Op-ed: Traversing the enormous potential of mainland China’s fast-opening asset management industry

Op-ed: Traversing the enormous potential of mainland China’s fast-opening asset management industry

By Patrick Yu, General Manager, SVP and Senior Partner, FleishmanHillard Hong Kong

The last year has seen a flurry of activity in mainland China’s fund management industry after the government allowed full and direct foreign competition in its retail fund market and ended foreign ownership limits on local fund house joint ventures. At the time of writing, the liberalisation has seen one major global asset manager receive the green light to start operations in the local retail market, with another two to three are likely to follow very shortly, subject to approvals. Others have taken the opportunity to submit applications to increase their stakes in their local joint ventures, with some even looking to take 100 percent ownership.

Our latest report, The Future of Asset Management in China 2021, which was launched earlier this month, confirms that global asset managers are entering a market full of opportunities and one that is eager to tap their services. Of the mainland Chinese investors we surveyed for the research, 95 percent of them said they are either extremely or very interested in onshore retail funds offered by overseas asset managers, with the participants telling us that they are attracted by their unique investment strategies and the strength of their brands globally.

It is also notable that mainland Chinese investors are placing a particular emphasis on asset managers with strong ESG capabilities, as local regulators lay down clearer disclosure requirements on listed companies’ climate-related risks. A combined 95 percent of mainland Chinese investors think that strong ESG product offerings are “very important” or “somewhat important” for overseas asset managers operating in mainland China, while just over half of them believe that the commitment of an asset manager to ESG is “very important”.

So how should asset managers communicate effectively with their target audiences and curate content relevant to their interests?
One consequence of the pandemic has been retail investors’ embrace of digital platforms. Region-wide, it is here to stay. Face-to-face interactions may continue, but at much-reduced levels, and may often involve a video option. In a sense, owing to its lack of legacy systems, mainland China is ahead of the curve on digitalisation. There is wider acceptance of it and deeper market penetration. 

The move to online, particularly through mobile platforms, means that asset managers need to think of the best ways to reach investors online, both for managing investments and for access to market information. While the importance of user experience on their own platforms cannot be overstated, they will need to build a presence wherever retail investors are located. They will need to find a way into the mobile ecosystems their target investors inhabit.   
Channels such as WeChat and Weibo will play a key part for foreign asset managers, regardless of what’s said about these platforms in other countries. WeChat is important for reaching mainland Chinese investors, but independent financial advisers, bank intermediaries and financial media are also important. From our report, more and more investors are making use of WeChat to look for corporate and thought leadership information from asset managers. To excel in this area, asset managers need to consider tailored content, gamification and multimedia content to entice investors’ interest and trigger a call for action. 

The value of financial media remains strong among investors in mainland China. There is still a strong appetite for investors to seek more reliable and better-sourced financial information, which is good news for financial news services. Communications professionals need to think through what content they can cascade through financial media outlets that differ from their owned social channels. 

Equally important is the need for transparency in communicating with investors. Amid signs of growing competition among overseas and local asset managers, foreign firms will need the ability to communicate the merits of being a foreign asset manager, along with the unique qualities that they bring to the mix.

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