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Fidelity Eyes China Exit Amid Fierce Competition
21 Aug
Summary
- Fidelity International may exit its China fund business after three years.
- Intense competition and scale issues cited as reasons for potential withdrawal.
- The unit manages 4.5 billion yuan, far below break-even targets.
Fidelity International (FIL) is reportedly considering a full withdrawal from its wholly owned fund business in China, according to sources cited by Reuters. This potential exit comes approximately three years after the firm commenced operations in the onshore market.
Sources suggest that persistent challenges, including intense domestic competition and difficulties in reaching sufficient operational scale, have led senior executives to view the retail fund business as unworkable. An internal document indicated the China operation needed at least $14 billion in assets to break even, a target far from the current 4.5 billion yuan ($670m) under management.
Despite these considerations, FIL has stated that China remains a crucial market with attractive long-term opportunities. The firm has invested $218 million in the Shanghai-based unit, which currently employs around 100 people. Any decision to leave would require regulatory clearance from the China Securities Regulatory Commission, which has not yet received a formal application.
