Private banking: The man in the middle of China’s family office boom
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Northeast Asia

Private banking: The man in the middle of China’s family office boom

Family offices in China have grown from practically nothing 15 years ago to a hyper-competitive industry now. Zhang Yong, a former private banker who set up one of the country’s biggest multi-family offices, shows how the market has developed.


Zhang Yong’s story is tied to the story of wealth management in modern China.

He founded multi-family office (MFO) Deyu in 2015, spotting an opening in an industry that has grown rapidly over the last decade. 

Before that, he spent 18 years with China Minsheng Bank, a leading joint stock commercial bank founded in 1996 and the first bank in China to be majority-owned by non-government enterprises, a novelty at the time among China’s banking firms.

Zhang joined Minsheng in 1997; by the time he left, he was in charge of private banking, then still a relatively new area of business in China. The story of how he went on to found Deyu gives a window into how modern Chinese business has evolved.

Deyu, which has a team of 25 people, is a MFO whose clients include some of China’s richest people. 

The firm manages the wealth of nearly 40 families; each of these families has at least Rmb2 billion ($280 million) in assets. At the top end, its wealthiest clients have family assets of at least Rmb10 billion on average, and one family has at least Rmb80 billion.

While Deyu cannot identify any clients by name for reasons of confidentiality, it says that they include four individuals who are the wealthiest in their respective provinces, and two other individuals who are the wealthiest in their respective cities.

Deyu captures only a fraction of each family’s wealth, but its assets under management is in the billions of renminbi. The firm is one of the biggest MFOs in China. 

A February report from Avic Trust and UBS claims that MFOs serve an average of eight ultra-high net-worth (UHNW) families. 

It was the imbalance between supply and demand that led to the birth of private banking in China – because there was a gap to be filled - Zhang Yong, Deyu

Deyu is also one of the most established. It was set up in 2015, regarded by many in the industry to be ‘year zero’ for family offices in the country. By then, China already had a swathe of wealthy individuals, early movers who prospered thanks to the ‘open door’ economic reforms that were announced at the end of 1978 and that accelerated after Chinese leader Deng Xiaoping declared in 1985 that “some regions and some people can get rich first, and drive and help others in other regions and gradually achieve common prosperity”.

High-end wealth management and private banking started in 2007 with the launch of Bank of China’s private banking business with strategic partner Royal Bank of Scotland; a decade later, the country’s breakneck economic growth started to slow, falling from 6.8% in 2017 to 6.1% last year – and will most likely slow even more in 2020 because of the coronavirus pandemic.

This has led to a slowdown in the creation of new wealth. 

The investable assets of Chinese citizens reached Rmb147 trillion by the end of 2018, according to a joint report by Boston Consulting Group (BCG) and China Construction Bank published last year. The number of HNW individuals or households, defined as those with investable assets of at least Rmb6 million, topped 1.67 million.

Their investable assets grew only 8% in the year to the end of 2018 – in sharp contrast to the average 16% annual growth between 2013 and 2017. More than half of the HNW individuals in China are over 50 years old, and over 40% of the ultra HNW individuals – many of them entrepreneurs – have started planning for wealth succession, according to the report.

All of this points to a simple fact: that China’s richest citizens, after decades of aggressive wealth accumulation, have shifted their focus more towards how to preserve wealth and pass it to the next generation

This likely means China’s family office sector will become bigger and more competitive in the coming years. 


Zhang, who was born in the eastern province of Shandong, studied finance at Shandong Economics University. It was the first university in the province to offer a finance major when Zhang was admitted in 1986. 

Zhang, who was top of his class in high school, was interested in both finance and law. He had considered attending the East China University of Political Science and Law in Shanghai, but decided to stay close to his family in Shandong and follow his father’s advice to take up a major in finance.

After graduating in 1990, Zhang went to work at the Shandong Academy of Social Sciences. Four years later, he went to the renowned Fudan University in Shanghai to do a master’s degree in international finance. 

We are very confident in the future of the whole family office market - Zhang Yong

It was Zhang’s research for his 70,000-word graduation thesis (on the subject of industry and finance) in 1997 that took him to Minsheng, his home for nearly two decades.

During his time at Minsheng, Zhang tried out pretty much all the front- and middle-office jobs, working across corporate banking, retail banking, investment banking, risk management and, finally, private banking. 

He was sent overseas on multiple occasions, sparking his interest in the private banking sector, which was still a relatively new concept in China. He trained in Hong Kong in 1999, two years after the handover of special administrative region, and went to the US in 2001 and to Singapore in 2006 for further training stints.

“Among the 60,000 employees of Minsheng, I was probably the one who had undergone the most training overseas,” he says. “During that training, I was exposed to the cutting-edge financial market of the West, and it was when my understanding of high-end wealth management and private banking began to take shape.”

Zhang and two other senior managers worked on the launch of Minsheng’s private banking department in 2008. He tells Asiamoney that it was a natural move for bankers trying to respond to the rapid accumulation of wealth in the country.


“From a demand perspective, the Chinese economy was growing at a high speed at the time and the whole society became wealthy,” says Zhang.

“There was huge potential in the [wealth] market, but not many institutions can provide services, particularly in wealth management and private banking,” he adds. “It was the imbalance between supply and demand that led to the birth of private banking in China – because there was a gap to be filled.”

Private banking

Between 2007 and 2008, state-owned Bank of Communications, China Construction Bank and Industrial and Commercial Bank of China followed BoC’s early lead. Minsheng and its joint stock peers China Merchants Bank and China Citic Bank were also among the first wave of domestic lenders to explore this market.

It was the right time. In the first decade of private banking in China, to 2017, China’s GDP trebled in size, according to World Bank data. During this period, the wealth of Chinese individuals jumped nearly 200%, according to BoC. By the end of the decade, the wealth management market had grown to $24.8 trillion, making China the second-largest country in terms of private wealth after the US.

Chinese banks were quick to grasp the implications. Within three years of BoC breaking into the market, a total of 16 Chinese and foreign banks had launched private banking businesses onshore. But setting up shop was just the first step.

“Every bank was experimenting,” says Zhang. “At the beginning, when the heads of private banks got together, everyone would always say: ‘This is a huge market with broad prospects’. But no one really knew what the next step should be.”

This industry lacks talent. You’ll need someone with a good character, who is smart but emotionally intelligent at the same time, who can learn quickly, but also with a service awareness - Zhang Yong

Those first few years were a period of trial and error for many Chinese banks, including Minsheng.

“We were slowly exploring, constantly changing things and trying to find a way that was suitable for China, because the experience of foreign private banks may not work here,” Zhang says. “It was only after three or four years that we found ourselves on the right track, and things started to accelerate.” 

Zhang moved to Beijing in 2011 and managed the development of Minsheng PB across the country. The bank’s assets under management reached Rmb273 billion in 2015. Private banking brought in Rmb4.82 billion in net income for the bank, which was 65.5% higher than the year before. 

At that point, Zhang decided to go it alone. On October 28, he founded Deyu. 

He was 48 years old at the time. Zhang says that well-connected Shanghai-based entrepreneur Yang Guoping told him that 48 was just the right age to start his own business.

“He said at my opening ceremony that 38 would be too young for this industry, while 58 would be too old because I wouldn’t have the energy,” Zhang tells Asiamoney.

Yang is not just any entrepreneur: he is best known for founding one of the largest taxi and transport networks in China, Dazhong Transportation (DZT), and has an interesting history himself.

DZT was set up in 1988 in Shanghai during the time when Zhu Rongji was mayor of the city – on his way to becoming China’s reformist premier. Yang worked for various utility sectors of the Shanghai municipal government, and according to a book by one academic, he was called on by Zhu to improve the organization of Shanghai’s taxi and transport network, leading to the creation of Shanghai Dazhong Taxi Co (which became Dazhong Transportation a few years later). 

Its fleet was then mainly made up of VW Santanas that were built in the city under one of China’s first post-Mao joint ventures with a foreign car-maker – a venture between Volkswagen and a Shanghai government-owned state industrial authority SAIC Motor. Both the car company and the taxi company were called Dazhong (meaning ‘the people’), a name which clearly works as well for VW, which means ‘people’s car’ in German.

Zhang and Yang met about 15 years ago through an association of Shanghai entrepreneurs when Zhang was working with Minsheng in Shanghai. He says Yang is “an excellent person”, a leading figure who he regards as “the big brother” among the entrepreneurs in the Shanghai entrepreneur community.


Zhang chose to enter the family office business after contemplating a few possibilities.

“You could go and source both products and clients, and become an independent wealth manager, like Noah or CreditEase,” he says. “Or put together a good investment and research team and find a chief investment officer, like a private equity or venture capital firm. Setting up a boutique investment bank would be another way to do it.”

But Zhang chose a path that he describes as “possibly the slowest, the hardest but the most enduring” – to start an MFO.

“The other areas were pretty mature and had established players already,” he says. “Starting a family office can fill in the blanks, and there is the opportunity to be the bellwether,” he adds.

“The family office market was quite chaotic at the time, so we felt there was a long way for us to go if we wanted to set an example for what a proper family office should be like, rather than pretending to be one.”

Zhang and his team worked hard for half a year before Deyu’s launch.

“It was quite exhausting,” admits Zhang. “We were working day and night, for 15 or 16 hours every day.”

We are not after high-speed [expansion], but longevity and stability - Zhang Yong

One of the difficulties was sourcing talent. 

“This industry lacks talent,” Zhang says. “You’ll need someone with a good character, who is smart but emotionally intelligent at the same time, who can learn quickly, but also with a service awareness; it is actually very difficult to find the right people.”

By the time Deyu opened for business, Zhang had handpicked 16 or so people to work with him. The team has expanded to 25 this year. Many of them came from a commercial banking, private banking or investment banking background, or were experts in insurance, trust, tax, law, consultancy and education. 

Team members have an average of 16.5 years of experience in their respective fields.

Zhang thinks it is the experience and breadth of his team that has given Deyu a march on the competition. 

The firm offers a range of services to Chinese families relating to the “creation, protection, succession and usage” of wealth, as Zhang puts it.

That includes helping clients to manage taxes, plan wealth transfer, manage on-and offshore assets, create trusts, buy insurance, send children to overseas schools and do everything else that wealthy (and busy) clients demand.

Unlike many MFOs in China that started off by serving just one client before taking on others, Deyu had more than 10 families on board from day one. 

Now, with nearly 40 families and billions in assets under management, each family is covered by four members of Deyu’s team. It also offers consultancy services to more than 160 HNW clients with a minimum of Rmb100 million of assets.

Client trust

A disadvantage of being an early mover in China’s private banking sector is that Deyu has had to work hard to educate clients: some do not like to pay for services, or will only offer to pay after their investments have made money. 

It also takes a long time to earn a client’s trust, Zhang says – unsurprising given the large amount of wealth as well as the privacy issues involved. 

Chinese entrepreneurs can also sometimes be over-confident and prefer to take control of things themselves rather than hiring others, he adds.

Zhang says he does not plan to take on many more families, but rather keep the size of the stable at about 40 to 50. 

There is a mutual selection process between Deyu and the families, and Zhang says they only take on those who “click” with Deyu and share the same values. 

“We are not after high-speed [expansion], but longevity and stability,” says Zhang. “That is why clients would usually like to renew their contracts with us: some of them sign for three or five years; others have asked for a lifetime contract.”

Deyu was launched in Beijing and Shanghai at the same time. It expanded to Hong Kong on its first anniversary, then to New York in June 2019. 

There is still plenty of room for China’s family office sector to grow. 

According to BCG and CCB, only 2% of HNW individuals were using family office services by the end of 2018. Some 20% say they have only a basic understanding of family offices. Nevertheless, competition in the sector is rising quickly.

There is no official data but several sources tell Asiamoney that China has 2,000 to 3,000 family offices, including single-family offices and MFOs such as Deyu. They claim there are more than 100,000 families with at least $100 million in assets.

“It feels like there are more family offices in China than [wealthy] families, and that tells you how chaotic this market is,” one tells Asiamoney.

“When I was looking at the family offices at the end of 2018 and in early 2019, I was not very optimistic about the overall market: many players were hiding behind a family office brand but doing something else,” says a banker who founded a new MFO in 2019.

“There were some good ones, but for a lot of them, their advantages and disadvantages – depending on whether they were founded by lawyers, insurers or bankers – were equally obvious. Many were struggling to make ends meet.”

There are several types of family offices in China, Zhang says. 

Some of them are product-focused and operate like an independent wealth manager. Others are investment-focused, much like an asset manager. There are also firms set up by lawyers, or tax or insurance experts, that primarily offer consultancy services.

Some firms are family offices in name only, doing little but helping their clients book health check-ups and cosmetic treatments, say market participants.

“The market is still quite chaotic, but it sort of developed amid all the chaos,” says Zhang.

And in that chaos, there is still plenty of room for growth. 

A third of the UHNW families who do not currently use family office services say they are interested in joining an MFO, according to the Avic & UBS survey, with 44% willing to set up their own single family offices. In Mainland China, only about 65% of net wealth is managed, compared with 81% in Hong Kong and 76% globally.

Now Deyu is entering its fifth year of operation, the latest task for Zhang and his team to navigate is the aftermath of the Covid-19 pandemic. 

He says there has been a clear impact on the wealth of his clients, as well as the fee income his firm earns.

“The pandemic also made it difficult to communicate with clients: even with video calls, high-end clients still prefer face-to-face communications.”

But the coronavirus, which most impacts older generations, has also drawn attention to the importance of succession planning. It has also made clear that wealthy individuals can no longer expect perpetual growth in their portfolios.

“We can help them to better allocate the assets and preserve the wealth, or looking at possible transformation of their companies or even asset disposals,” Zhang says. “We are very confident in the future of the whole family office market.” 

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