China's Financial Opening Up: China-overseas insurance joint venture enters wealth management

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Today we continue our five-episode Wider Access Series on China's financial opening-up. We'll show how international insurers, brokerages and payments companies may increase market share thanks to China's opening up policies. Plus, what benefits are in store for Chinese consumers. Today we'll focus on the insurance sector.

Specifically, we profile a China-foreign insurance joint venture that's moving into China's wealth management sector as we see more overseas capital expanding into the country's financial markets. Yang Chengxi has the details from Shanghai.

This new office space is waiting for a logo to be emblazoned on the wall. The office belongs to ICBC-AXA Life wealth management, the first investment firm set up by a China-foreign joint venture insurer this year. ICBC-AXA Life took in insurance fees totalling about six billion US dollars last year. This new branch is tasked with managing those funds.

MA JIAN, CHAIRMAN ICBC-AXA LIFE "We have been expanding our investment scope, from merely bank deposits and sovereign bonds in the beginning to targets like stocks, funds and equity now."

Experts say joint ventures like ICBC-Axa Life represent a growing trend.

BROCK SILVERS, MANAGING DIRECTOR KAIYUAN CAPITAL "When China integrates its capital into global investment flows, it will really revolutionize the industry. I think a lot of western companies are working to establish their companies and their brands in China now, in preparation for that future opportunity."

ICBC-Axa Life says it will tap into the client resources of ICBC, its Chinese stakeholder -- and also China's biggest bank.

MA JIAN, CHAIRMAN ICBC-AXA LIFE "We will utilize the professional investment and risk control techniques from AXA, and we can also cooperate with the many branches of our other shareholder Minmetals."

The investment arms of many insurers made solid gains in 2017. They are now the biggest institutional investors in China's mutual fund market.

YANG CHENGXI SHANGHAI "China's financial regulator announced new policy guidelines for the wealth management industry in April. The core focus was to get rid of questionable practices, especially implicit guarantees."

ICBC-AXA Life says they're offering an alternative to the high-risk, high-return investment products that the regulators will be scrutinizing.

MA JIAN, CHAIRMAN ICBC-AXA LIFE "For investors looking to lower risks, we believe they will like our products, which provide both life insurance and financial returns."

BROCK SILVERS, MANAGING DIRECTOR KAIYUAN CAPITAL "However let's keep in mind that the sector still has low profitability and extremely difficult competition. It's not even clear that the western style asset management preferences of lower yield with less risks will really find a welcoming home in China. It remains to be seen if that will or will not be the case."

Nevertheless, the background of ICBC-AXA Life makes the wealth management market more diverse. The firm appears confident that it will succeed in navigating the Chinese market in the long run. YCX, CGTN, SHANGHAI.