Product Description
Introduction
A rising tide of affluence has made China a key market for major international wealth managers. The recent opening of the market to foreign players and birth of the onshore private banking industry has lured in banks tantalized by the market' s potential. New entrants face stiff competition from local institutions and so must quickly understand the demands and motivations of the local HNW client.
Features And Benefits
• Build your customer targeting strategy using in-depth HNW demographics and needs analysis based on Datamonitor' s annual Global Wealth Manager Survey
• Assess your competition through detailed profiles of notable players, including the customer targeting, marketing and product strategies they employ.
• Size your potential client base using Datamonitor' s proprietary data, presenting the number of affluent individuals by liquid asset band to 2014.
Highlights
In China, the sheer size of the numbers is only half the story; the rate of growth is also impressive. The increase in the number of affluent Chinese in 2010 was estimated to have been, once again, double-digit. It is the continued rapid expansion of the market for affluent individuals that has many foreign banks eager to set up locally.
Entrepreneurship is by far the top source of wealth for HNW individuals in China, reflecting a trend seen across the Asia Pacific region. The share within China is much higher than is typical for the region, however, with earned income featuring quite low compared to the regional average.
Wealth managers that have moved into China have typically long been in the region and see the Greater Chinese market as their natural home. Those players that have taken the plunge include Citibank, which was one of the first to set up a private bank in the country, BNP Paribas, HSBC, Société Générale, Standard Chartered, and UOB.
Your Key Questions Answered
• What strategies are my competition employing to win and keep affluent clients?
• What market share do the leading domestic private banks have among the onshore HNW population?
• What is the potential market for a private banking or mass affluent proposition in China?
• What are the most effective acquisition techniques that I should use to build up my client base?
Table of Contents
Executive Summary
The affluent market in China has expanded rapidly and is forecast to continue growing
The number of affluent individuals in China has grown considerably in just a short period of time
The number of millionaires in China is set to double over the next four years
The HNW Chinese investor is typically a young entrepreneur
Most HNW individuals in China are between 31 and 50 years old, making retirement products a tough sell
Women account for a significant proportion of HNW individuals in China, unlike in the rest of Asia Pacific
The majority of HNW individuals have amassed their fortunes through entrepreneurship
The market is becoming crowded as foreign and domestic players set up private wealth management operations
New entrants to the market have raised the profile of wealth management in China
The major domestic banks have all established private banking operations
ICBC and the Bank of Communications are the market leaders in terms of the size of their private banks
OVERVIEW
Catalyst
Summary
Methodology
SIZING AND FORECASTING THE AFFLUENT MARKET IN CHINA
Introduction
Macroeconomic overview
Recent trends and performance
GDP
Real GDP growth
Inflation
Long-term and short-term interest rates
Stock market capitalization
Regulation of wealth management in China
Key institutions and players
Industry associations
Recent legislation and regulatory developments
Efforts by the government to de-risk the banking system may contribute to a focus on wealth management
The CBRC has announced plans to expand the wealth market to smaller fund managers
Sizing the onshore affluent population
The number of affluent individuals in China has grown considerably in just a short period of time
The number of dollar millionaires in China continues to expand
The asset value of the mass affluent population has grown dramatically since 2008
HNW assets are now the highest they have ever been in China
Forecasting the Chinese onshore affluent market
The mass affluent market is expected to continue its robust growth
The number of millionaires in China is set to double over the next four years
Asset values will likewise see substantial growth over the forecast period
The wealth of the HNW individuals in China will total $4.4tn in 2014
The offshore market is tightly controlled in China and relatively new
The QFII program has been the only means of investing in Chinese financial assets
Private banking in China for individual offshore investors is non-existent
The QDII quota is more than three times larger than the QFII
HIGH NET WORTH CUSTOMERS IN CHINA
The HNW Chinese investor is typically a young entrepreneur
Most HNW individuals in China are between 31 and 50 years old, making retirement products a tough sell
Women account for a significant proportion of HNW individuals in China
The majority of HNW individuals have amassed their fortunes through entrepreneurship
Chinese HNW individuals have a diversified investment portfolio allocation
In broad asset class terms, Chinese HNW individuals have the largest proportion of their portfolios in real estate
Detailed asset class analysis shows Chinese HNW individuals have invested most in equities and closed real estate funds
Within two years, alternative investments will see the biggest reallocation in Chinese HNW portfolios
There is a high demand for financial planning among Chinese HNW individuals, but credit cards are set to become increasingly important
Cash management and credit are critical services that wealth managers need to offer to entrepreneurial Chinese clients
Chinese HNW individuals currently have a strong appetite for discretionary asset management, and execution-only services will see growing demand
Chinese HNW individuals show a higher demand for credit to support their investment strategies, and credit card demand will grow the most
When financial planning is available, Chinese HNW clients show a strong and enduring demand
Chinese HNW individuals are relatively financially innocent and disengaged customers
Chinese HNW individuals are less experienced and adventurous in their investment strategies than the rest of Asia Pacific
Chinese HNW clients place little premium on connectivity to their wealth management provider
Apathy appears to be a significant factor behind Chinese HNW individuals' attitudes to wealth management
Chinese HNW individuals tend to spread their wealth across more managers than is the case in the rest of Asia Pacific
The majority of Chinese HNW individuals hold between a third and half of their liquid wealth with one manager
Referrals are the most effective means of customer acquisition
COMPETITOR DEVELOPMENTS IN CHINESE WEALTH MANAGEMENT
Introduction
Business models of Chinese wealth managers are extremely varied
The banking and investment sector as a whole is dominated by the big government-backed banks
The Chinese wealth management market is dominated by the banks
Major trusts also play a smaller role in managing and investing the money of wealthy individuals
Competitor trends
New entrants to the market have raised the profile of wealth management in China
Key competitors in Chinese wealth management
Competitor overview
The major domestic banks have increased their share of the private banking market even as it has grown
Competitor profiles
Bank of China
Bank of Communications
China Merchants Bank
CITIC Bank
ICBC
Appendix
Supplementary data
Definitions
High net worth (HNW)
Liquid assets
Mass affluent
Measures of growth
Onshore
Methodology
Overall methodology
Global Wealth Model
Global Wealth Managers Survey 2011
Selected bibliography
[Missing title]
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
