by LIU Chenguang
China's ongoing financial reforms and expanding market access are creating fresh opportunities for foreign institutions. According to a report released by Ernst & Young, China has accelerated its pace in banking, insurance, securities, and asset management, leading to increased foreign investment, revenue growth, and business expansion.
Allianz Investment, a subsidiary of Europe's largest insurance and asset management group, Allianz, has deepened its footprint in China. In April 2024, its wholly foreign-owned mutual fund, Allianz Fund, commenced operations, launching its first public offering in August. The company later doubled its registered capital to 6 billion yuan (US$830 million) in December. Additionally, Allianz Investment became the first foreign shareholder of Guomin Pension, acquiring a 2 percent stake for 284 million yuan.
What drives Allianz's strategic moves in China? How does the company view China's financial market? And how does it plan to tailor investment strategies to the local landscape? Jiemian News spoke with Desmond Ng, CEO of Allianz Investment Asia-Pacific and Chairman of Allianz Fund, to gain insight.
Jiemian News: When did Allianz Investment enter China, and how has its strategy evolved?
Ng: Allianz Group began operating in China in the early 1900s, making it one of the first foreign insurers in the market. Allianz Investment started allocating to China-related assets in the 1990s and has since become one of the largest global managers of overseas A-share funds. In 2006, we were selected as a manager for China's National Social Security Fund.
We established a wholly foreign-owned enterprise in Shanghai in 2017, obtained a Qualified Domestic Limited Partner (QDLP) license in 2018, and continued expanding. With a population of 1.4 billion and growing household wealth, China's asset management market presents vast opportunities, particularly in wealth and pension planning. The government's pro-market policies have further reinforced our confidence in long-term growth.
The launch of Allianz Fund in 2024 was a key milestone. Although China's stock market faced headwinds at the time, our investment team saw it as an opportunistic timing. Our first public fund was launched last year and has so far performed well.
At the same time, we are engaging in China's pension sector. Becoming the first foreign shareholder in Guomin Pension underscores our belief in the market’s long-term potential. With our global expertise in risk management, product development, and asset allocation, we aim to contribute to innovative pension solutions tailored for Chinese retirees.
Jiemian News: China has been opening its financial markets at an accelerated pace. How has Allianz Investment benefited, and what role do foreign institutions play in this process?
Ng: The progress has been remarkable. The relaxation of market entry rules has made it easier for foreign institutions to participate, promoting a more dynamic and diversified financial sector.
For us, this shift has fuelled growth in multiple areas. Our QDLP business saw a significant expansion in 2024, making Allianz one of the top six QDLP managers. We also broadened our distribution channels to include banks, securities firms, and wealth management platforms, giving Chinese investors access to our global investment strategies.
Our mutual fund business has also thrived. Allianz Fund went from application to approval in just over a year – a testament to China's improving regulatory efficiency. Within five months of establishment, we launched our first product, and a second fund is already in the pipeline. Our goal is to bridge Chinese investors with high-quality global assets while offering international investors a gateway into China’s market.
Jiemian News: The phrase "high-level opening-up" was a key theme in China's 2024 government report. From a foreign institution's perspective, how do you interpret this?
Ng: To us, "high-level opening-up" means aligning with international standards, streamlining market entry, and lowering barriers for foreign investors. It also includes fostering financial innovation and cross-border collaboration, leading to a more globally competitive financial sector.
For foreign institutions, this environment not only creates more investment opportunities but also sets a higher bar for market adaptability and expertise. Allianz's investment in Guomin Pension is a perfect example of this openness in action.
The expansion of China's private pension system is another key development. Since December 2023, all workers enrolled in urban or rural pension schemes can now participate in personal pension accounts, marking a nationwide rollout. We're honored to be part of this transformation and look forward to providing diversified and accessible retirement solutions for Chinese citizens.
Jiemian News: Allianz has extensive experience in pension investment worldwide. How do you adapt these models for China, and how do you manage investment risks?
Ng: While Europe, particularly Germany, has a mature pension market, China's unique demographic and economic landscape requires tailored solutions. Simply replicating foreign models isn’t viable. Instead, we focus on understanding local market needs, strengthening distribution channels, and enhancing investor education. This approach not only raises awareness about retirement planning but also helps investors recognize the long-term value of pension products.
On risk management, we have a well-established framework that includes strict corporate policies, ongoing portfolio monitoring, and timely strategy adjustments. Our investment team leverages proprietary research and extensive data analysis to gain a competitive edge. Being ahead of trends is crucial in capturing new market opportunities, and our global research platform allows cross-team collaboration to enhance decision-making.
Jiemian News: As China's financial market continues to open, what new opportunities and challenges do foreign institutions face? How can they differentiate themselves?
Ng: China's commitment to high-level market access provides foreign financial firms with broader investment avenues and a larger investor base. Government policies supporting economic stability and technological innovation further enhance market potential.
However, with more players entering the market, differentiation is key. Rather than competing solely on similar products, foreign firms must leverage their expertise in active investment management, global asset allocation, and specialized financial services. At Allianz, we focus on long-term value creation, robust risk management, and innovation to offer distinct advantages in China's evolving financial landscape.
