BCG - The Boston Consulting Group

• The Growing Importance of China’s Wealth Markets
• Understanding the Nature of Chinese Wealth
• Private Banking Models for China
• Key Elements for Building a Leading Wealth Management Business in China
• Acknowledgments

In recent years, the global wealth management industry has continued to experience very strong growth and has been a strong focus for many global banks. The Boston Consulting Group (BCG) estimates that worldwide wealth measured as the household financial assets under management (AuM) grew by a very healthy 7.5 percent last year to reach US$97.9 trillion. This marked the fifth consecutive year of expanding wealth. When wealth was measured in local currencies, Asia Pacific excluding Japan, had the strongest gains in wealth AuM in 2006 at 12.8 percent.

Wealth management customers, be they merely affluent or extremely affluent, represent one of the most attractive individual customer segments for many banks. Indeed, BCG benchmarking surveys of retail banks show that the average private banking customer can be ten times more profitable than an average mass market retail customer.

In recent years, Chinese banks have been paying increasing attention to the wealth management market, to the importance of attracting and retaining these highly valuable customers, and to the profit potential that wealth management offers. Most Chinese banks offer premium banking services (to customers with more than RMB 500,000 in AuM) and several have launched private banking offerings for clients with more than RMB 5 million or USD 1 million in assets. In addition, foreign banks increasingly are turning their focus to tap opportunities with wealthy Chinese clients, utilizing both onshore and offshore private banking models.

In this special supplement to our report Tapping Human Assets to Sustain Growth: Global Wealth 2007, we provide an update to the Chinese wealth management market, covering:

• The growing importance of China’s wealth markets
• Understanding the nature of Chinese wealth
• Private banking models for China
• Key elements for building a leading wealth management business in China

Tjun Tang is a partner and managing director in the Hong Kong office of The Boston Consulting Group and the head of the firm’s Financial Institutions practice  in Greater China.

Alain LeCouedic is a partner and managing director in the firm's Hong Kong office.

Frankie Leung is a partner and managing director in BCG’s Hong Kong office.

Holger Michaelis is a partner and managing director in the firm's Beijing office.