Strategy & Practice Management
Evolving opportunities to service China's wealthy
Aug 30, 2016
Ray Chou of Bain & Company explains the growth in wealth in China, as well as discusses the expected developments of the opportunities both onshore and offshore, along with the evolving needs of the country's wealthiest individuals.
In general, the Chinese wealth management market has been growing rapidly in recent years.
This has been driven mainly by a combination of overall income growth as well as the structure of the levels of income, says Ray Chou, principal at Bain & Company.
First, he explains, the overall population of HNW individuals has been increasing dramatically.
The second key driver has been the penetration of the level of managed wealth within the country. “There has been a lot of development and innovation by local wealth mangers in China, which has effectively attracted local wealth,” he says.
Onshore opportunity
According to Chou, domestic Chinese markets remain the major investment focus and allocation for wealthy Chinese, despite the growing internationalisation of their investment strategy.
A lot of Chinese investors are still very self-directed in terms of where to invest, what to invest in, and how to invest.
At the same time, he adds that they are also becoming more and more sophisticated.
Offshore appetite
However, increasingly, they are allocating offshore and realise the value in actively investing in new markets, adds Chou.
When they do this, these investors look at different categories of investment. One of them, he says, is around real estate, stocks and other traditional assets. The other represents assets where they have less experience – such as derivatives and other non-standard products.
Evolving client needs
For HNW and UHNW clients in China today, Chou says they have shifted from a focus on investment returns towards wealth preservation and inheritance.
“[Wealthy Chinese] are also looking to wealth managers to provide services in these areas,” he explains.
Principal at Bain & Company
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