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Global Trends in Family Offices #4: China’s Billionaires Looking for Family Offices

 

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By David Drake

The demand for family offices is gradually increasing in China, and this has made Chinese billionaires with over  US$1 billion  in properties to seek family offices from renowned firms across the world. HMC Family Office (HMCFO) is one of the largest firms which offers all-inclusive family office products and services. The firm was founded in 2011 in Beijing by Adam Yang – a popular fund manager. In late 2013, he registered the firm in Singapore as a holding firm for HMCFO.

The estimated number of Chinese billionaires is 4,000, and this number has been gradually increasing over the last few years as China is seen to be one of the fastest growing economies worldwide. These Chinese billionaires are generating wealth all over the world and are therefore looking for family offices that will help them manage their wealth efficiently and pass their fortunes to their children.

“The origin of family offices is linked to John Rockefeller – a famous US oil baron who had a family office in Room 5600 of the New York’s Rockefeller Center. This is the office where Rockefeller’s family wealth and inheritance was managed and multiplied. It is this family office by Rockefeller 5600 that has remained the greatest inspiration for the Chinese billionaires.”       

Despite the fact that China is among the countries with the fastest growing billionaire population, the idea of family offices has not been fully embraced, and this has left a big gap that needs to be filled within the Chinese market. Many Chinese billionaires have been going to foreign countries like Singapore and the US to seek family offices. This is because China lacks family offices that combine asset management, tax planning, and progression planning.

With the success stories from family offices in other countries, some of China’s biggest organizations such as Ping An Insurance and Bank of China, and also Noah Wealth Management – based in Shanghai, are already structuring family offices & trusts like the family office by Rockefeller 5600.

However, there are many challenges that are likely to face family offices to be established in China. Some of these include exchange rate limitations and restricting of some varieties of financial products in China. Beijing is also contemplating whether to put in place estate taxes. These,  among other factors like political stability and multilingual personnel,  are making Chinese and other global billionaires feel safer and contented to seek family offices in Singapore.

Besides China, HMCFO is also targeting clients from London and Los Angeles.

The main goal of HMCFO is to set up family offices for Chinese billionaires to help them manage their wealth, build legacies, and pass them to their heirs for the future generation. Many rich Chinese currently do not know how to use family offices to build family legacies. 

In June this year, UBS Wealth Management has organized an event in Shanghai which specifically discussed  family legacy and generosity. The event targeted clients from China.

With China’s potential to grow their economy and increase their billionaire population, there is an increased need for the establishment of family offices like the family office of Rockefeller 5600 so as to help them achieve their dreams. HMCFO is set to assist them attain this.

Note: This article originally appeared in the first issue of Family Offices Today.

 

David-Drake_2014David Drake is the Chairman of LDJ Capital, a multi-family office; Victoria Partners, a 300 family office network; LDJ Real Estate Group and  Drake Hospitality Group; and The Soho Loft Media Group with divisions Victoria Global Communications,Times Impact Publications, and The Soho Loft Conferences. Reach him directly atDavid@LDJCapital.com.

 

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