Despite COVID-19 and Sino-U.S. trade tensions, China’s asset management industry recorded a stellar year in 2020, supported by bullish onshore capital markets, robust track records delivered by fund managers, and increasing product recognition of mutual funds from both retail and institutional investors. Looking ahead, we believe that managers should pay attention to the below to build a strategic approach to the region:

• Evolving distribution dynamics: Distributors are focusing on long-term growth in assets under administration (AUA), driven by regulatory initiatives. They have renegotiated trailer fees with managers, promoted C-share classes, promoted digital marketing campaigns, and further developed the pilot fund investment advisory business.
• Outsourcing: Following the regulation requiring all financial institutions conducting asset management business to comply with the “super guidance” by year-end 2021, product transition pressure and lack of in-house capabilities have boosted institutional outsourcing from banks’ wealth management subsidiaries, and the trend could continue for a few years.
• Staffing and organizational structure: Various liberalization measures such as the lifting of foreign ownership caps have boosted global players’ presence in China. After a manager achieves its license to operate, how should the firm structure its operation and find qualified talent?

Our latest report, Asset Management in China 2021: Seizing Opportunities Across Diverse Segments, examines these trends and more. Tap into our findings to inform and validate your expansion approach to China.