Chinese tycoon and prospect of family offices in china
-
Upload
eva-law -
Category
Presentations & Public Speaking
-
view
440 -
download
0
description
Transcript of Chinese tycoon and prospect of family offices in china
![Page 1: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/1.jpg)
Capturing Chinese Wealth & Prospects of Family Office in China
Eva Law
2014-10-28
![Page 2: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/2.jpg)
Content
• The Status of Private Wealth & Family Office Markets
• Profile of Chinese Magnates
• Challenges Facing the Wealth Owners
• What Magnets really want?
• Prospect of Family Offices in Greater China
• What AFO & APB do to Foster Collaboration
• Bring Everyone On the Road to Success
![Page 3: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/3.jpg)
The Status of Private Wealth & Family Office Markets
![Page 4: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/4.jpg)
The Status of Private Wealth & Family Office Markets
• Global Snapshot of Private Wealth Markets
• China : AUM and no. of wealth are going up, reveals promising outlook
• Wealth management in Asia gains in stature, maturity
• Seasonal Trend in Family Office Market : Shifting focus to direct investment
• Constant Change in Family Office : Investment Behavior Evolves In New Generation
• Asia FOs gain momentum and Chinese family offices start to emerge
![Page 5: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/5.jpg)
![Page 6: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/6.jpg)
![Page 7: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/7.jpg)
![Page 8: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/8.jpg)
Top 25 HNWI Population Ranking
• China : Rank the 4th
• HNWI Population : Grow from
643,000 in 2012 to 758,000 in
2014. Annual Growth Rate : 17.8%
• HNWI Wealth: US$ 3.8 trillion.
Wealth also grew strongly by
20.5%
![Page 9: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/9.jpg)
Wealth Management in Asia Gains Stature
• access to a broader array of products and services
• stronger regulatory frameworks and market structures
• local wealth management firms began investing in talent &
capabilities
• two primary service models operating in Asia: a bank led model verse
an international private wealth model
![Page 10: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/10.jpg)
Seasonal Trend in Family Office Market : Shifting focus to direct investment
• Lift up allocation % to direct investment , see opportunities in other business and real estate
• FOs investing in PE are predominantly SFO & MFO with in-house investment management capabilities that seek a capital growth over a medium to long-term horizon.
• Allocate more in Asia, Western Europe, US, UK. Most of the FO investors are considering co-investments alongside FOs and PE firms.
Source : BCG Source : Investec
![Page 11: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/11.jpg)
Constant Change in Family Office : Investment Behavior Evolves In New Generation
![Page 12: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/12.jpg)
Profile of Chinese Magnates
![Page 13: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/13.jpg)
Profile of Chinese Magnets
Latest Trend
• Not just embracing family office concept, we see offices creation,
both SFO and MFO
• 2nd and 3rd generations step-in though some Chinese new generations
reject to continues the parent’s business
• Co-investment is common
![Page 14: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/14.jpg)
Profile of Chinese Magnets
Investment Profile
• Allocate More In Direct Investment
• More real estate and private equity
• Less in capital market
• Seek For Diversification
• Still biased on Asia Pacific
• Fond of several developed markets : North America, Australia, UK & Germany
![Page 15: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/15.jpg)
Interesting Fact about Wealthy Chinese & Asian
17,500 UHNWI in Asia having net investible assets of US $30 million. China
has 4,900 of these well-heeled people
Top Tier FOs in Asia : Average size of US$480 million in
assets under management & managing >US$20 billion private wealth
77% of family offices in Asia
reporting some form of philanthropic
1/3 family offices with
endowments of at least US$15 million, focusing on mainly education and healthcare
The Chinese wealthy entrepreneurs & owners of listed
companies aged between
50 to 70
Many of the wealthy families
in China have 1++ passports
![Page 16: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/16.jpg)
Challenges Facing the Wealth Owners
![Page 17: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/17.jpg)
Challenges the Magnets Facing
Shrink in Wealth
Some indicative
Stories
Fall of Business
Threat to Family Wealth
$ ¥ £
![Page 18: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/18.jpg)
Fall of Business
• The life cycle of Chinese firms is less than 20 years
• Not many have the luck to pass on the business to 2nd Generation
• When business passed on or the founder passed away, most of the
public firms experienced significant fall in share price
![Page 19: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/19.jpg)
Threats to Family Wealth
• Tax (US inheritance tax at 50%, China : expect to come, probably
high rate)
• Dissipation to multiple family members
• The failure of family business, its continuity and evolution
• Predators (e.g. bad advisors)
• Catastrophe (e.g. war, economic crisis, political incidents)
![Page 20: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/20.jpg)
Some indicative stories
• From the wealthiest to the bankrupted person, Solar King in China –
Story of Mr. Shi Zhengrong
• Fighting of Kam’s Family, Fall of the Famous Roasted Goose
Restaurant
• A Golfer, refusing to be the successor of a family corporation, Son of
Zhu Xinli, Huiyuan Group
![Page 21: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/21.jpg)
What Magnets really want?
![Page 22: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/22.jpg)
Hear the Guru’ says?
![Page 23: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/23.jpg)
Key Agenda Set up Firewall between Corporate & Family Assets
Continuity and Evolution of Family Business
Succession
Growth of Wealth
Individualized / Family Goals
![Page 24: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/24.jpg)
And What do the Magnets Need• Going Out : International / Regional Footprint
• Corporate Financing Solution
• Business Renovation
• Going Public / Privatization
• Philanthropy
• Prep the Future
Generation
• Family Enjoyment
• Passion Investment
Growing / Transforming their Business
Succession Management
Self Actualization
Life Style Pursuance
Wealth Management
• Wealth Transfer & Protection
• 2nd Generation Take-over
• Fire Wall between corporate &
family wealth
• Real Asset
• Financial Asset
• Lux Concept
• 2nd Home
Diversified Needs
![Page 25: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/25.jpg)
Business Life Cycle
Business
Family
![Page 26: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/26.jpg)
Prospect of Family Office in Greater China
![Page 27: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/27.jpg)
Growth of Asia Wealth
![Page 28: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/28.jpg)
Potential of Family Offices in China
Investable assets of UHNWI : RMB 88 Trillion in 2013
Hitting threshold of listing Forbes Billionaires : close to 500 known magnets
Advent of capital market & wave of wealth succession, high demand of FO services
1000 – 2000 FOs emerge in China in next decade
![Page 29: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/29.jpg)
Asia FOs gain momentum & Chinese FOs start to emerge
• Foreign Asset Managers set up offices in China
• Local wealthy clients consider setting up family offices to manage
their huge capital and wealth transfer to next generations
• We see local family offices will be found in China while still many
families want to establish their FOs in offshore wealth management
hub in Hong Kong or Singapore
![Page 30: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/30.jpg)
Operational Challenges of Family Offices
• Controlling Costs While Improving Efficiency
• Facing Staff Shortages to Build a Team with the Required Level of Expertise
• Growing Cross-Border Transaction Leading to Complexity in Managing Operations
• Demand for Transparency, International Investments and Growing number of
Asset Classes Increase the Complexity of IT Systems
![Page 31: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/31.jpg)
Controlling Cost While Improving Efficiency
• Staff Costs + Administrative Costs + IT Costs
• SFO : Not Cost Efficient
• MFO : Scale Required
• Action : Analyze Cost Structure, Streamline its Operation
• Lean FO model good for SFO and MFO
![Page 32: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/32.jpg)
Finding Right People
• The typical composition of FO : CEO, CFO, CIO, analysts, lawyers, accountants, controllers administrative staffs.
• Few family members work in FO but hard to trust people outside
• Competition from investment banks, private banks, hedge funds and investment boutique.
• Hard to find staff with the required level of expertise
• China – we need more• Need of going aboard• Becoming sophisticated• In adequate all-rounded Front Office Managers
![Page 33: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/33.jpg)
High Complexity in Operation
• Families are becoming more internationally located
• Family offices are increasingly managing investments in foreign countries
• Manage operations outside their home country
• Deal with complex taxation and legal systems involved in international
investments and cross-border transactions.
• Hire local talent to provide country-region-specific investment advice
• Require advanced IT systems for managing the complexity in operation
![Page 34: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/34.jpg)
Good Progress So Far
• The existing family offices founded in the past 2 decades run in good shape
• They have made significant progress in
• creating sustainable wealth management structures
• fostering important relationships
• The offices manage significant wealth, their average size of asset under
management is USD 480 million
![Page 35: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/35.jpg)
What AFO and APB do to Foster Collaboration
![Page 36: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/36.jpg)
Engage with Solution Providers & Professional
1. Real Asset• Property (Residential, Commercial, Agricultural, Land Development)
• Private Equity, Club Deal & Resources Mining
• Physical Commodities
2. Entrepreneur Solution• Listing, Offshore Incorporation, Investment Banking Services
• Financing, Accounting, Tax Advisory
• Due Diligence, Legal Services, Asset Valuation
• Business Consulting, BPO, Corporate Trust, Corporate Coach
3. Passionate Life• Jet, Yacht, Charter Services, Club
• Lift Style, Lux, Concierge, Ivy League, Education, Immigration
4. Private Wealth Management• Private Trust, Estate Planning, Wills, Succession Mgt
• PWM Education (Not offering financial products)
• Fund Set Up, Manager Selection, Portfolio Advisory
Solution Portal
Online Platform
Structured Interaction
Offline Events
![Page 37: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/37.jpg)
Strengthen the ties among the prestige circle
Industry Contribution
Industry Research and Survey
CFOS & Extension Courses MFO Founder Prep Course
Networking Event & Knowledge Foster Functions
Member Service
Club Deal Facilitation (Regular Private Party)
Platform Solution that support co-working
Customized Consulting Services using guru in the circle
![Page 38: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/38.jpg)
Supporting Family OfficesChallenge Faced by FOs Initiatives by APB & AFO
Controlling Costs While Improving Efficiency - Consulting Service For Out-scouring- Business Model & Process Review by Bureau Members
or Connected Industry Guru
Build a Team with the Required Level of Expertise - CFOS Program- MFO Founder Program & Start Up Consultation- Customized Training & Industry Exchange Program- Diversified Events For Knowledge Boost- Maintain a large talent pool in specialty bureau &
technical committees
Growing Cross-Border Transaction & Operation Complexity
- Cross Disciplinary Services by Platform Providers and Bureau & Technical Committee Members
- Cover : M&A, Financing, Legal, Tax, Compliance, Due Diligence, Valuation, Various Sector Specialists
Complexity of IT Systems - Technology Consulting Service by APB Platform Providers and Bureau & Technical Committee Members
- Cover : Data Aggregation, Accounting, Valuation, Global Trading, Company Management, ERM
![Page 39: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/39.jpg)
Strategies that Bring Everyone On the Road to Success
![Page 40: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/40.jpg)
Strategies that Bring Everyone to the Road of Success
Back Client’s Business
One Stop Shop?
No indifferent Customers
Reach out the plugged in connectors with Chinese Expertise
![Page 41: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/41.jpg)
Back Client’s Business
• Mantra : Back business, not investment
• Who is the customer ? The key man in family business, the
entrepreneurs
• Conversation all link to family business
• To gain trust, work on bottom line or the main thing the entrepreneur
desire first
![Page 42: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/42.jpg)
One Stop Shop?
To successfully develop decent solution that is contingent to
the unique and all-encompassing requirements of client,
One-size-fits-all approach doesn’t work
![Page 43: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/43.jpg)
No Indifferent Customers
• Within a family, there is founder and future bosses
• Their needs and requirements evolve
• Heterogeneous format of family offices
• Develop solution that is contingent to the unique requirements of
clients
![Page 44: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/44.jpg)
Reach out the plugged in connectors
• Target the trusted investment bankers, attorneys, accountants and
other plugged-in advisors who can help get you connected.
• APB – gather practitioners, offer solution and support
• AFO – gather SFO, MFO, VFO, society, facilitate co-investment
• Leverage AFO & APB for local insights & relationship
![Page 45: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/45.jpg)
Final Words
![Page 46: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/46.jpg)
• A business build on long term client relationships
• Demand understanding and responding to clients’ need
• Quality : unbiased advice, transparent, reliable and prudent
• Duty : Help client contain risk bearing in chasing return, Support client’s business and goal pursuance
• Chinese value flexibility and relationship much more than the western world
• Adapt to this culture, partner with local players or hire local staff to bring you advantages
![Page 47: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/47.jpg)
• To reach out the discreet SFOs, you need to leverage trusted bankers,
attorneys, accountants and other plugged-in advisors
• AFO & APB connects elites and ultra-affluence, we manage a platform that
accessed by industry practitioners and wealth owners for confronting new
relations & opportunities emerge around the world
• Members of APB link you to wealth owners.
• Members of AFO are SFOs and MFOs
![Page 48: Chinese tycoon and prospect of family offices in china](https://reader034.fdocuments.net/reader034/viewer/2022052600/557d4efad8b42a93078b50c5/html5/thumbnails/48.jpg)
Eva Law
• Profile : hk.linkedin.com/in/evalaw/• Email : [email protected]• Email : [email protected]• WeChat : APB-AFO
Association of Private Bankers in Greater China RegionAssociation of Family Offices in Asia
• HK Phone # : + 852 3499 3851• PRC Phone # : + 86 147 1433 4066• Correspondence : GPO Box 11666, Hong Kong Post Office• Email : [email protected] (APB)• Email : [email protected] (AFO)• URL : www.private-bankers.net (APB)• URL : www.familyoffices-asia.org (AFO)