Opportunities in China for Foreign Asset Manager

A legal update from Dechert’s Financial Services Group has focused on describing opportunities for foreign asset managers in China, currently the third-largest economy in the world.

An overview of the market and market opportunities for asset management in China is followed by a description of the formation and structure of joint venture fund management companies (the type of legal structure through which foreign asset managers may enter the market in the People’s Republic of China (“PRC”) and practical tips on the most effective way to establish such joint ventures.

Notwithstanding the recent severe global economic slow-down, China is on track to achieve its annual gross domestic product growth target of 8% thanks to a robust four trillion stimulus plan. Goldman Sachs has recently revised its forecast of China’s annual GDP growth upward to 8.3% for the current year and 13.5 % for 2010. The World Bank has raised its China annual GDP growth forecast for 2009 to 7.2%.
As a result of GDP growth averaging more than 10% per year for the past three decades, a middle class of over 300 million people has emerged in China. Middle class Chinese live predominately in tier 1 cities (namely Beijing, Shanghai, Guangzhou and Shenzhen) and the coastal regions. Household savings are estimated at approximately US$3.29 trillion and growing.