by Ji Yao

China's commitment to high-level financial openness has brought unprecedented opportunities for global investors. In an exclusive interview, Huang Xiaoyi, Managing Director of Fidelity International China, shares insights into the company's journey in China, the impact of regulatory advancements, and the potential for collaboration in shaping the future of the nation’s financial landscape. From pension reform to green finance, Fidelity aims to leverage its global expertise to contribute to China's sustainable development while meeting the evolving needs of local investors.

Jiemian News: When did Fidelity enter the Chinese market, and what does this market mean for the company? Could you review Fidelity's journey in China and its business layout?

Huang: China is a strategic market for Fidelity. As a private company, we began strategizing for the Chinese market early, with the goal of helping investors achieve long-term financial goals while committing to sustainable investment in China. We opened offices in Shanghai in 2004, Beijing in 2008, and Dalian in 2007.

Although the market wasn't fully open to foreign asset managers at the time, Fidelity accessed China through the Qualified Foreign Institutional Investor (QFII) mechanism in 2007, eventually securing a US$1.2 billion (8.7 billion yuan) quota, the highest among asset managers. Simultaneously, we provided Chinese investors with overseas allocation opportunities through QDII mechanisms.

In 2011, we built a local investment team, recruiting local analysts. We set up a wholly foreign-owned enterprise in Shanghai in 2015 and became the first foreign-owned private fund manager in China in 2017. Following the removal of restrictions on foreign equity in public fund companies, we applied for a wholly foreign-owned public fund license in 2020 and received approval by late 2022.

In 2023, our public fund business officially launched in China—a critical step in our long-term strategy. We've since introduced several fund products to the market.

Jiemian News: How would you evaluate the results of China's financial opening-up, and what opportunities and benefits has Fidelity gained? What role do foreign institutions play in China's financial market?

Huang: China's high-level financial openness has achieved significant progress, earning broad international recognition. The development of its capital markets has been steady, with improvements in systems and mechanisms. The opening of financial services has facilitated market entry for foreign institutions, creating opportunities for collaboration and participation in China's economic growth.

Fidelity has benefited from this openness through mechanisms such as QFII, QDII, and Stock Connect, enabling us to capture opportunities for both domestic and global investors. This also allowed us to enhance our local research capabilities while aligning with global practices. The removal of foreign equity caps in public funds was a pivotal moment, marking another milestone in Fidelity's journey.

Foreign institutions bring expertise from international markets, including product innovation and investor education, to meet the diverse needs of Chinese investors. This infusion of experience fosters innovation in financial products and services, enhancing market standards and introducing long-term perspectives essential for sustainable development.

Jiemian News: The 2024 Government Work Report emphasizes "high-level openness." What does this term mean to you as a foreign institution?

Huang: High-level openness entails easing market access, improving legal frameworks, ensuring efficient administration, and fostering fair competition. For foreign institutions, these aspects are indispensable for development and signal China's growing attractiveness and competitiveness.

We take pride in being among the first foreign-owned public fund companies in China. As the market evolves, we will continue refining our product offerings and investment performance to serve investors better and grow alongside China's asset management industry.

Jiemian News: What key factors should China focus on to attract more foreign financial institutions and long-term capital?

Huang: Recent advancements in market access, regulatory improvements, and interconnectivity have drawn increasing numbers of foreign investors. However, further alignment with international standards—such as in areas like pension management and cross-border investments—can significantly enhance the experience for foreign institutions.

For the public fund industry, lowering barriers, while incorporating the global experience and scale of foreign institutions, could foster innovation and enhance investor satisfaction. Ultimately, a balanced regulatory approach ensures the stability of China’s financial system while accommodating diverse investor needs.

Jiemian News: What new opportunities and challenges do foreign institutions face in China's expanding financial market?

Huang: China’s economic transformation is creating a landscape focused on energy transition, technological innovation, and healthcare, underscoring high-quality and sustainable growth. Policies such as the five-pronged approach to financial innovation—including green finance and pension reform—present significant opportunities for foreign institutions.

Fidelity has deep expertise in pension management, having pioneered target-date funds (TDFs) and led the US 401(k) and IRA markets. We share insights with regulators and industry peers in China to tailor solutions for local needs. Similarly, in green finance, we leverage our global expertise to contribute to sustainable investing policies and practices, helping align with international standards while addressing local challenges.

Market fluctuations and economic cycles, while inevitable, often herald opportunities. Long-term investors who navigate these cycles can emerge stronger, and foreign institutions with global experience can play a vital role in bolstering China's capital markets.

Jiemian News: What is Fidelity’s vision for its future in China?

Huang: Fidelity’s global expertise, long-term vision, and strong risk management form the foundation of our approach. We aim to establish a diversified asset allocation capability in China, spanning equities, fixed income, ESG investments, and alternatives.

The cornerstone of our strategy is to solidify our public fund business. We emphasize trust-building through consistent communication and investor education, empowering clients with tools like retirement calculators and research reports to plan their financial futures.

China's advanced digital ecosystem offers unparalleled opportunities for innovation. By leveraging data-driven tools and digital engagement, we aspire to deliver intuitive, participatory solutions that resonate with local investors, ensuring our growth aligns with their evolving needs.