Bloomberg
Shock and Tears: Behind Vanguard’s Retreat From China Market
(Bloomberg) — Vanguard Group Inc. staff who dialed into a video call from their desks on the 40th floor of the Shanghai World Financial Center last month were expecting a morale-boosting speech from regional head Scott Conking on how the U.S. fund giant would tackle the Chinese market after years of preparation.Instead, Conking said the $7 trillion money manager was abandoning its push for a mutual fund license. The firm would rely on an advisory venture with Ant Group Co. to maintain a presence in China, Conking said via video from the same Shanghai office, where he was visiting for the first time.The 30-odd employees were in shock. More than 10 staff were let go right after Conking finished speaking, according to people familiar with the matter. One employee burst into tears, the people said, asking not to be identified as the information is private.Yet behind the seemingly hasty retreat were years of scrutiny by Vanguard’s top management on whether its low-cost model works in China, the people said. The conclusion, at least for now, appears to be no, and serves as a cautionary tale for other global asset managers eyeing China’s $13 trillion wealth market.A representative for Vanguard declined to comment.While there had been some signs of Vanguard’s shrinking ambitions in Asia last year, the firm was still expected to apply for a fund license in China, seen as crucial for growth in the…
