A number of foreign firms have established JVs to tap into the world’s second-largest economy. It is one of the main ways for them to do business in mainland China.

Morgan Stanley Investment Management has won approval from the China Securities Regulatory Commission to take a full controlling stake in Morgan Stanley Huaxin Funds.

The move is subject to business registration and other procedures required by Chinese regulatory entities, the US firm said in a statement last Friday. When complete, Morgan Stanley will have 100 per cent ownership of the business, from 49 per cent.

Based in Shenzhen, Morgan Stanley Huaxin Funds became a joint venture in June 2008.

Several other firms, such as Manulife Asset Management, the asset management arm of Canada’s Manulife Financial, have taken full control of Chinese JVs. In 2020 Goldman Sachs agreed to buy its China joint venture partner. A number of foreign firms have established JVs to tap into the world’s second-largest economy and the structure remains one of the main ways in which Western organizations are able to do business in China.

“Wholly-owning our China mutual funds business will allow us to more fully serve this dynamic asset and wealth management market and adds a significant pillar of growth to our global investment management franchise,” Dan Simkowitz, head of investment management at Morgan Stanley, said. 

Gokul Laroia, CEO of Asia at Morgan Stanley, said: “The firm has been active in China for almost three decades and we are committed to our goal of building a fully-integrated financial services firm to meet the evolving needs of domestic and global clients. With high levels of wealth creation, growing demand for financial advice, and with the launch of a private pension scheme, we see long-term opportunities in China’s asset management industry.”

Morgan Stanley’s business provides diversified investment management services to retail and institutional clients through mutual funds and segregated management accounts, including fixed income, active equity, quantitative equity, and multi-asset investment.

In November 2020 Union Bancaire Privée, the Geneva-based private bank, announced that its wholly foreign-owned enterprise in China, UBP Overseas Investment Management (Shanghai), had partnered with Idinvest Partners, a European private equity firm and a subsidiary of global investment company Eurazeo. Amundi, the European asset management giant, and China’s BOC Wealth Management, won a license to operate a joint venture in China in 2020. In February 2021 UK-listed Schroder Investment Management won regulatory clearance to set up a joint venture in Shanghai.

A Cerulli Associates report has pointed out the growth potential of such ventures.