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China’s world-beating technology has already re-written many rules for onshore wealth management. Alibaba or Tencent have pampered a generation of wealthy clients to expect everything at their fingertips, with real time interactions, with a touch of fun.

«Wealth management is still fundamentally about building relationships and foreseeing trends»

How to adapt and deploy digital know-how to acquire, serve, and transact for private banking clients in China, against the very high benchmark set by China’s tech giants and their financial services unicorns, might be the battle which could win or lose the war this time.

So, you are still pessimistic towards the foreign entrants?

Not really. Wealth management is still fundamentally about building relationships, foreseeing trends, managing risks, guarding against conflicts of interest, and always putting clients first. For this reason alone, I am optimistic that international wealth managers, at least the best of them, can establish a meaningful, profitable presence in the China onshore market and create synergies with their offshore franchise.

«This is the time to play high, improvise and dare»

The complexity and competitiveness of the China onshore market, however, require the foreign entrants to be more humble, more diligent, more adaptive, and more committed than last time.

In fact, the new batch of foreign entrants are indeed thinking harder and planning more rigorously, adopting entry models that play to their strengths.

Any examples?

A few large foreign banks are aligning their onshore banking entity and securities JV platform to create a full-spectrum wealth proposition; a few boutique Swiss private banks have set up referral and product white-labelling partnerships with local banks to acquire China knowledge and some initial synergies before entry.

One Swiss private bank has acquired minority stake in an independent wealth manager, and may build on that; and another few foreign wealth managers are studying China’s Fintech landscape to identify a disruptive partner which may help them enter China with a big bang.

Where do you see the foreign wealth managers in China, in five years time?

China onshore high net worth liquid wealth will easily reach $10 trillion in five years. If the foreign entrants capture just 5 percent of the market, their total onshore assets under management could reach $500 billion, with very healthy margins. Of course it won’t be easy, but the private banks that get China right will be hugely rewarded. Winston Churchill once exhorted his generals: «This is the time to play high, improvise and dare.»

This is timely advice for these brave entrants, too.

Nick Xiao was born in China but spent quite some years in Europe. He is an academic specialized in China's financial markets. He published a pioneering book in 2003 on China's infant over-the-counter derivatives market, and contributed award-winning theses to journals of People's Bank of China and Chinese Academy of Social Sciences. He is also a seasoned practitioner in China's wealth management industry. He started his career at a U.S. management consultancy, and moved to establish and manage the China onshore private banking businesses of Standard Chartered and later of Credit Suisse. He is now managing partner of a family office in Hong Kong.