CMB: Leading China into a new era of wealth management
Private banking in China is entering a new era of growth and development. Wang Yanrong, general manager of private banking at China Merchants Bank – Euromoney’s Best Overall Private Bank in China – describes the transition and the role private banks should play.
Chinese private banking has experienced 15 years of development since its emergence in 2007. Since its initial inception, China Merchants Bank (CMB), a member of the first batch of private institutions licensed to offer banking services, successfully reached a stage of preliminarily maturity.
During this period, the bank achieved satisfactory results while facilitating national economic growth. Yet, in the face of new economic growth drivers under the “14th Five-Year Plan”, we are now asking how we can meet new, emerging market demands and better play our role as a private bank?
Private banking should facilitate innovation among enterprises.
On the one hand, private banking customers are mainly entrepreneurs, who are not only the backbone of our national economy, but leaders who possess a keen awareness of the market and innovation. Private banking should therefore enhance the integration of “mixed public-private” services for individuals and the enterprises behind them. In addition, it should offer a comprehensive, in-depth understanding of the demands and meet those demands.
On the other hand, private banking should help guide people’s long-term investment in intelligent manufacturing and other technical innovation projects. Investment in innovation over the past few years has created a large population of wealthy people.
Importantly, private banking should also serve as a stabiliser for wealth inheritance. The first generation of private entrepreneurs who emerged after China’s opening-up are currently at the stage of succession, which might bring challenges to the development of their enterprises.
According to a survey conducted by Cornell University, less than 40% of enterprises can pass their success on to the second generation, and less than 13% to the third generation. Many Chinese entrepreneurs worry that the inheritance process might affect their family growth and corporate governance, or even give rise to big fluctuations in operation and management.
The first generation of private entrepreneurs who emerged after China’s opening-up are currently at the stage of succession, which might bring challenges to the development of their enterprises
Private banking is responsible for, and capable of, helping entrepreneurs to plan for wealth inheritance via family trusts, family constitution and other means in order to avoid risks and realize stable transition.
We, as private bankers, should help entrepreneurs to fulfil their social responsibilities. In general, successful entrepreneurs usually have a strong sense of family and nation. In their view, society is what has enabled their success and they have a responsibility to give back to society.
However, they often encounter challenges in carrying out charities and public welfare projects. For instance, their own enterprises might lack qualified professionals. Yet, if they decide to cooperate with external foundations, the vast number of institutions and wide variety of projects can be difficult to choose from.
Private banking organisations can do our part in passing on their philosophy, offering charity consultation, architecture building, project implementation and more, and should build a bridge that facilitates public welfare projects among entrepreneurs.
Compared to the centuries old private banking industry in Europe and the US, Chinese private banking is at an early stage of growth and development. This said, we are lucky to be a part of the blooming market at a time when the Chinese economy is transitioning and upgrading.
Indeed, we are confident and committed to taking up the mantle in this new era, and forging a new path for the development of private banking with Chinese characteristics.