China’s wealthy are looking overseas for business investment

BEIJING — China’s wealthy are increasingly looking for ways to move capital outside the mainland to pursue business opportunities, rather than just chasing investment returns, according to asset managers and consultants.

This year, there’s been a “very significant” trend of requests from Chinese family offices that want to acquire smaller businesses in Japan, said Ryota Kadogaki, co-founder and global CEO of Monolith, a Japan-based consulting firm for family offices.

“I’m studying Chinese as well, and I’m thinking to hire Chinese speakers in my company right now,” he said, noting that slower growth in China and a weaker Japanese yen are supporting the increased interest. Even with recent strengthening to around 20 yen versus the Chinese yuan, that’s still weaker than the 15 level seen in 2020.

Investors based in mainland China increased their non-financial direct investments overseas by 16.2% to the equivalent of $83.55 billion during the January to July period, according to the Ministry of Commerce. It said the investments covered more than 6,100 businesses in 152 countries and regions.

“Most of our clients are China-rooted entrepreneurs who are looking to further globalize,” Grant Pan, CFO of China-based wealth management firm Noah Holdings, told CNBC. “Obviously they are at least keeping their eyes open for opportunities for their businesses all over the world. Obviously there’s slowdown pressure in terms of domestic markets for many industries.”

“Many of our clients appear to be busier than before,” he said. “As they are exploring new markets, they travel more frequently, which more or less gives them a better perspective of global allocation.”

Noah Holdings said the number of its overseas registered clients rose by 23% from a year ago to nearly 16,800 as of the end of June. The company’s active overseas clients rose by nearly 63% year on year to 3,244.

Overseas assets under management rose nearly 15% to $5.4 billion from a year earlier, while mainland China assets under management fell over 6% to $15.8 billion, according to Noah’s quarterly earnings report.

Mainland China keeps a tight control on capital with an official limit of $50,000 in overseas foreign exchange a year. That’s meant affluent Chinese have long looked for alternative ways to grow wealth outside the country.

Kadogaki noted that buying foreign companies is a way for Chinese investors to move assets abroad. He also shared examples of how a fund investing in a tech company in China might now look to acquire a retail store in Japan to expand potential revenue.

In June 2023, Kadogaki said his company started working with Canopy, a Singapore-based wealth management software company…