{"text":[[{"start":9.95,"text":"Global asset managers that struck out on their own in China after Beijing relaxed ownership rules have captured just 0.1 per cent of the market in five years, confounding the hopes pinned on the mainland’s mutual funds industry."}],[{"start":23.799999999999997,"text":"BlackRock, Fidelity, Neuberger, Allianz, AllianceBernstein and Schroders all set up wholly owned mutual fund businesses after China opened up the sector in 2020 and have invested about $800mn between them, data from consultancy Z-Ben Advisors shows."}],[{"start":40.05,"text":"But they have succeeded in attracting only Rmb34bn ($5bn) of the market’s Rmb36.5tn in assets as of the end of the first quarter, highlighting the scale of the challenge for foreign financial institutions that had banked on China opening up for future growth. "}],[{"start":57.9,"text":"“It’s just proving very tough going for those foreign players” with challenges from distribution to brand recognition, said Conal McMahon, senior consultant at Three Lions AWM Advisory."}],[{"start":70.6,"text":"Beijing permitted foreign firms to fully own their own mutual fund businesses shortly after a US-China trade deal struck late in President Donald Trump’s first term, though the relaxation had been flagged earlier."}],[{"start":82.1,"text":"But the firms have had to contend with worsening geopolitical relations between the US and China, as well as a climate of intense domestic competition and slower economic momentum."}],[{"start":94.35,"text":"The FT this month reported that Schroders would exit its mainland mutual funds business just three years after its launch. "}],[{"start":101.94999999999999,"text":"Schroders, which had Rmb1.7bn under management in China out of the $1tn it manages globally, has received permission from China’s securities regulator to transfer three of its funds and an investment team to Neuberger."}],[{"start":116.35,"text":"“Foreign firms have proven unfortunately incapable of adapting to the local rules of engaging and effectively competing locally,” said Peter Alexander, director at Z-Ben in Shanghai, though he added that Neuberger had done “relatively well” because “headquarters had provided a degree of autonomy”. "}],[{"start":134.04999999999998,"text":"“Essentially all of these companies have been throwing more money at the businesses,” he added."}],[{"start":139.24999999999997,"text":"The consultancy estimated that a mutual funds business needed assets under management of Rmb25bn ($3.7bn) to break even on operations. "}],[{"start":150.69999999999996,"text":"Of the six wholly owned businesses launched since China loosened its rules, Neuberger has more than Rmb14bn, BlackRock Rmb11bn and Fidelity International Rmb4bn, while the other three have much lower amounts, the Z-Ben data for the end of the first quarter show. BlackRock said the Rmb11bn figure did not include institutional mandates or capture the full picture of the funds under management. Neuberger said its total had risen to Rmb19bn after inflows last week."}],[{"start":183.24999999999994,"text":"Neuberger chief operating officer Andrew Komaroff told the FT that managers had been hit by woes in China’s property market just as they obtained their licences. The problems had “led to a market that was less favourable to scaling new equity strategies”, Komaroff said, although he added that there had been “a meaningful improvement in sentiment” over the past year."}],[{"start":204.59999999999994,"text":"Firms also operate alongside joint venture partners: Schroders will maintain a presence through joint ventures and said it “remains fully committed to China”, while BlackRock’s wealth management joint venture with China Construction Bank has about Rmb42bn of assets. "}],[{"start":220.09999999999994,"text":"Foreign asset managers that bought out their Chinese joint venture partners after years of collaboration, such as JPMorgan, Manulife and Morgan Stanley, have accumulated more assets under management than the new entrants at around Rmb373bn, or around 1 per cent of the total market. "}],[{"start":237.69999999999993,"text":"Fidelity International declined to comment, while Allianz said it saw “significant growth potential” in the country. AllianceBernstein did not respond to a request for comment."}],[{"start":247.49999999999994,"text":"With contributions from Cheng Leng in Beijing"}],[{"start":261.15,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780323481_3628.mp3"}