Restrictions on how much a foreign fund house is allowed to own in a joint venture in China has led many firms to adopt a wait-and-see attitude in the mainland despite five years of strong growth.
Since China introduced the fund law five years ago, funds under management have doubled to 160 billion yuan as of the end of September last year, according to a report prepared by Economist Corporate Network for KPMG.
However, the growth has not yet resulted in a rush into the mainland market by global fund houses.
KPMG partner Bonn Liu said the joint venture rules - which restrict foreign firms from holding more than 33 per cent of a joint venture, rising to 49 per cent at the end of this year - is a key barrier for foreign firms entering China.
'The concern for foreign firms is the lack of full control. The joint venture restriction presents problems to those looking for full control of the business,' Mr Liu said.
HSBC's investment arm is looking for a mainland joint-venture partner after two years of talks with Shenzhen-based China Southern Fund Management failed.
Invesco dumped Penghua Fund Management for Great Wall Securities. ABN Amro negotiated a deal with Xiangcai Hefeng Fund Management after ending talks with Changsheng Fund Management.
