After two decades of helming major financial services providers in Asia, René Buehlmann is a top Swiss expert in the region. In an interview with finews.asia, Abrdn's head of Asia talks about fundamental changes for business with the region.
René Buehlmann has recently learned a thing or two about supply chain disruptions. Taking up his post as the new head of Asia at the Abrdn (formerly known as Standard Life Aberdeen) required a move from Hong Kong to Singapore in the middle of the lockdown in March. Upon arriving, he spent weeks in quarantine, waiting for furniture that wouldn't arrive.
While strict measures continue to apply in Hong Kong, the Asian city-state has greatly relaxed its regulations, which Buehlmann has since taken advantage of.
Global Innovation Hub
Buehlmann has been with UBS for nearly 30 years and lived in Hong Kong for 17 years, most recently heading the firm's fund business in the Asia-Pacific. He doesn't buy into the fears of deglobalization and geopolitical rifts between China and the West circulating in the local financial center. Moreover, «Switzerland's neutrality is not a major issue in Asia,» he reassures finews.asia.
While fundamental changes in the business of Western and Swiss financial service providers in Asia cannot be dismissed out of hand, the firms in question «weren't born yesterday» he points out. Part of the development is that China has been moving up the value chain. Long the world's factory, China and neighboring Asian countries are increasingly becoming the innovation center of the global economy.
Closer to the Customer
The region's dependence on the West will become less important over time, he said, particularly because supply chains are becoming more regionalized after the experience of the Corona crisis. «For the financial industry, this means that we have to get closer to Asian customers,» he says.
Data from the 2021 World Intellectual Property Indicators bear Buehlmann's point out. In 2010, Asia accounted for 51.4 percent of patents granted globally. By 2010, the share had risen to 58.1 percent, mostly at the expense of Europe and North America.
From an investor's point of view, there are lots of opportunities locally to generate «alpha» vis-à-vis stock exchanges, which is another reason accessing these markets is urgent. «We can't avoid having a local presence,» Buehlmann emphasizes. In this regard, it allows Abrdn, which has been on the ground in Singapore for 30 years, direct contact with companies from its other Asian locations and, as an active asset manager can exert influence locally.
Give and Take
Also at play is the distribution aspect of Asia's mass market. «For us, it is also about making the international investment market accessible to Asian clients». Chinese institutional investors are currently very interested in European real estate. Conversely, there is no way around local partners when it comes to tapping into the Chinese mass market, he said.
«I have already worked out such joint ventures at UBS,» Buehlmann reports, emphasizing the give-and-take that is involved. «In return for the existing and extremely strong distribution networks in the country, Western firms can offer their knowledge on how modern asset management or pension fund systems work.»
But there are no quick wins to be found. In China, partnership and long-term commitment count, and «you have to prove yourself over and over again there,» he explains from long experience.
Eye on Switzerland
But he is firmly convinced that the commitment is worthwhile. The region's growth potential is substantial despite the current slowdowns and will further accelerate with digitalization. By 2024, more than half of the world's GDP is expected to come from the region where 40 percent of global consumption already takes place there. Add that in ten years, two-thirds of the world's middle class is expected to come from Asia. «There are so many investment opportunities in Asia that it's impossible from an investment perspective to steer clear of the region,» he finds.
Buehlmann also notes the rapid rise of Asian financial centers. According to a recent study, Switzerland will be overtaken by Singapore and Hong Kong as an offshore financial center in just a few years. «Hong Kong and Singapore are very focused on offshore finance and very competitive,» he notes. Meanwhile, the Swiss financial center was early to embrace fintech and blockchain regulation so it has a head start there. «But it's clear: The core Asian markets are watching Switzerland very closely and developing their own legislation.»
Financial Center Coexistence
But because different clients have different needs, Buehlmann says he expects that global financial centers will find a way to coexist in wealth management.
The different perspectives on the region also ensure that, in Asia and China, in particular, sustainability is increasingly an issue, and «we spend an extremely large amount of time on the topic,» Buehlmann says. By now it is clear to most investors the fight against climate change cannot be won without this region. «Exclusion doesn't work,» he explains, and «as active investors, we need to help Asia make the transition to a low-emissions future.»
Who Needs an «E»
The same applies to policy Depending on the client, he said, financial services providers need to view the situation with a different lens and help them navigate the discussion.
And speaking of different ways to look at things, when Standard Life Aberdeen eliminated the «e»'s in its name, rebranding itself to Abrdn, it led to some furrowed brows and snide comments in the local financial industry. Not so in Asia. «There, the reaction to the rebranding was very positive,» says Buehlmann.
