The three parties are entering into a long-term comprehensive co-operation in developing fund management business in China, and are considering setting up a joint venture fund management company, once policy, legal and other factors permit, to contribute to the development of China's capital markets, particularly the asset management market.
With China's imminent accession to WTO, many foreign securities companies have speed up the pace of their collaboration with Chinese partners. It is anticipated that China's fund management business will be open for foreign investment after China's accession to the WTO. Furthermore, the prospects of the asset management market are generally positive due to the steady growth of the Chinese economy and the stock market. Setting up joint venture fund management company will naturally become an important area for the Sino-foreign collaboration.
The co-operation has received high-level of attention and support. Senior officials from Shanghai Municipality and CRSC, French Ambassador to China attended the signing ceremony, and made important speeches. They viewed positively the co-operation between the three parties, and conveyed their best wishes.
In addition, more than 100 persons from Shanghai financial Community, CSRC, domestic securities exchanges, local and foreign financial institutions and media attended the signing ceremony.
Some of the special aspects of this collaboration have been put at spotlight:
1. The two foreign parties with which S&W shall collaborate are well-known international financial institutions. BNP PAM is a top international asset management company fully owned by BNP Paribas of France. Currently it has over 170 billion Euro assets under its management. Its clients are all over America, Europe, Asia and other regions. BNP PAM has vast international network and strong technical capacity. IFC is a member of the World Bank Group, with over 40 years of history. It is mandated to develop sound private sector economy in developing countries, and to promote best international practice in corporate governance and risk management in its investee companies. In China alone it has made over 40 investments, with the total investment of its owns funds amounting to more than US$1 billion. IFC can contribute its global expertise in setting up and management of domestic-foreign joint venture corporates. S&W's collaboration with these two industrial giants is expected to set high standards for corporate governance, regulatory compliance, and code of conduct for the industry, and pioneer a new path for domestic and foreign financial institutions to seize market opportunities in the post-WTO-accession China.
2. The reason that a domestic securities firm actively seeks a European partner is that they are highly complementary to each other. As compared to some large well-known American securities firms, BNP PAM's global asset management capacity is highly competitive. Over 60% of its business is generated internationally outside its native land of France. Its clients include more than 20 central banks and many famous international financial institutions and multinational corporates. The Chinese collaborator, S&W, through the collaboration, will learn the industrial expertise from its foreign partners, to leverage on S&W's 108 national branch network and over 2 million clients. Through the collaboration, S&W will gain invaluable experience in promoting corporate governance and operation transparency, enhance its domestic stock market research capacity, obtain global expertise in the capital markets, and contribute to developing a new road for China's mutual fund market jointly with the foreign parties.
3. The technical collaboration will multi-level and comprehensive. The first level of the collaboration concerns the mutual fund company's corporate governance, code of conduct, compliance, and the model of its management and operations; the second level relates to product design, portfolio management techniques, risk management and other techniques; the third level is IT system support; and the fourth level is back-office support, including funds settlement, accounting, customer relations, product design, marketing, technical assistance and training, and exchange of personnel.
Based on the signed Technical Co-operation Agreement, the three collaborating parties will design and implement exchange and co-operation programs and move their co-operation to a deeper level.