05/28/2021

On May 25, the US financial giant Goldman Sachs announced its plan to partner with China's largest commercial bank, Industrial and Commercial Bank of China (CBC), to establish a wealth management joint venture in China. The joint venture will offer a broad range of asset management products to domestic investors and savers in China, after receiving approval from the China Banking and Insurance Regulatory Commission, according to a press release from the US financial group.

Goldman Sachs Asset Management will hold 51 percent of shares of the joint venture and ICBC Wealth Management Co Ltd, a subsidiary of ICBC, will hold 49 percent, it said.

The move aims to create a world-class asset management company, combining Goldman Sachs Asset Management's expertise in investment and risk management with ICBC's strong brand recognition and unparalleled access to retail and institutional clients across China, according to Goldman Sachs.

Quantitative investment strategies, cross-border products and innovative solutions in alternatives will be on the joint venture's investment product list. Investable assets held by Chinese households are set to surpass $70 trillion by 2030, with about 60 percent to be allocated to non-deposit products, including securities, mutual funds and wealth management products, according to Goldman Sachs Global Investment Research.

Goldman Sachs seeks to hire more than 400 employees in China, Hong Kong to further expand its presence in the world’s second-biggest economy.

In December 2020, Goldman reached an agreement with its Chinese partner Beijing Gao Hua Securities to take 100 per cent control of its mainland joint venture . It is waiting on final approval from regulators to complete the deal. The joint venture was started in 2004, Goldman has operated in the Chinese capital markets since the 1990s.

Goldman employed 40,500 people at the end of last year, with 28 per cent of its staff in Asia, according to its annual report . Asia accounted for 14 per cent of Goldman’s revenue in 2020, or US$6.2 billion, and 3 per cent of its pre-tax profit, or US$419 million. Goldman hoping to take advantage of rising incomes and future growth in China, financial services companies, from banks to asset managers, are rapidly expanding their boots on the ground and increasing control over their existing partnerships in the mainland, particularly in the Greater Bay Area.