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Money Matters: Young China Wants Risk and Convenience.







May 08,2016;The Chinese middle class is getting younger, and the under-30 crowd has very different ideas about managing money than their parents. They are more interested in higher-risk products such as equities, trusts, and peer-to-peer loans and have a greater affinity for banking and investing online. Though the $1.3 trillion yuan ($200 billion) managed in online accounts for just 3 percent of total assets under management in China, it’s been growing fast, and Credit Suisse believes it will continue to do so. Three types of online wealth management providers are vying for dominance: the financial services arms of Internet giants Baidu, Alibaba, and Tencent control 56 percent of the market, traditional financial institutions take another 15 percent, and third-party purveyors of wealth management products comprise the remaining 29 percent. The Internet giants have had success selling money market funds to Chinese investors, and Credit Suisse says an immense trove of customer data gives them an advantage going forward. Banks are launching their own online money market funds alongside their online banking services. Third-party providers allow users to buy products such as equity index funds and short-term wealth management products, and often offer financial education materials and advisory services. Which type of provider will win the day? Young Chinese investors tend to choose services based on convenience and investment opportunities. The Internet giants are certainly familiar and convenient – young people are already using them for other things – but they lack sophisticated risk management systems and can’t develop their own products. (Neither can third-party platforms.) Meanwhile, banks have a wide range of high-yielding products, better risk management, and can customize products, but they’re poor marketers and play a fairly passive role in their partnerships with the Internet giants. The battle lines are drawn.