China’s affluent individuals are increasingly shifting focus toward overseas business investments, seeking opportunities beyond the mainland as domestic economic growth slows. Asset managers and consultants note that this trend is no longer solely about investment returns but is now driven by a desire to expand businesses globally.
Ryota Kadogaki, co-founder and global CEO of Monolith, a Japan-based consulting firm, highlighted the growing interest of Chinese family offices in acquiring smaller businesses in Japan. He attributed this trend to China’s slower growth and the depreciation of the Japanese yen. Despite some recovery, the yen remains weaker than in 2020, making Japanese investments more attractive to Chinese investors.
Between January and July 2023, non-financial direct investments by Chinese investors overseas rose by 16.2% to $83.55 billion, covering over 6,100 businesses in 152 countries, according to China’s Ministry of Commerce. This surge in global expansion is driven by Chinese entrepreneurs seeking to diversify amid domestic market pressures.
Grant Pan, CFO of Noah Holdings, a China-based wealth management firm, explained that many affluent Chinese clients are actively exploring global opportunities. Noah Holdings reported a 23% increase in its overseas registered clients as of June, with overseas assets under management rising by nearly 15% year-on-year to $5.4 billion. In contrast, domestic assets under management dropped by over 6%.
Kadogaki observed that Chinese investors are increasingly using business acquisitions as a means to transfer capital abroad, with some moving from tech investments to sectors like retail in Japan. His company recently partnered with Singapore-based wealth management software firm Canopy to facilitate Chinese investments in Japan.
Mu Chen, executive director at Canopy, noted that the interest in overseas expansion began post-COVID and has now become a more strategic and rational approach for Chinese families, using Hong Kong or Singapore as global bases.
This trend reflects a broader shift in Chinese wealth management, with families and businesses looking to expand their global footprint, moving away from traditional strategies like exporting goods or purchasing overseas real estate.
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