Foreign joint venture funds face fierce competition
According to a Pricewater house Coopers(PwC) survey , those joint venture fund management firms in china, which have large investments of foreign asset management companies, are an increasing threat to wholly owned domestic fund management.
Domestic fund management should hold at least more than 51 percent stake in domestic fund management companies based on the rules made by the china Securities Regulatory Commission. As the survey, which interviewed 29 such foreign joint fund management firms in china, showed that the fully owned domestic funs firms, viewed as their greatest competitive threat, has ranked the second place in regards to threat perception in this year instead of the 16th position in 2007.
Alex Wong, a partner with PwC, said that because the expanding domestic fund management firms are a more stable and long-term development way to fund managers, domestic ones these days are winning the competitive edge over Foreign joint venture fund management firms.
He pointed out that it is because of the better career prospects in views of staff recruitment that fund management chose to work for foreign joint venture fund management companies before 2007. But nowadays, such advantages are less obvious since domestic fund firms are providing a more comprehensive product line-up and are more likely to get a new product launched and approved in China.
Nevertheless, the survey revealed significant growth by 2012 would been achieved by most foreign joint venture fund management firms in China, or about 66 percent of them their under their anticipation. This shows no evidence at this moment that the global financial crisis has lead to scale back or withdraw funds from China.
As the survey revealed that a “flat-to-moderate” growth is expected by foreign joint venture fund management firms from this year to the next three years.
Generally speaking, they hope to achieve a 101percent in the overall projected assets under management by 2012, in the hope of elevating the number of Chinese retail investors growing from the current 33.8 million to almost 69 million.
According to the survey, Fund managers at these joint venture asset Management firms also believe that the existing product performance should been improved and new products and distribution channels developed over the next three years if they want to increase profitability.
They predicted that qualified domestic institutional investors (QDII) would present a significant opportunity in the long term despite of their poor performance.
Robert Grome, an the senior partner with PwC said that mainland investors should have faiths in the QDII product , which is, conceptually, sound and will be very successful in providing profitable international market exposure.
According to the industry-wide data for the fourth quarter last year, 45.5 percent of the overall market share in views of assets is hold by the foreign joint venture fund management firms, achieving an AUM of 882 billion yuan. They had 224 funds under the management at the tail of 2008.
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