The common practice of sharing fees in China can be traced back to 2008’s bear market, when fund houses had to sacrifice revenue to incentivise banks to sell their products,
Paying higher fees still has its merits for new entrants like BlackRock, which needs distributors to tout its biggest selling point -- being a globally renowned asset manager -- to more investors, according to Lu Haiyang, vice president of Xin Hu Wealth. BlackRock’s ratio will likely stay high for the near term when the US manager launches new products, Lu added.The BlackRock China New Horizon Mixed Securities Investment Fund, which raised 6.
Not using distributors is also costly. It takes at least 1 billion yuan in outstanding fund sales for a direct-selling entity to break even, and it’s getting more expensive to attract new clients online, according to Zhou Xiaojie, a marketing director at Shenzhen Dollar Technology, which advises money managers.
“While this year’s market has been incredibly challenging, BlackRock’s progress in establishing its platform, launching funds and building capacity in China will set it up for significant growth over the long term,” said Susan Chan, the firm’s head of Greater China.China’s asset management market provides “huge room” for growth to both local and foreign managers, said Eddy Wong, chief executive officer of China International Fund Management, JPMorgan’s fund joint venture.
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