In May, Jersey Finance CEO, Geoff Cook spoke with Wealthbriefing Asia on the opportunities for Jersey in this growing market.
With Brexit becoming an ever-nearing reality, the UK is busy making plans to ensure the flow of business in and out of the country remains steady, both within the European time-zone but crucially further afield too.
The fact that London remains the world’s pre-eminent centre for international financial services will be vital as it nurtures new and existing trade relationships worldwide, and there is no doubt that links with Asia-Pacific regions will be pivotal.
The opportunities presented by the significant increase in wealth creation in China are well documented. According to the Knight Frank World Wealth Report, 2017, last year Asia was second only behind the US globally in terms of the number of individuals worth over US$50m (35,880), with Hong Kong and mainland China seeing up to a 20% rise on the previous year.
Jersey, as a leading and forward-thinking International Finance Centre (IFC), is in tune with this movement and ready to support the growth of outbound Chinese investment in a post-Brexit era.
Jersey’s strategic vision makes it clear that forming and maintaining strong relationships with overseas markets is a key priority for long-term sustainability, and over the years it has invested considerably to make this vision a reality. As a result, it’s notable that half of the new business attracted to Jersey is now coming from outside of Europe.
Continuing to build relationships with key markets like Greater China will be instrumental in setting Jersey apart.
For instance, the jurisdiction has been promoting its finance industry in Greater China for almost two decades now and opened a representative office in Hong Kong in October 2009 – one of the first IFCs to do so. In addition, Jersey Finance has been running Roadshows across Asian markets for almost five years – in 2017, events in Shanghai and Hong Kong explored developments within the international financial services landscape and the positive role of IFCs like Jersey in helping fulfil the increasingly sophisticated private wealth objectives of Chinese investors and their families.
Recently, Jersey has sought to embed its position in China by focusing on delivering fresh insights into a rapidly evolving market. Research published last year by Jersey Finance (‘How to service Chinese wealth as it goes global’), for example, highlighted that a lack of investment products in China is driving investors to look overseas, using structures such as trusts and offshore companies. It also found a gap between a desire for succession planning and how to achieve it, with the overwhelming sense in China being that wealth planning involves a loss of control over assets.
With Chinese investors showing a growing appetite for outbound investment, the opportunities to capitalise on Jersey’s specialist knowledge are clear.
Jersey has long been recognised in China as a centre for corporate structuring and listings work – Jersey companies listed on the Hong Kong Stock Exchange are valued at around £60bn – but the internationalisation of Chinese wealth is now presenting new opportunities.
Investors are looking increasingly at commercial real estate as investment opportunities, for example – the purchase of the “Walkie Talkie” building in London last year by LKK Health Products Group, a member of the Hong Kong-based Lee Kum Kee Group, for £1.3 billion, was the largest-ever office complex transaction in the UK, and it was structured through Jersey.
There is no doubt that the future of international finance is digital, and in China digital innovation is a serious driving force.
Given Jersey’s focus on developing a world-leading digital economy and being the leading IFC for doing business remotely, there are real opportunities here to support the needs of Chinese investors.
The use of artificial intelligence (AI) is featuring increasingly within wealth planning, whilst handling data securely across borders is another area where technology can be particularly helpful. It’s pertinent that a further finding of last year’s research was that reporting tax information across borders is the biggest concern of wealth advisers to families in China.
In a world where financial activity is under careful examination, Chinese investors ramping up their cross-border activity need reassurance and certainty when it comes to compliance with reporting requirements under regulatory initiatives like CRS.
Demonstrating its prudence in the regulatory and governance space, Jersey a leader on global transparency initiatives. It’s an early adopter of CRS and ‘fully compliant’ with OECD tax transparency requirements, but it is also at the cutting-edge in terms of embracing technology that can make cross-border reporting more efficient and secure.
As the opportunities presented by China come into focus, and Brexit reinforces the importance of global connectivity, specialist knowledge and digital innovation are going to be vital for IFCs operating in a complex and sophisticated market. On both counts, Jersey is focused on setting itself apart as an IFC of choice for supporting Chinese investors and working with China, the UK and Europe to facilitate better links.