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China Gives License To BlackRock To Start Mutual Fund Business There


06/11/2021


China Gives License To BlackRock To Start Mutual Fund Business There
Chinese authorities have granted permission to start its business in the country as Beijing starts to open up its $3.5 trillion industry. That makes BlackRock the first global asset management company to start business in China as a wholly-owned onshore mutual fund company.
 
Approval to start the operation to its Chinese fund management unit was given to it by the China Securities Regulatory Commission (CSRC), BlackRock said on Friday.
 
"China is taking significant steps in opening up its financial markets," BlackRock Chairman and Chief Executive Officer Larry Fink said in a statement. "We look forward to sharing our global investment expertise and offering more differentiated investment solutions to Chinese investors," the company added.
 
Foreign ownership curbs in the companies in China’s mutual fund and securities sector were removed by Chinese authorities last April as a part of the trade deal made between Beijing and Washington.
 
Applications for setting up wholly-owned mutual fund business in China have also been submitted by a number of other global asset managers, including Fidelity International, Neuberger Berman and Schroders.
 
It was a month ago that BlackRock was also granted a licence for a majority-owned wealth management venture in the country by Chinese authorities. A minority stake in a mutual fund venture with Bank of China is also owned by the United States based fund management giant.
 
BlackRock said on Friday that with the approval from the Chinese regulatory authorities, BlackRock is now well placed to expand the breadth of its products and services and investment insights it offers in the country and can approach all client segments throughout the market. 
 
Susan Chan, BlackRock's head of Asia, said in the statement that there has been significant growth in China’s domestic asset management industry in recent years because of massive economic development of the country as well as greater accumulation of wealth in the second largest economy of the world.
 
"We are eager to play our part in helping to make investing easier and more affordable" in China, the company said in the statement.
 
Earlier in March this year, the global asset manager had de-registered a private fund unit in Shanghai in its preparations to launch its mutual fund business in China.  This de-registering was done voluntarily by BlackRock of its wholly foreign-owned enterprise (WFOE) unit in Shanghai.
 
In August last year, the company had also become the first global asset management firm to be given regulatory approval by China for setting up a mutual fund unit in the country and was given a six month period for establishing the business.
 
But the Chinese market is very crowded as there are 147 firms who together offer 8,202 mutual fund products. Its plans for obtaining a mutual funds licence in China was dropped by the Vanguard Group earlier this month as it argued that the market was very crowded.
 
Its WFOE was registered by BlackRock in late 2017 and launched itself as a platform for launching private funds locally. After China’s full deregulation of its mutual fund market, the business was deemed non-essential.
 
(Source:www.businesstimes.com & www.reuters.com)


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