On December 22, 2019, CF40 held the third Jinjialing Wealth Management Forum in Qingdao, Shandong Province. The theme was "Transformation and Innovation of Wealth Management under the New Situation".
The General Assembly commenced with a Letter of Congratulation from Chen Yuan, Chairman of CF40 Executive Council, and Vice Chairman of the 12th National Committee of the Chinese People’s Political Consultative Conference (CPPCC), which was presented by Wang Haiming, CF40 Secretary-General.
The letter was followed by two opening remarks by Meng Fanli, Mayor of Qingdao and deputy secretary of the Qingdao CPC committee and Sun Haisheng, CPC Secretary of Laoshan District in Qingdao.
The General Assembly in the morning featured two keynote speeches on wealth management in China by Yang Weimin, member of the Standing Committee of the 13th National Committee of the CPPCC, Vice Commissioner of the Economic Policy Committee of the CPPCC and former Deputy Director of the General Office of CPC Central Leading Group for Finance and Economics, and Huang Yiping, Chairman of CF40 Academic Committee and Deputy Dean of the National School of Development in Peking University.
In his speech, Yang Weimin stated that emerging economies may not repeat the development tracks of Western countries, and theories like the middle-income trap do not fully apply in China given its large population which provides a basis for long-term economic growth. However, as the economy’s growth relies more on domestic consumptions, industrial growth slows down because of sluggish increase in total volumes of retail sales as a result of heavier debt burdens of the Chinese people. He proposed to increase the proportion of direct financing, especially equity financing, and improve the banking system to accommodate to the coexistence of different ownerships. He also stressed that financing costs must be lowered to secure investment returns for private enterprises, and that debt pressure on the household sector should be relieved to create greater consumption demands and industrial productions.
Huang Yiping pointed out that the investment opportunities for the Chinese people are very limited. The major reason is that the people put most of their money in two places: bank deposits and houses. However, as the risks in real-estates mount high, people are not going to continue to heavily spend their deposits on houses; meanwhile, the benchmark deposit rate in Chinese banks are almost the same as the inflation rate, so bank deposits are not attractive for investors, either. He raised concerns about the imbalance between the abundant available funds for investment and the scarce available assets to be invested in.
After the speeches, Xiao Gang, CF40 Senior Fellow, released the 2019 Report on the Development of Intelligent Finance in China, which gave eleven suggestions to promote the sound advancement of smart finance in China from three perspectives: planning, infrastructure building and regulatory supports. He emphasized the importance of adequate fundamental research, reasonable product application and prudent risk management in developing smart finance, and suggested to set a three-year agenda for the development of smart finance with innovative regulatory models and enhanced investor protection.
Xiao’s report precedes another one released by Tang Ning, founder and CEO of CreditEase – the 2019 Report on Chinese Entrepreneurs: Family Businesses. Tang Ning discussed the problem of wealth inheritance in family businesses, which constitute a major target group of wealth management in China. He believed that the modern corporate system could help to separate corporate risks and family risks and sustain the long-term development of family businesses. The report is the first of its kind focusing on the inheritance of wealth and values among generations of private business families and proposed solutions that both accommodate the realities in China and fit the best international practice.
Wang Haiming, CF40 Secretary-General, moderated the General Assembly.
Two sessions ran in the afternoon. The first session focused on “Development Trend and Outlook of the PE Industry” and was chaired by Bao Jiang, Deputy Director of the equity asset department at the National Council for Social Security Fund.
Xiong Xiaoge, founding chairman of IDG Capital, reviewed the development of the consumer-internet industry and pointed out that equity investment was the most direct financing channel and an indispensable driver of emerging industries and businesses’ development. Equity capital played an important part in China’s industrial upgrading and the explosive growth of the internet industry in China. However, as innovation in the industry gets harder and the costs rise, businesses have been facing bottlenecks. In contrast, “hard technologies” like AI, smart mobility, business services, gene medication and advanced manufacturing have seen rapid growths and are at the eve of outbreaks.
To break the bottlenecks faced by Chinese businesses, Jiao Zhen, President of CDH Investments, proposed to improve the investment efficiency and actively seek for opportunities in the global market. According to him, the underlying logic was that when investments could no longer grow sustainably, the focus of efforts should be turned to improving their efficiency.
Discussing the risks and exit channels in PE investments, Chen Hao, President of Legend Capital, stressed that one of the biggest problems in the field was the exit of venture capitals. He advised that private equities should raise the threshold when screening investment projects and argued against short-term exit channels directing investment flows. Instead, he called for longer-term exit mechanisms for private equity investments.
Chen was echoed by Sheng Xitai, co-founder of Hongtai Aplus and Chairman of Hongtai Group, who stated that the top concern in PE investments was how to exit. He cited the example of the failed listing of Wework and said that the inversion of prices in the primary and secondary markets was not occasional. According to him, many companies are way overvalued and have too long financing chains. He suggested that venture capitals should consider their exit channels as soon as they carry out the C round financing, and the B round should be the junction point of private equities and venture capitals, while the C round should be the pre-IPO stage.
Li Baoguo, Chairman of Shanghai Haifu Industry Investment Fund Management Co., Ltd, voiced optimism in the investment sector despite the economic slowdown. He said that the global economy faced structural imbalances in various dimensions including demand structure, industrial structure and the structure of economic growth drivers. However, wise investors could always spot areas with faster growth paces amid the structural adjustments.
The second session witnessed discussions on “Challenges and Opportunities Facing Wealth Management Subsidiaries amid Industrial Changes” with five speakers: Duan Bing, President of ABC Wealth Management Co., Ltd., Wu Yaodong, PSBC Wealth Management Chairman, Liu Hui, China Merchants Bank Wealth Management Chairman, Zhang Xuyang, China Everbright Bank Wealth Management Chairman and Liu Xiaochun, vice president of the Shanghai Finance Institute, who talked about competitive business models in the wealth management industry, the transformation of business models and modern operation of wealth management subsidiaries and related issues of concern. The session was moderated by Jiang Zeshen, head of an asset management division at the innovation department of China Banking and Insurance Regulatory Commission (CBIRC).
The forum was hosted by the People’s Government of Laoshan District in Qingdao and the Administrative Committee of Jinjialing Financial District, co-sponsored by CF40 Education Development Foundation and CF40 School of Finance, and supported by CreditEase.
