US management giant Vanguard backs down in China

Vanguard coaster. The American asset management group announced on Tuesday that it was abandoning its plan to obtain a full-service license in China. The world number two in the sector behind BlackRock now wishes to focus locally on the development of its robo advisor, a digital decision-making tool for individual investors created at the end of 2019 with Ant Group, the financial services subsidiary from Chinese e-commerce giant Alibaba. “At this point, Vanguard believes it can offer more value to investors through its advisory services joint venture than offering a small number of funds in an already crowded market.”, specifies a press release. This refocusing could lead to job cuts, the extent of which is not specified, the Wall Street Journal had revealed. Recruited a few months ago to lead the future Chinese company of Vanguard, Luo Dengpan, former boss of Dacheng Fund Management, will remain in post with the residual team in Shanghai.

Vanguard’s turnaround clashes with the ambitions of its competitors BlackRock or Fidelity attracted by the potential of the domestic Chinese market, totaling 16,000 billion dollars (13,400 billion euros) in assets in mid-2020. Since last April, foreign groups can control 100% of their activities in the country. They are no longer required to use joint ventures with local companies. JP Morgan thus agreed to pay more than a billion dollars to buy back the 49% of its JV that it did not yet hold, a premium of more than 50% compared to the estimated value of this stake.

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