By David Drake
(Note: This article is the fourth in a series on Global Trends in Family Offices Investments.)
The demand for family offices is gradually increasing in China. The estimated number of Chinese billionaires is 4,000, and the number has been gradually increasing over the last few years. Chinese billionaires are generating wealth all over the world and are therefore looking for family offices that will help them manage their wealth efficiently and pass their fortunes on to their children.
Despite boasting one of the fastest growing billionaire populations, the idea of family offices has not been fully embraced in China, leaving a large gap in the market. Chinese billionaires have been going to foreign countries like Singapore and the US to seek family office services. China currently lacks family offices that combine asset management, tax planning, and progression planning.
Some of China’s biggest organizations such as Ping An Insurance, Bank of China, and Noah Wealth Management are already structuring family offices and trusts. In June 2014, UBS Wealth Management organized an event in Shanghai to discuss family legacy and generosity. Those seeking to establish family office services in China face many challenges including exchange rate limitations and the restriction of some varieties of financial products. Beijing is also contemplating whether to institute estate taxes. Along with concerns over political stability and language barriers, many Chinese and Asian billionaires feel safer seeking family offices in Singapore.
While there are certainly real risks and challenges to entering the family office market in China, the continued rise in the number of billionaires and billionaire families makes it a prime target for investment. The historical lack of family offices in China means there is a massive gap in the market just waiting to be filled.
Note: This article originally appeared in the first issue of Family Offices Today.
David Drake is the Chairman of LDJ Capital, a multi-family office; Victoria Partners, a 300 family office network; LDJ Real Estate Group and Drake Hospitality Group; and The Soho Loft Media Group with divisions Victoria Global Communications,Times Impact Publications, and The Soho Loft Conferences. Reach him directly at David@LDJCapital.com.