fund management companies in the world, with over $1.2 billion of assets under management. Jointly owned by Everbright Securities, China Eagle Securities, China Trust and Investment Corporation for Economic Development and Guangdong Securities, Da Cheng is involved in the open-ended fund market, B-share fund, retirement plan, fund for insurance companies and separate accounts for institutional assets.