TWENTY-FIVE years ago this week, investment bank Robert Fleming and Jardine Matheson formed a joint venture to create Jardine Fleming (JF), the territory's first merchant bank. The product of a union that was rich in resources and heritage gave the new venture a promising start in life despite its humble financial origins. Backed by just GBP50,000 (about HK$608,000) start-up capital from each parent company, JF cut loose to push back the Asian frontier. Once established, it quickly moved into what would become one of its most important niches, offshore fund management. Although the company was not incorporated until January 1970, its first unit trust, a Japan fund, was established in August 1969, enabling easier access for European (particularly British and Swiss) investors who wished to buy into the Japanese success story. Early decisions by JF's chiefs paid off and the GBP100,000 injected at the start was the only time the joint owners put money into the company. By 1993, profits from the Jardine Fleming Group's four business arms - investment management, broking, corporate finance and banking - tipped a new record of US$202 million (HK$1.56 billion). With 2,200 staff based in 22 offices in 15 countries, JF can also boast the biggest network in Asia. 'I think they [Robert Fleming and Jardine Matheson] had some sort of vision when they decided to establish the company,' said current chairman Alan Smith. 'But what developed exceeded their expectations.' As financial services in the territory developed and China's potential became apparent, similar companies anchored in Hong Kong also began to prosper. But few enjoyed the depth and range of success enjoyed by Jardine Fleming. Hong Kong 25 years ago was far short of an international financial centre and the pace of development since then has left even the most futuristic projections lagging behind. Mr Smith attributed the group's ability to capitalise more on the region than its competitors to the fact that it had always been a Hong Kong company and as such it has marched to a different drum. 'The rhythm of Asia has been ours to keep pace with, unlike most of our competitors whose operations have expanded and contracted in line with forces in the market of their parent company.' A shorter chain of command had also been instrumental. Unlike many competitors then and now who must refer back to their overseas head office for their lead, the buck stops with JF's Hong Kong-based board of directors. Business in the early 1970s was conducted from a fourth floor office in the first Jardine House in Pedder Street, Central. In 1974, the company moved into the new Jardine House, its current home. JF will not be marking its 25 years in Hong Kong with a big celebration. Instead the occasion will be marked by a few low-key gatherings. Thoughts then will no doubt turn to what surprises the next quarter of a century will hold and whether or not it will be any easier to predict. JF is well placed to benefit from the huge population bases and the continuing economic boom in the Asia-Pacific region. Mr Smith said Hong Kong seemed to be embarking on a prolonged growth period in financial services and, like other merchant banks, JF was well positioned to capitalise on the region's next phase. 'I've always felt that in any one year there are more opportunities than there are people to handle them,' said Mr Smith. Despite a year of turmoil in regional markets, Mr Smith was upbeat about the 12 months ahead: 'Maybe 1995 will be a more difficult year in terms of profit but that does not worry me. 'We have been here a long time and while not immune from downturns we have in the past emerged from them in a stronger position because they shake out our competitors.' In the past 25 years different divisions in the JF operation have been its main source of profits. Banking and corporate finance were big earners in the 1970s and 1980s and the stockbroking arm, which came on line in 1973, has been a consistent profit generator. However, JF's success was most visible at the height of the bull market in January last year, when its unit trust division was so swamped with retail clients that it was forced to shut its doors to new investors and raise its investment ceiling for existing clients. Ironically, the full capabilities of the new administration system put in place after the closure remain untested because of the steady market declines since. The dream run for JF's unit trusts ended earlier and harder than for most other fund management companies and the clamour of retail investors has become a distant memory. MORE serious than the sobering effects of a market downturn for the group has been the animosity between Jardine Matheson and China. Whether or not JF has lost business as a result of the rift has been difficult to gauge. 'China is a large place and we win some contracts and not others but when we don't win there's no way of knowing the cause,' said Mr Smith. 'Both our shareholders are strong supporters but they let Jardine Fleming run its own business and we do things differently from Jardine Matheson and Robert Fleming.' He added: 'We have more dedicated China investment funds than anyone else. Before there was a stock market, and before B shares and H shares were available we were finding investments to make in China. 'We have mobilised a lot of foreign capital to invest there and in that sense China and its authorities understand that we are not trying to take money out of China by selling them consumer goods. 'Instead we make money by foreigners using our services to invest in China.'