---
title: China Focus
description: This report provides analysis of China's private fund market and it's participants
image: https://blog.grainstonelee.com/hubfs/li-yang-5h_dMuX_7RE-unsplash-1.jpg
---
- [About](https://www.grainstonelee.com/about-us)
- [Candidates](https://www.grainstonelee.com/candidates)
- [CLIENTS](https://www.grainstonelee.com/clients)
- [Insights](https://blog.grainstonelee.com/insight)
- [Contact Us](https://www.grainstonelee.com/contact-us)
- [About](https://www.grainstonelee.com/about-us)
- [Candidates](https://www.grainstonelee.com/candidates)
- [CLIENTS](https://www.grainstonelee.com/clients)
- [Insights](https://blog.grainstonelee.com/insight)
- [Contact Us](https://www.grainstonelee.com/contact-us)
China Focus
[BACK TO BLOG](https://blog.grainstonelee.com/insight)
In this edition of China Focus we analyse the different options for overseas firms to set up in China and more specifically the China's Private Fund Market and it's participants.
**China Update**
There have been no new foreign entrants in the Chinese private fund market since our [last update](https://blog.grainstonelee.com/insight/which-hedge-funds-are-growing-in-china) in November. In fact the only movement involved Blackrock deregistering their private fund vehicle. This did not however herald a retreat from the worlds largest asset manager as Blackrock has become the first WFOE (Wholly Foreign Owned Enterprise) to be awarded a Public Fund Licenses. This will enable them to tap into the £3.3 trillion retail fund market.
This is a good opportunity to describe the different vehicles available for foreign firms looking to set up a fund presence in China.
Investing Onshore:
**Fund Management Company (Public Fund)** – This entity allows you to do almost everything in China including mutual funds for Chinese retail investors. No wonder Fidelity, Neuberger Berman and Schroders are reportedly trying to follow Blackrocks lead.
**Securities Company** – Regulated by the CSCR (China Securities Regulatory Commission) this entity is for Investment Bank activities (M&A, IPO) and Sales & Trading (brokerage, market making, short selling etc).
**Private Securities Investment Fund Manager (Private Fund Manager)** – Regulated by AMAC this entity is specifically for Alternative Investments in China (Private equity, VC, Hedge Fund). Domestic Institutional investors only.
Investing Offshore:
**Qualified Domestic Limited Partnership (QDLP)** – Regulated by AMAC this entity is for funds that want to invest in overseas securities. Domestic Institutional Investors only and subject to caps and quotas.
**Qualified Foreign Limited Partner (QFLP)** – Similar to QDLP however focus is on overseas private equity investments. Open to offshore as well as domestic Institutional Investors and subject to a different set of caps and quotas.
There are other avenues open for cross border investments which include:
**QFII (Qualified Foreign Institutional Investor)** – A license for foreign institutional investors to invest directly in mainland securities. Subject to limits on holdings.
**StockConnect** – There are currently three “connections” between
- Shanghai – Hong Kong
- Shenzhen – Hong Kong
- Shanghai – London
- - The platforms offer access to mainland stocks via Global Depositary Receipts.
- **Bond Connect** – Offshore (HK) platform allowing overseas institutions to invest in mainland bonds.
- **CIBM Direct** – same as above however account opening, trading and settlement is onshore so requires a local partner.
- **Qualified specific types of commodity futures** – China is opening up their futures markets with specific contracts in agriculture, oil and metals now available to trade through a local broker or through the QFII scheme.
-
**Private Funds**
Private funds can be broken down into three basic groupings:
The majority of WFOE Private funds fall into Private Equity / VC type investments. This report however is going to focus on the Private Equity Securities firms (hedge fund type firms that trade on exchange and can only raise money from institutional investors).
Registered Capital
Excluding Blackrock, the total registered capital across the 31 WFOE PFM firms we analysed in November 2020 was $365 ml. This has grown slightly to $ 398.5 ml with UBS, Fullerton, Eastspring, Two Sigma, Income Partners and William O’Neil increasing the Registered Capital.
Paid up Capital
Paid up capital also increased from a total of $277ml to $320ml with large increases from Bridgewater and Eastspring Investments. Interesting UBS actually cut their paid up capital from$32ml to $27.5ml.
Employees
The number of investment staff across the 31 firms stood at 426 in Nov 2020. This has increased across the board with Fidelity leading the charge adding 43 new investment professionals bring the grand total of investment staff to 543.
Conclusion
It's unsurprising that there are no new entrants to the domestic fund market given the recent turmoil. It's also a highly competitive market with over 3,500 private funds registered with AMAC. Unless you're Blackrock, becoming a brand name in the domestic market is going to be difficult. However as Chinese markets open up, that local experience and insight will be invaluable.
Fortune favours the brave so good luck to the PFM 32 !!
### Don’t miss an update.
SUBSCRIBE TO OUR NEWSLETTER
### Subscribe To Our Newsletter
Unlock your potential
[Get in touch](https://www.grainstonelee.com/contact-us)
### address
Grainstone Lee Limited, 20 St Thomas Street, London, SE1 9RS
### number
+44 (0) 203 478 1898
### email
info@grainstonelee.com
### Social media
© 2020 Grainstone Lee Ltd. All rights reserved.
- Privacy Policy
### Privacy Policy
###### Grainstone Lee Limited Privacy Policy
###### This privacy policy will explain how our organisation uses the personal data we collect from you when you use our website.
Topics:
- What data do we collect?
- How do we collect your data?
- How will we use your data?
- How do we store your data?
- Marketing
- What are your data protection rights?
- What are cookies?
- How do we use cookies?
- What types of cookies do we use?
- How to manage your cookies
- Privacy policies of other websites
- Changes to our privacy policy
- How to contact us
- How to contact the appropriate authorities
**What data do we collect?**
Grainstone Lee Limited collects the following data:
- Personal identification information (Name, email address, phone number, etc.)
**How do we collect your data?**
You directly provide Grainstone Lee Limited with most of the data we collect. We collect data and process data when you:
- Register online, apply for a job or submit any other forms
- Voluntarily complete a customer survey or provide feedback on any of our message boards or via email.
- Use or view our website via your browser’s cookies.
**How will we use your data?**
Grainstone Lee Limited collects your data so that we can:
- Provide recruitment services and manage your account
- Email you with special offers, content and services we think you might like.
**How do we store your data?**
Grainstone Lee Limited securely stores your data at Suite 3, Third Floor, Roxby House, 20 – 22 Station Road, Sidcup DA15 7EJ.
Grainstone Lee Limited will keep your data for 6 months unless it is in your best interest for us to keep this longer, for example if we are processing an application for you. Once this time period has expired, we will delete your data from our systems.
**Marketing**
Grainstone Lee Limited would like to send you information about products and services of ours that we think you might like.
If you have agreed to receive marketing, you may always opt-out at a later date.
You have the right at any time to stop Grainstone Lee Limited from contacting you for marketing purposes.
If you no longer wish to be contacted for marketing purposes, please click [here](https://hs-4648117.s.hubspotemail.net/hs/manage-preferences/unsubscribe-test?d=VndxG37Zm3_CVWbyV-3zgDK_W3SYM003P6jZDW3K1LY33Qz6XDW3_fymH15gBJzW6R2ZdT6r9pWdW6G5VBg59p51gN89K80zWCp1QN7QpczPXk_7QVbw6sK1zSn3PW4CqGtw4l6bgVw6PMmFtmDQ2&v=3&utm_source=hs_email&utm_medium=email&utm_content=2&_hsenc=p2ANqtz-__cRcA7VOacblos76RUspmQkPU4wlz6nM1Ymxc_LM1NNM2QPTgrCKjn4rakxwhB_c89-B91hMjsPqG-kSD6SdWXiKRow&_hsmi=2).
**What are your data protection rights?**
Grainstone Lee Limited would like to make sure you are fully aware of all of your data protection rights. Every user is entitled to the following:
**The right to access** – You have the right to request Grainstone Lee Limited for copies of your personal data.
**The right to rectification** – You have the right to request that Grainstone Lee Limited correct any information you believe is inaccurate. You also have the right to request Grainstone Lee Limited to complete the information you believe is incomplete.
**The right to erasure** – You have the right to request that Grainstone Lee Limited erase your personal data, under certain conditions.
**The right to restrict processing** – You have the right to request that Grainstone Lee Limited restrict the processing of your personal data, under certain conditions.
**The right to object to processing** – You have the right to object to Grainstone Lee Limited’s processing of your personal data, under certain conditions.
**The right to data portability** – You have the right to request that Grainstone Lee Limited transfer the data that we have collected to another organization, or directly to you, under certain conditions.
If you make a request, we have one month to respond to you. If you would like to exercise any of these rights, please contact us at our email: [s.grainger@gslsearch.com](mailto:s.grainger@gslsearch.com)
Call us at: +44 20 3478 1898
Or write to us: Suite 3, Third Floor Roxby House, 20-22 Station Road, Sidcup, DA15 7EJ.
**Cookies**
Cookies are text files placed on your computer to collect standard Internet log information and visitor behaviour information. When you visit our websites, we may collect information from you automatically through cookies or similar technology
For further information, visit allaboutcookies.org.
**How do we use cookies?**
Grainstone Lee Limited uses cookies in a range of ways to improve your experience on our website, including:
- Keeping you signed in
- Understanding how you use our website
**What types of cookies do we use?**
There are a number of different types of cookies, however, our website uses:
- Functionality – Grainstone Lee Limited uses these cookies so that we recognize you on our website and remember your previously selected preferences. These could include what language you prefer and location you are in. A mix of first-party and second-party cookies are used.
- Advertising – Grainstone Lee Limited uses these cookies to collect information about your visit to our website, the content you viewed, the links you followed and information about your browser, device, and your IP address.
**How to manage cookies**
You can set your browser not to accept cookies, and the above website tells you how to remove cookies from your browser. However, in a few cases, some of our website features may not function as a result.
**Privacy policies of other websites**
The Grainstone Lee Limited website contains links to other websites. Our privacy policy applies only to our website, so if you click on a link to another website, you should read their privacy policy.
**Changes to our privacy policy**
Grainstone Lee Limited keeps its privacy policy under regular review and places any updates on this web page. This privacy policy was last updated on 30 March 2020.
**How to contact us**
If you have any questions about Grainstone Lee Limited’s privacy policy, the data we hold on you, or you would like to exercise one of your data protection rights, please do not hesitate to contact us.
Email us: [s.grainger@gslsearch.com](mailto:s.grainger@gslsearch.com)
Call us at: +44 20 3478 1898
Or write to us: Suite 3, Third Floor Roxby House, 20-22 Station Road, Sidcup, DA15 7EJ.
**How to contact the appropriate authority**
Should you wish to report a complaint or if you feel that Grainstone Lee Limited has not addressed your concern in a satisfactory manner, you may contact the Information Commissioner’s Office.
Email us: [s.grainger@gslsearch.com](mailto:s.grainger@gslsearch.com)
Or write to us: Suite 3, Third Floor Roxby House, 20-22 Station Road, Sidcup, DA15 7EJ.