UK's Aberdeen Asset Management granted licence to operate in China

The licence, which was granted to a newly-created Aberdeen subsidiary by the State Administration of Industry and Commerce in Shanghai, will allow that subsidiary to operate as a wholly foreign-owned enterprise (WFOE). The company announced the deal during a week-long trade visit to China by UK chancellor of the exchequer George Osborne.

The announcement also follows agreement by China to loosen trade restrictions around its securities markets. It has announced that locally-incorporated private fund management firms which are wholly foreign-owned, or part of a joint venture, will be able to conduct private security management business, including securities trading on the secondary markets, in line with domestic regulations.

Aberdeen Asset Management's chief executive, Martin Gilbert, said that gaining the new licence was an important part of the firm's plans for the next decade.

"UK business cannot ignore the structural development of China," he said. "It is already the second largest economy in the world and will sooner or later surpass the US."

However Hugh Young, the managing director of the firm's Asian business, said that the firm intended to grow its investments "slowly" in order to "avoid short-termism and focus on quality".

Aberdeen Asset Management is a FTSE 100-listed company which currently operates in 25 countries across Europe, Asia and the Americas, managing $483 billion worth of assets on behalf of institutional and private investors as of June 2015. It opened a representative office in China in 2007, which has mainly performed "liaison work", according to the firm's announcement.

Now that the firm has received a business licence, its next step is to apply to be registered with the Asset Management Association of China, a self-regulatory body for the Chinese mutual fund industry. Its early plans include recruiting business development staff and analysts to research local equities, and raising assets from local institutions.

Economic secretary to the Treasury Harriett Baldwin, who is part of the UK delegation in China, said that the announcement was in line with the UK government's wider plans to "secure London's future as China's bridge to western financial markets as part of a new golden era of cooperation between our countries".

"Our efforts are already bearing fruit – I am delighted Aberdeen Asset Management has received a licence to operate in China as a wholly foreign-owned enterprise. This is an important step for an established British firm and will help to increase the links between our financial services industries," she said.