Hong Kong continues to play a leading role as a leading global finance and business centre and is set to continue to do so, with business booming amongst high net worth (HNW) and ultra high net worth (UHNW) Chinese families seeking sophisticated wealth planning solution, reports ZEDRA the global specialist in corporate, fund and “Active Wealth” solutions.
Within the last two months, Hong Kong has once again regained its position ahead of Singapore to rank fifth among 111 global financial centres, according to a survey published by London-based think tank Z/Yen Partners and the China Development Institute.
The city was among the top five centres in terms of the business environment, human capital, infrastructure, financial sector development and reputation, and took the first place based on trading, according to the Global Financial Centres Index report.
ZEDRA has regional offices in Singapore and Hong Kong, from where Jacqueline Shek, Executive Director, Trust Services, explains that, “In many ways, global and local political instabilities, as well as the pandemic, have acted as something of a supercharger for us, catapulting business enquiries around areas such as pre-immigration planning, succession planning, trusts and other asset protection structures to manage wealth for future generations. Ironically it is when people feel threatened that they are more likely to look to establish or review their existing succession plans. Our Active Wealth proposition, aimed specifically at families who want, as the name suggests, to take a more personal role in the planning and delivery of their wealth management strategies, sits well in this market . It offers the potential to bring together corporate, fund and private wealth services under one roof to the growing number of very wealthy Chinese billionaire entrepreneurs and their family offices.”
More wealth was created in 2020 than the previous five years combined
China is the engine room for this growth. The country continues to grow and to be a success story. Jacqueline points out that “The Hurun China Rich List recorded more wealth created in 2020 than the previous five years combined.” She believes this signals the structure of the economy has evolved, moving away from traditional sectors like manufacturing and real estate, towards the new economy.
Established in 1999 by Rupert Hoogewerf, today the Hurun Report is widely recognised as the foremost authority in tracking the rapid changes amongst China’s high net worth population. The Hurun report’s findings are echoed by UBS and PwC’s 2020 Billionaire Insights Report showing that despite the pandemic, the total number of Chinese billionaires increased to a new record of 415 with a total wealth of USD1,680.9 billion by the end of July 2020.
A consequential pattern seen emerging over the last 18 months is an increase in demand for family office services from successful Asian family entrepreneurs.
Jacqueline continues, “Asian businessmen and businesswomen have very specific needs and increasingly prefer a global wealth management solution. Our typical clients are likely to be multi-banked and seek an open architecture platform, which will enable them to select specific expert advisers, according to their exact requirements. They also need a level of cultural understanding and linguistic competence to deliver global best practices. All this means a successful, sophisticated financial services operation in Hong Kong must have functional specialists who are native speakers and more importantly, can adapt to the pace and way things are now done. A new generation of confident, successful Chinese, Hong Kong and South East Asian entrepreneurs are setting the bar ever higher.”
Personal income taxes in China can rise to 45% and as clients invest globally in all classes of assets, tax planning expertise is always critically important, thinks Jacqueline, herself a Chartered Tax Adviser. However, other factors also come into play. “The ultra-high net worth individuals and their families that we work with often have global business interests or family members in different jurisdictions. For them, family governance, wealth protection, succession planning and access to global jurisdictions are central to any discussion too. When it comes to serving the needs of successful Chinese families, our business partners look to Hong Kong or Singapore to provide the necessary expertise to deliver appropriate offshore trust and family office solutions.”
ZEDRA sees the growing trend in the demand for family trusts and family office solutions lasting for some time to come. Hong Kong continues to be a gateway for the world into China, but equally, the gateway for mainland Chinese to access global opportunities and solutions in the wealth management industry.