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American International Group (AIG) is forging into China's asset management business and is also looking for partners in the commercial banking sector.
Its fund management joint venture with China's Huatai Securities, AIG-Huatai Fund Management Co Ltd, is expected to open business in a couple of months in Shanghai, with both sides holding 33 percent stakes.
Joel Epstein, AIG Country Manager in China, said Wednesday in Beijing that the group continues to be confident with China's economic prospects and plans to go ahead with expansion moves in the country over the coming years.
Next year, AIG, in collaboration with Huatai Securities, intends to increase the ratio of stake in the fund venture to 49 percent, according to Epstein.
That is also the maximum ratio the Chinese authorities allow a single foreign company to hold in a fund management joint venture three years after China's entry to the World Trade Organization.
The timing of entering into the fund management industry in China does not presently look good, given the current stock market correction and mounting competition in the business, analysts said.
However, like many other foreign financial institutions, AIG is attracted by the long-term prospect of the Chinese market and the potential growth in the demand of high-quality professional asset management services, said Epstein.
The combination of AIG's international expertise and Huatai's local network and resources is expected to bring positive results, said Qi Liang, the awaiting chairman of the preparatory AIG-Huatai Fund Management and also vice-president of Huatai Securities.
Innovative products, sound internal control and a good corporate image will be the weapons the new venture will use to stand out in the highly competitive market, he said.
Apart from fund management, the new company will also look into opportunities in pension and other asset management businesses.
AIG signed a framework agreement with Shenzhen-based China Merchants Bank to co-operate on occupational pension management earlier this year and is awaiting more policy progress to make a concrete move in product development, said Desmond Chan, senior vice-president and regional director in Asia of AIG International Retirement Services.
Also included in AIG's blueprint for its China business is the plan to enter credit card and commercial banking sectors.
"AIG hopes to have a credit card business in China some day," said Epstein, adding that the market potential in some major cities like Beijing and Shanghai is good.
That will be achieved through partnership with a Chinese bank, he said.
AIG has talked with a number of Chinese banks on the issue, but Epstein said it is difficult to choose one now.
Epstein also said that AIG has been considering the possibility of purchasing a stake in a Chinese commercial bank, though no "concrete decision" has been made so far.
Meanwhile, for the group's traditional insurance business, he expects an annual growth between 30 and 40 percent.
(China Daily August 5, 2004)
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