商業企畫書：Parsec國際財務管理 - 政大學術集成

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(1)國立政治大學商學院國際經營管理碩士學程 International MBA Program College of Commerce National Chengchi University. 立. 治政碩士論文大. ‧. ‧ 國. 學. Master’s Thesis. sit. y. Nat. er. io. 商業企畫書：Parsec國際財務管理 a. n. iv l C International Parsec n U h. engchi. Student: Meredith Hall Clinton Advisor: Professor Edward Chow. 中華民國九十八年十二月 December 2009.

(2) 商業企畫書：Parsec國際財務管理 Parsec International 研究生：李啦啦指導教授：周行一. 政治大. 學. 國立政治大學. 商學院國際經營管理碩士學程碩士論文. Nat. sit. y. ‧. ‧ 國. 立. Student: Meredith Hall Clinton Advisor: Edward Chow. A Thesis. er. io. Submitted a to International MBA Program. n. iv l C n NationalhChengchi University engchi U. in partial fulfillment of the Requirements for the degree of Master in Business Administration. 中華民國九十八年十二月 December 2009. ii .

(3) Abstract PARSEC INTERNATIONAL By Meredith Hall Clinton. Parsec International was created in 2009 to expand the successful and profitable Parsec Financial overseas to Chinese tier-2 cities. Parsec Financial is a wealth management company that created Parsec International to capitalize on the growing needs of the ever-increasing High Net Worth Individual Population (HNWI) in China. HWNI wealth management needs are currently being served in China’s tier-1 cities; therefore, Parsec International hopes to gain a first-mover’s advantage by supplying proven wealth management services to Chinese tier-2 cities, beginning in Xiamen, China.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. Based on the attached financial projections, our research, our own personal experience, and careful scrutiny of the specific audience and area where we are focused, we are convinced that the market for Parsec International’s wealth management services will support the accomplishment of our a goals and objectives. v. ni. l. C h of measuringUour effectiveness in our We have built in specific means engchi marketing efforts, engaged with strategic partners and reviewed regulatory requirements to support our success. The market is expected to grow quickly in the wealth management industry in Chinese tier two cities over the next 5 years. We fully intend to lead the industry in our market, establish and maintain the highest standards and position ourselves as the most knowledgeable and trustworthy wealth management stewards for Xiamen, China and other Chinese tier two cities. We fully anticipate reaching our break-even point by year 3 and profitability in just 4 years. We will drive most of our profits back into the company during, to support our planned expansion to other Chinese tier two cities. Otherwise, profits will be distributed to investors as dividends.. iii .

(4) Acknowledgements I would like to take this opportunity to share my warmest appreciation for my advisor Professor Edward Chow. Without his help, I was sure to be lost with this project. His patience, kindness and direction gently guided my path towards finishing my business plan. I would also like to thank Lichi Ho; without her help while overseas, nothing would have been done. I would like to thank my Uncle Bart for his words of wisdom on the wealth management industry and his continuing encouragement throughout this project. A special thanks to Jatin Yuan for tying up loose ends after my departure and the never-ending plates full of quesadillas that kept me going through the night.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. iv . i Un. v.

(5) Table of Contents Table of Contents .............................................................................................................................1 Market Opportunity ........................................................................................................................15 Market Analysis .............................................................................................................................18 Competition ....................................................................................................................................27 Risk.................................................................................................................................................33 . 政治大. Company Overview ........................................................................................................................40 Environmental Sustainability .........................................................................................................43 . 立. Vision, Mission, Goals & Objectives .............................................................................................45 . ‧ 國. 學. Business Strategy ...........................................................................................................................49 Revenue Model ..............................................................................................................................52 . ‧. Service Strategy..............................................................................................................................55 . Nat. sit. y. Marketing Plan & Strategy .............................................................................................................59 . al. er. io. Internet Strategy .............................................................................................................................70 . iv n C Operations ...................................................................................................................................... 79 hengchi U n. Management ...................................................................................................................................72 . Present Situation .............................................................................................................................81 Financial Plan .................................................................................................................................85 Capital Requirements .....................................................................................................................90 Exit / Payback Strategy ..................................................................................................................92 Summary ........................................................................................................................................93 Supporting Documents ...................................................................................................................96 . ______________________________________________________________________________________ 1.

(6) Parsec International was created in 2009 to expand the successful and profitable Parsec Financial overseas to Chinese tier-2 cities. Parsec Financial is a wealth management company that created Parsec International to capitalize on the growing needs of the everincreasing High Net Worth Individual Population (HNWI) in China. HWNI wealth management needs are currently being served in China’s tier-1 cities; therefore, Parsec International hopes to gain a first-mover’s advantage by supplying proven wealth management services to Chinese tier-2 cities, beginning in Xiamen, China.. Background For many years China’s industry, economy, manufacturing sector and GDP have grown leaps and bounds.. 政治大. With this new growth comes new demands from the Chinese people. With all of the wealth that has been created, earned and saved, growth in the financial industry is imminent; especially in the field of personal wealth management.. 立. “ Between 2006 and 2007 alone, Boston research estimates Chinese wealth grew 36.8%… ”. Consulting Group at a staggering. Nat. sit. y. ‧. ‧ 國. 學. Today, the Chinese wealth management market is growing exponentially, creating an overwhelming demand for proven, and experienced wealth managers in both domestic and international investments.. al. er. io. Parsec International will use the resources, research and carefully designed portfolios of Parsec Financial, to meet the wealth management needs of Chinese clients living in Xiamen and other tier-2 cities.. n. iv n C Parsec Financial’s existing businesshmodel has provenU to succeed in the US market for i e h n c g over 30 years. By utilizing Parsec’s successful business structure and localizing it. specifically to Chinese tier-2 cities, Parsec International will also achieve profitability and success in our joint venture with Xiamen International Bank. Parsec International will be established as a joint venture with prestigious partner Xiamen International Bank for two reasons; to more easily penetrate this new market and to abide Chinese Qualified Domestic Institutional Investor (QDII) regulations. This structure will facilitate marketing, rapidly encourage new business and ensure more stable growth. Parsec International will be located in Xiamen, China, with office headquarters in Asheville, North Carolina, USA. Planned expansion will follow into other Chinese tier-2 cities after profitability has first been achieved in Xiamen. By 2015, our assets under management (AUM) will be USD $100 million annually, and is expected become profitable by year 4. Revenues projected for fiscal year 2015, are expected to reach USD $750,000 (half of which will be shared with Xiamen International Bank). Annual growth projections indicate an increase of 50% - 100% per year through ______________________________________________________________________________________ 2.

(7) 2015. Currently, Parsec International still needs to find one key local Chinese talent and secure a partnership with Xiamen International Bank. As initial seed money, we intend to receive USD $200,000 from Xiamen International Bank and and USD $200,000 from investors to expand Parsec Financial (as Parsec International) into Xiamen, China.. Market Opportunity The Chinese wealth management market is growing rapidly. Assets under management (AUM) for foreign fund management amounted to RMB 882 billion in 2009 – representing a 25% CAGR (Compound Annual Growth Rate) over the past five years. Not only is China’s growing HNWI population important for wealth management, but also so is its Emerging-HNWI population. The Emerging-HNWIs are defined as individuals with between U.S. $750,000 and USD $1 million in investable assets. According to Capgemini, “China’s Emerging-HNWI population expanded by 20% and also broke through the US $100 billion barrier” in 2007. This opens up opportunities for wealth managers all along the wealth spectrum including China’s Ultra-HNWIs (those with more than USD $30 million in invstable assets), HNWIs, Emerging-HNWIs and the Mass Affluent (defined as those with USD $100,000 to USD $1 million in investable assets).. 立. 政治大. ‧. ‧ 國. 學. er. io. sit. y. Nat. According to Barclay’s Capital Wealth Management report from 2009 “a majority of wealth managers see China as the most attractive market, with a quarter of wealth managers still forecasting the country to generate revenue growth of more than 15% per annum during the next two years”. Parsec International perceives that the best area for immediate growth is in China’s untapped tier-2 cities. Currently, none of our competitors are present in tier-2 cities, which would give us a very strategic “first-mover” advantage.. n. al. Ch. engchi. i Un. v. In the next 5 years, our forecasts indicate that Parsec International will succeed in reaching USD $100 million in AUM. USD $100 million in assets under management (with an average .75% managing fee) – is approximately USD $750,000 in revenues. This translates to Parsec International’s market share at .09% of the overall Chinese market in 2015.. Customers Parsec International’s target market includes Ultra-HNWIs, HNWIs, Emerging-HNWIs, and the Mass Affluent in the greater Xiamen, China area. The typical customer for our products is someone who is a business owner or executive and who currently has domestic Chinese investments and is looking to diversify internationally. The most typical client for Parsec International will be an HNWI, Emerging-HNWI or Mass Affluent client; or basically an individual who has at least USD $100,000 of disposable income available for investment. They will most usually be ______________________________________________________________________________________ 3.

(8) an HWNI with at least USD $1 million in net assets. They will probably have several residences, take vacations abroad and be looking for a smart, long-term way to grow their investments.. A partial list of Parsec Financial customers includes: . Doctors Business Owners / Entrepreneurs Executives. Portfolio Strategy Parsec Financial currently offers stock portfolios with the appropriate risk for the UltraHNWI, HNWI, Emerging HNWI, and Mass Affluent markets including: . 立. 學. ‧ 國. . 政治大. Growth, a portfolio designed for younger clients, or clients for a larger risk appetite and higher returns Balanced, a portfolio designed for working professionals with a lower risk appetite Growth and Income, a portfolio designed for older, retired individuals or those whom are risk adverse. ‧. Each of these is a well-diversified portfolio. The growth portfolio is comprised of 100% equities. The Growth and Income portfolio is 100% equities, but with an emphasis on higher dividend stocks. The Balanced portfolio includes 80% equity and 20% fixed income. For the Chinese market, these portfolios will be adjustable, but our competitive fee schedule will remain the same. In China, under QDII regulation, only 50% of a client’s international investments can be held in equities. Parsec International will invest client money into portfolios that are comprised of 50% equities. The other half will be split between US Treasury bond trading and other fixed instruments, to comply with Chinese QDII regulation and maintain our competitive advantage.. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. The unique benefit that Parsec International offers its clients is its core belief in customer alignment. Our competitors earn commissions through selling or pushing financial products onto their clients, which may not be in the clients’ best interest. Not at Parsec. What is important to note here is the different way that Parsec Financial earns its management fees. Parsec Financial never charges commission for selling a product. Instead, Parsec charges a fee strictly based upon the assets under management; aligning Parsec with her customer’s best interests. The motivation is that better investments, attract more clients to Parsec. With growth in AUM, comes growth in revenues (not to mention the organic growth from the investments themselves). So, if Parsec makes smart investments and earns its clients money, Parsec enjoys the growth in earnings too. Whenever client portfolios move upward, so do Parsec’s revenues and net profits. This is how Parsec stays true to its ______________________________________________________________________________________ 4.

(9) customers and what makes it stand out against the rest of the financial industry that may push unnecessary products to gain a quick commission. Also consider that Parsec Financial’s normal attrition rate is 2-3% annually, which remained the same even during the financial crisis. Parsec typically gains about 8-10% of new clients a year, for a net gain of 6% more clients each year. Over the last ten years the S & P 500 grew about 1% annually while Parsec grew at an impressive 14%. Parsec’s fee-only structure and low attrition rate are its keys to success.. Business Model The realization of the enormous amounts of FDI (Foreign Direct Investment) pouring into China and its resulting birth to an alarmingly huge HNWI population was where the idea for Parsec International originated. This HNWI population coupled with the recent relaxation of China’s QDII regulations, makes China an ideal place to expand Parsec Financial’s wealth management expertise.. 政治大 Parsec has a unique approach 立to the wealth management business as we do not “sell” investment products like our competitors. In contrast, we are vested alongside our. ‧ 國. 學. ‧. customers with our unique fee structure that makes our clients interest our own. That is what is most unique about our business strategy. In addition, Parsec International provides experienced, proven investment knowledge for a lower fee than the competitors. In fact our fee is almost half of what our competitiors charge. To date, we have not encountered any other wealth management service in China offering a similar added value. Parsec fully intends to establish itself as the source of choice for asset management in the personal finance industry by first gaining a strong reputation in Xiamen, China.. sit. y. Nat. n. al. er. io. Parsec also uses a bottom-up valuation method for research and carefully selecting stocks. As a result, Parsec has consistently outperformed the S&P 500. This combined with a competitive fee structure makes Parsec the best choice for a high net worth customer.. Competition. Ch. engchi. i Un. v. The most notable companies that competing in this market are China International Fund (JP Morgan), Harvest Asset Management and ICBC Credit Suisse Asset Management. These competitors all charge much higher fees than Parsec International and only operate in China’s tier-1 cities: Competitive Pricing Our top 3 competitors are: China International Fund Management; International Trust and Investment President Location. JP. Morgan. and. Shanghai. Jamie Dimon Shanghai. Years in Business. 5 years. Market Share. 2.53%. ______________________________________________________________________________________ 5.

(10) AUM. 49 billion RMB. Fee to manage equity. 1.5%. Foreign Equity. 49%. Number of Products. 9. Harvest Asset Management; Deutsche Asset Management President Location. Rong Ren Beijing. Years in Business. 10 years. Market Share. 政治大. AUM Fee on equity. 7.09%. 立. 138 billion RMB 1.8%. Fee on mixed. 1.5%. ‧ 國. 學. Fee on Bonds. 0.6%. Fee on Money Market. 0.33%. ‧. Foreign Equity. 16. ICBC Credit Suisse Asset Management Asia Pacific Executive Chairman. n. al. Location. Ch. engchi. er. io. sit. y. Nat. Number of Products. 30%. i Un. v. Anthony Iliya Beijing. Years in Business. 4 years. Market Share. 3.88%. AUM. 75 billion RMB. Fee on equirity. 1.8%. Fee on Bonds. 0.6%. Fee on ETFs. 0.5%. Foreign Equity. 25%. Number of Products. 9. Key factors, such as Harvest’s first-to-market leadership position and leader in assets under management; China International’s exceptional peer ratings and Credit Suisse’s ______________________________________________________________________________________ 6.

(11) large market share have resulted in the present competitive situation in the Chinese wealth management industry. This means that Parsec International will need to first partner with Xiamen International Bank in order to establish strong brand recognition in Xiamen. Our strategy is to first establish significant brand recognition in Xiamen, before expanding into other tier-2 cities. Parsec International’s asset management meets customer expectations with the unique fee structure that correctly aligns our interests with that of our customer. As noted by the Boston Consulting group in 2008, Chinese customers are tired of being “sold” financial products and want a portfolio designed specifically for their needs. Parsec doesn’t sell financial products to clients, but instead, manages them in the client’s best interest. Our fee structure keeps us committed to a client’s best interest. Parsec International’s key competitor’s major strengths include: experience in the Chinese market and brand recognition. Their weaknesses include higher fees and less flexibility to react to clients needs.. 政治大 Our products and related services will be positioned in the minds of prospective 立 customers as a wealth management company that puts a client’s interests first. This. sit. y. Nat. Risk. ‧. ‧ 國. 學. positioning in the minds of potential customers gives Parsec International a decided advantage as a smaller, more flexible, low cost competitor. Because we are not yet a globally established household name, we intend to compete on price, location, value and co-branding with our partner Xiamen International Bank.. n. al. er. io. As we expand into the Chinese wealth management market, top business risks for Parsec International include competition, industry growth, economic factors, insurable risks and regulatory risks.. Ch. i Un. v. Like any operation, there is always some risk associated with operating a business. We perceive our greatest exposure in the low possibility of tightening regulation in the area of QDII. A significant threat to our business would most likely derive from a sudden backlash in international investing for Chinese citizens.. engchi. Our strategy for minimizing regulatory risk includes remaining a flexible company with scenario planning. Our main concern is a scenario where QDII regulations may become stricter. In the highly unlikely event QDII regulations become stricter in the future, our scenario plans include shifting to a more QFII (Qualified Foreign Insitutional Investor) focus. Fortunately, current trends show an increase of funds leaving China, seeking longterm growth and diversification to domestic Chinese investments. It is forecasted that QDII regulations in the future are more likely to loosen, than become stricter. Loosened QDII regulations may also require that we make adjustments to account for lowered barriers to entry (which would invite more competition) or the signing of ECFA (Economic Cooperative Framework Agreement), which would open up many new opportunities but also increase competition from Taiwan. ______________________________________________________________________________________ 7.

(12) Marketing Plan Parsec International's marketing strategy is to enhance, promote and support the fact that the benefits of our services can be experienced worldwide, and especially by the Chinese HNWI populations. The overall marketing plan for our wealth management services are based on the following fundamentals: . Managing the wealth and assets of HNWI clients in the Xiamen, China area. Joining together with the prestigious Xiamen International Bank to attract client’s assets. We expect to capture .09% of the market share by 2015, with $100 million USD under management by year-end.. To demonstrate the value of Parsec’s investments we can: . 政治大 Appear on radio and TV talk 立shows talking about our unique services. Promote informative financial conferences and round table discussions to raise awareness of Show Xiamen HNWI clients the exceptional track record of Parsec Financial’s historical portfolio performance.. ‧ 國. 學. our in-depth industry knowledge.. ‧. The absence of wealth management firms in Chinese tier-2 cities is because our competitors are completely focused on the tier-1 cities as their main strategy. This opens a sort of “Blue Ocean” opportunity for Parsec International to offer our services starting in tier-2 cities. The HWNI population is on a steady rise in China and they are in great need of wealth management services with sophisticated and knowledgeable advisors. Those who live in tier-2 cities do not have quick and regular access with their fund managers and may be frustrated with the lack of local financial advisory firms. This is the niche Parsec International intends to fill.. n. er. io. sit. y. Nat. al. New Business Strategy. Ch. engchi. i Un. v. Wealth management services should be approached as a long-term, life long relationship. As such, the target market segments for Parsec International’s primary focus are HNWI and Emerging-HNWI that reside in the greater Xiamen area. Because of Parsec International's special market characteristics, as a fee-only financial advisory service our strategy to attract new business includes a special niche-market positioning. Most of the marketing guidance will come from our strategic partner Xiamen International Bank because of their in-depth local knowledge. Our highly engaged financial advisors will handle the majority of Parsec’s client services internally. Most of our HNWI and Emerging-HNWI customers will tend to be executives or entrepreneurs, and it is important that financial advisors, with a considerable financial background, present our wealth management services to our prospective customers in this market segment. ______________________________________________________________________________________ 8.

(13) We have chosen to use our own specially trained financial advisors because our products require considerable customer education and long-term support—directly from our financial advisors. Our product, pricing structure and profits are such that our services warrant a “person-to-person” advisory strategy.. Positioning Our fee-only wealth management is seen by the consumer as a relatively new, effective way to significantly diversify investments and raise their overall wealth. Its historically high performance and comparatively lower fee structure will be attractive to prospective Ultra-HNWI, HNWI, Emerging-HNWI and mass affluent clients. In terms of market segmentation advantages, we can use a low cost, higher return appeal to arrive at a winning position for each targeted segment.. 政治大. Repositioning Parsec International as a profoundly experienced, fee-only advisory service is expected to generate interest and response among prospective customers not reachable by our competitors in tier-2 cities.. 立. ‧. ‧ 國. 學. To be effective, our offerings must remain flexible and proactive as a supplement to existing domestic investments. We can reposition our competitors by capitalizing on our smaller, more flexible position that only we can claim. The basis for attracting new business, is a lower cost, more customer aligned asset management service located in the tier-2 cities of China.. sit. y. Nat. io. er. Distribution Channels. Xiamen International Bank's marketing and sales department have collaborated on a plan with Parsec International to offer our services through several channels available only through Xiamen International Bank.. n. al. Ch. engchi. i Un. v. The determining factors in choosing these channels are: . Customer profile and financial management preferences (delegator, self-delegator, participator). . Geographic factors (tier-2 city) Ultra-HNWI, HWNI, Emerging-HNWI or mass affluent population. Advertising & Promotion Parsec recognizes that the key to success at this time is aggressive, widespread promotion. The key is to penetrate the correct segments and do so discreetly. To accomplish our assets under management goals, we require an extremely capable and local Xiamen advertising agency and public relations firm that has expertise and experience in China. Parsec also has a valuable in-house team member for advertising and promotion. Jatin Yuan possesses incredible experience in brand management for a Taiwanese Jade company whose target segments are HNWIs and Emerging-HNWIs. Jatin Yuan has ______________________________________________________________________________________ 9.

(14) phenomenal insight and experience as to how to market specifically to Parsec International’s target market. Our advertising and promotion strategy is to position Parsec International as the leading wealth manager in the Chinese tier-2 market. We will utilize the following media and methods to drive our message home to our customers: Radio Television appearances Newspapers and magazines geared towards the HNWI market Informative financial seminars and conferences. Objectives. 立. 政治大. Position Parsec International as the first and leading wealth manager in the tier-2 market. Position Parsec International as a trustworthy and experienced wealth management firm. Create high levels of visibility in our HNWI and Emerging HNWI target markets. Increase company awareness and brand name recognition among business executives and entrepreneurs.. . Through market research, develop significant, relevant data resources to create immediate and long-term marketing plans.. . Coordinate literature, demonstration materials, and direct response promotions in order to raise assets under management.. ‧. ‧ 國. 學. . er. io. sit. y. Nat. Publicity / Public Relations a (PR). n. iv l C n hengchi U Position Parsec International at the leading edge in providing fee-only wealth management to. Our publicity efforts are intended to accomplish the following: . Chinese tier-2 cities. Increase Parsec International’s reputation and brand recognition among potential HNWI clients in the local Xiamen area. Communicate on a regular basis with three target audiences: Editors of major trade, business, market, industry and local publications Key management personnel in existing customer companies Organizations frequented by HNWI consumers. Management Team Wm. Barton Boyer, CFP Chairman & CEO Bart made his first investment at age 12. He has since gained more than 49 years of investing experience. Named among the best financial advisors in the country by Worth and Medical Economics magazines, the Minnesota native founded Parsec Financial in 1980. He has appeared as an investment and financial planning commentator on the ABC Good Morning America program and the Fox television network, and was recently ______________________________________________________________________________________ 10.

(15) quoted in the Wall Street Journal. He is a CERTIFIED FINANCIAL PLANNER™ practitioner and member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA). He holds a Bachelor of Science degree in business from Arizona State University. Richard R. Lee, JR., CFP, CFA, Angel Investor and Advisor Mr. Lee will be serving as one of the main investors and valuable advisors for Parsec International’s entry into China. With more than 30 years of wealth management experience, his counsel will be absolutely necessary. Mr. Lee is the President of Lee Financial Corporation, which he helped found in 1975 as one of the first fee-only financial advisors in Texas. He is a CFA Charterholder (Chartered Financial Analyst) and a Certified Financial Planner (CFP). Mr. Lee received a Bachelor of Business Administration degree from the University of Texas at Austin in 1969 and a Master of Business Administration degree from Southern Methodist University in 1978. Mr. Lee served in the US Army from October 1969 to April 1972, including a tour in Vietnam as an infantry platoon leader.. 立. 政治大. ‧. ‧ 國. 學. Mr. Lee currently serves on the Boards of several companies, public and private. He is an active member of the CFA Insitute (formerly the AIMR), the Financial Planning Association (FPA) and is a charter member of the National Association of Personal Financial Analysts (NAPFA).. n. al. er. io. sit. y. Nat. Meredith Clinton – President of Parsec International, 29 Meredith Clinton started Parsec International after working in the insurance industry as a sales producer for 3 years, and interned at TAIFEX (Taiwan Futures Exchange) in business development for 3 months. Coupled with an extensive education in business and fluency in Chinese, Meredith is ideally prepared to run Parsec International. Meredith graduated from Texas A&M University with a Bachelors of Business Administration in marketing and had additional experience in Latin American business studies. She has also lived in Taiwan for 3 years and is familiar with the Chinese culture and business practices.. Ch. engchi. i Un. v. Having worked in the insurance industry for 3 years, Meredith traveled to Taiwan to learn Chinese and position herself to become part of the expanding Chinese market. After the first semester of her MBA at ChengChi University, Meredith became aware of an urgent need for experienced wealth managers in China, and proceeded to plan and launch Parsec International. With her Uncle’s 30 years of US wealth management experience combined with Meredith’s experience with Asian culture, Parsec International is poised to become a very profitable business. Vincent Chen – Senior Financial Advisor, 30 Vincent Chen has an overwhelming passion for the field of financial management. Vincent commenced his studies at National Taipei University and earned his Bachelors in Public Finance. He then entered the prestigious Tai Da University to earn a Masters in Financial Engineering in 2005. After serving his obligatory army service, he started his career at Cathay Life Insurance Company as a foreign exchange trader from March 2007 ______________________________________________________________________________________ 11.

(16) to November of 2007. Then Vincent moved onto Sino Pac Securities where he has been a bond trader for almost two years. He earned a Securities Specialist License in 2004 in Taiwan. Vincent has the necessary skills to direct the financial advisory team of Parsec International, with primary emphasis on expanding the customer base with his expertise in trading US Treasury bonds. Jatin Yuan , Senior Marketing and Brand Manager , 32 Jatin Yuan has almost a decade committed to finance, marketing and brand management. Her distinct range of skills makes her a perfect fit for Parsec International. Jatin earned a degree in Financial Accounting from Yuan Ze University in 2001. Upon graduation Jatin became a Financial Specialist in Investments in the Financial Department in Tainet for two years. From 2004 to 2006, Jatin was a Marketing Specialist at Kingstron Technology. From 2007 to the present she has been a Product Manager at the sophisticated company of Rich Jade where she has gained invaluable experience marketing specifically to HNWI consumers. Jatin holds an AMBA degree from ChengChi University in Marketing.. 政治大 Harli Palme, Senior Financial Advisor, Parsec Financial 立 Harli joined Parsec in 2003. She is a CERTIFIED FINANCIAL ‧. ‧ 國. 學. PLANNER™ practitioner and has a Bachelor of Arts degree in English and religion from Wake Forest University. Harli has completed professional studies at the College for Financial Planning and passed Level I of the CFA examination in 2008. She is a member of the Financial Planning Association and serves as treasurer on the board of Asheville's domestic violence agency, Helpmate.. y. Nat. Michael J. Ziemer, CFP & Parsec Partner, Senior Financial Advisor. sit. n. al. er. io. Before joining Parsec in 2004, Michael worked as an investment representative for Charles Schwab & Co., Inc. He is a CERTIFIED FINANCIAL PLANNER™ practitioner. He also serves on the board of the Gateway Village YMCA as well as their finance committee. In addition to earning a Bachelor of Business Administration degree with a major in finance from Indiana University, the Indiana native studied abroad at the American College of London in London, England. His focus overseas was international business. He has also completed professional studies at the College of Financial Planning.. Ch. engchi. i Un. v. Ron Clinton, Angel Investor and Business Guidance Representative Ron Clinton, father of Meredith Clinton, has over 30 years of successfully running his own businesses, and is one of the major investors of Parsec International. Ron, alongside his daughter, will help guide Parsec International’s transition into becoming a profitable venture. Ron owned and managed one of the top Allstate agencies in Texas from the years of 1989 to 2007. For 20 years, Ron was in charge of marketing, leadership, recruitment, sales, accounting, and financing for the company. Under his ownership, his Allstate agency became one of the most profitable and sought after agencies in Texas. Before owning an Allstate agency, Ron was owner and president of a successful distribution and manufacturing retail electronics company for 10 years. Ron’s passion has always resided with starting profitable companies. Currently he is a avid Texas land investor and looks ______________________________________________________________________________________ 12.

(17) forward to advising Meredith to turn Parsec International into yet another profitable investment. Local Talent, Xiamen, China It is of utmost importance that Parsec International carefully and diligently trains our local talent. Each local hire will first spend six months to one year at Parsec Financial to gain the necessary knowledge and witness first-hand the special attributes that makes Parsec Financial a success. Our local talent will be involved in making decisions during that six months to show them the importance of team work and to learn about the company culture of Parsec Financial that makes it stand out above the rest. This is also one of our recruitment strategies. We will choose the best of the best applicants, and the way we will attract them to apply to our company is by having one of the most intensive, person-to-person training programs. We wholly believe in this method , because our people are our success. At Parsec we value our employees, we do not deplete them. Personal financial management training in the US is one of the factors that will make Parsec International a roaring success.. 立. 政治大. Outside Management Support Local Xiamen Talent. Corporate Attorney. ‧ 國. Accountant / CPA. 學. Local Xiamen Talent. al. er. io. sit. y. Nat. Objectives. ‧. Additionally, our management advisors, Bart Boyer, Richard Lee and Ron Clinton will all provide tremendous support for management decisions, as well as broad experience and creativity.. n. Projected revenues for fiscal year 2015, without external funding, are expected to be USD $750,000. Annual growth is projected to be 50% - 100% per year through 2015. We feel that after 5 years Parsec International will be in a suitable position for further expansion. At this time, our objective is to propel Parsec International into a prominent market position by expanding into the emerging wealth management industry of China.. Ch. engchi. i Un. v. To achieve our objectives, we plan to establish a strong strategic partnership with Xiamen International Bank. This will require cooperation and dedication from both sides, as well as performance measures and clearly set expectations and goals.. Capital Requirements Based on the opportunities identified through research and analysis, building on Parsec International’s experience and what we feel are sound business assumptions, our initial capital requirements are USD $400,000 by 2010 to successfully launch Parsec International.. ______________________________________________________________________________________ 13.

(18) Exit Strategy / Return on Investment The attached financial projections indicate that Return on Investment will be within six years. Our exit strategy could be accomplished through a number of avenues. However, Parsec International is looking to expand throughout the rest of China. Therefore, we will mainly concentrate on growing stockholder’s equity within the company. There will also be a chance that employees and other investors will be able to purchase stock within the company, thus offering investors liquidity and/or a proper exit. Other possibilities of exit include merging with other wealth management firms that are looking to expand to Chinese tier-2 cities and would require our market expertise, experience and knowledge. Yet another possibility is to take Parsec International and launch it as a domestic IPO. This would favor investors as their initial investment would become more liquid.. 政治大 All of these exit strategies will be taken into consideration as Parsec International’s over立will focus first on the Xiamen market and expansion into all strategy. However, Parsec ‧. ‧ 國. Conclusion. 學. other tier-2 cities after 5 years of successful operation.. n. al. er. io. sit. y. Nat. The market for Parsec International’s wealth management services is clearly a profitable opportunity for Xiamen International Bank, Parsec Financial and Parsec International investors. This expanding market gives us an opportunity to be the first fee-only wealth management company to penetrate tier-2 cities in China. The rapidly expanding assets under management for this market support Parsec International reaching its break-even point by 2014 and profitability in the beginning of year 4.. Ch. engchi. i Un. v. ______________________________________________________________________________________ 14.

(19) Market Opportunity The highly profitable wealth management industry has continued to grow rapidly worldwide despite the financial crisis. Outside of the US, the demand for wealth management is expanding exponentially, most notably in the Asia region. According to the 2009 Capgemini World Wealth Report, it is expected “by 2013 the Asia-Pacific region will overtake North America as the largest region of HNWI financial wealth”. Moreover, “the Asia-Pacific region’s HWNI wealth is projected to reach $13.9 trillion by 2012, growing at an annual pace of 7.9%”, states Emirates Business, 2009. The most impressive global mover in the wealth management industry is China. In fact, China has surpassed the United Kingdom, and now ranks fourth in the world for its quantity of HNWIs (High Net Worth Individuals). According to the Boston Consulting Group (BCG), “wealth in China has outgrown the global market significantly over the past five years, with growth rates at 25% CAGR” (global averages are around 13.4%). Between 2006 and 2007 alone, BCG research estimates Chinese wealth grew at a staggering 36.8%.. 立. 政治大. ‧ 國. 學. ‧. Not only is China’s HNWI population important for wealth management, but also so is its Emerging-HNWI population. According to Capgemini in 2008, “China’s EmergingHNWI population expanded by 20% and also broke through the US $100 billion barrier in 2007”. If this trend continues, the Chinese Emerging-HNWI population will surpass all the rest of the regions’ markets in the next decade. This opens up opportunities for wealth managers in China to market all along the wealth spectrum (Ultra-HNWI to the Mass Affluent) inside China.. n. er. io. sit. y. Nat. al. i Un. v. Chinese HWNIs, Emerging-HNWIs and the Mass Affluent populations need experienced, proven wealth management services that have traditionally only been accessible to larger business organizations and Ultra-HNWIs located in China’s tier-1 cities. According to PWC (PricewaterhouseCoopers) in 2009, foreign fund companies in China are currently only available to Chinese HNWI clients in tier-1 cities (Beijing, Shanghai, Shenzhen, Guangzhou). Moreover, wealth management companies operating in China reported themselves that there are fantastic expansion opportunities to begin penetrating Chinese tier-2 cities.. Ch. engchi. Even with the recent financial crisis, there is an overwhelmingly strong demand from the growing Chinese HWNI, Emerging-HWNI and Mass Affluent populations for more specialized wealth management services. Despite growth prospects in the near term being compromised by the crisis, the 2009 Asia-Pacific Wealth Report states “the longterm potential of the Asia Pacific HNWI marketplace remains strong: the regional economies continue to generate real and sustainable wealth on an unprecedented scale.” Barclay’s Capital Wealth Management report from 2009 explains that “a majority of. ______________________________________________________________________________________ 15.

(20) wealth managers see China as the most attractive market, with a quarter of them still forecasting the country to generate revenue growth of more than 15% per annum during the next two years”. With the expected 15% growth in the Chinese wealth management market, Parsec International fully anticipates revenues to reach USD $750,000 by 2015. Parsec International sees a distinct advantage by opening its office first in Xiamen, China. Untouched by the current wealth management industry, Xiamen offers a first-mover advantage. Xiamen also has the HNWI population to support profitability and significant growth. In 2006 the population of Xiamen was 2,330,000 people with an income per capita of RMB 18,513 for a total of approximately RMB 43,135,290,000 for the entire population. As shown in a report from BCG (Boston Consulting Group), China’s wealthy holds the lionshare of their country’s money. According to BCG, 70% of China’s wealth (households with AUM greater than USD $100K) is held by .8% of the total Chinese population. Loosely extrapolating China’s wealth proportions to fit Xiamen’s yearly income levels, it can be shown that 70% of Xiamen’s wealth is held by 18,640 people. And if there is any direct link between wealth and income, the wealthiest 18,640 Xiamen citizens earn USD $4.4 billion (or 70% of the total income earned by Xiamen residents). This means that Parsec International’s goal of achieving USD $10 million AUM in the first year is conceivable as it is only .25% of total Xiamen HNWI yearly income.. 立. 政治大. ‧. ‧ 國. 學. y. Nat. Seizing the Opportunity. sit. al. er. io. A number of potential Chinese HNWI customers are immediately and economically accessible via magazine readership.. v. n. Many potential customers can be targeted and reached through these popular media: . Fortune China 21st Century Business Review Harvard Business Review Forbes China. Ch. i Un. 165,000 monthly circulation 81,265 monthly circulation 130,000 monthly circulation. engchi. 158,000 monthly circulation. We plan to advertise in these publications upon entering China and periodically thereafter to build brand awareness. Parsec International also plans to build customer awareness through participation in local Chambers of Commerce, customer referrals, comarketing partners, joint ventures (Xiamen International Bank) and company promotions (financial lectures, investment “contests” & other networking opportunities).. Integrating the Internet Having a web presence is of the utmost importance for Parsec International because it is a way to communicate our services with potential and current clients. Information for. ______________________________________________________________________________________ 16.

(21) Parsec Financial and Parsec International will be written in both English and Simplified Mandarin Chinese. The Parsec Financial website gives a face to what the “team” in the US looks like that researches Parsec International’s funds. The Parsec International website will be specifically designed for our Chinese clients and will contain both marketing and informational material. Parsec’s websites serve as an informative communication tool; but our partner website, www.schwab.com, is also incredibly important. Charles Schwab allows customers to see in what equities their money is currently being invested, minute-by-minute portfolio gain/loss performance, market reports, and other valuable services offered by Schwab. The Parsec websites are clearly important, but Charles Schwab’s website is indispensable. As a trusted third-party custodian that securely holds client accounts, Schwab builds a Chinese customer’s confidence (i.e. Parsec International does not have access to withdraw any of their funds, our role is strictly to manage their wealth). Schwab.com is also easy to navigate for our Chinese customers, as the Schwab website is already written in Mandarin. Using their native Chinese language, customers can easily view their account details online, research past investments and deposit money into their portfolios online, 24 hours a day. Schwab Institutional also handles all reports and issues their own electronic monthly statements for each customer.. 立. 政治大. ‧ 國. 學. ‧. A third party website that manages a customer’s portfolio is a key aspect of the Parsec business model. By integrating a third party brokerage firm to hold the customer’s money, Parsec is a company that consumers can more readily trust, knowing that Parsec does not have direct access, nor can Parsec withdraw any of a customer’s funds. By allowing Parsec control over only investment decision making, a client is put more at ease and feels more in control of their own money.. er. io. sit. y. Nat. al. n. Charles Schwab Institutional already has a built-in secure, password-protected area for bringing up any customer account information. Schwab is a large trusted company whose core competency is acting as a brokerage firm. Parsec Financial has already trusted Schwab for many years as a third-party custodian of funds and Parsec International will do the same.. Ch. engchi. i Un. v. Collaboration between the websites of Parsec Financial, Parsec International and Charles Schwab enables Parsec International to most effectively manage investments, build consumer confidence and produce accurate monthly client portfolio statements.. ______________________________________________________________________________________ 17.

(22) Market Analysis Industry Analysis The foreign fund wealth management market in China is growing at an exponential rate due to the recent changes in QDII (Qualified Domestic Institutional Investor) regulations, increasing access for the Chinese to invest in international financial markets. Even despite the recent financial crisis, at the end of 2008, the market for wealth management in China amounted to RMB 1.9 trillion. Domestic Chinese QDII management companies serve approximately half the market share for a total of RMB 1 trillion. Foreign fund managers have captured the remaining at RMB 882 billion. According to PricewaterhouseCoopers, foreign fund management companies “envisage a significant pick-upper in the next three years. By 2012, 66% of [fund managers] anticipate they will have significant growth of between 21% and 100% per annum. PWC estimates an increase in the numbers of retail investors in funds, growing from 33.8 million currently to almost 69 million by 2012.”. 立. 政治大. ‧ 國. 學. ‧. PricewaterhouseCoopers, Asia Pacific Leader, Robert Grome, explains “The speed and extent of wealth creation in China far exceeds the investment opportunities currently available in the country, and therefore exposure to international asset classes in inevitable. Clearly QDII at today’s market prices are far more attractive than back in September 2007.”. al. er. io. sit. y. Nat. Market Segment. v. n. Key points in defining the market segment for Parsec International’s wealth management are mainly net worth and location. Target Market. Ch. engchi. i Un. Total Percent of Business. 1. We will be selling primarily to a. High Net Worth Individuals. 45%. b. Emerging High Net Worth Individuals. 25%. c. Mass Affluent Individuals. 30%. 2. We will initially target customers through: a. Xiamen International Bank Distributor. 50%. b. Local Financial Advisors. 20%. c. Word of Mouth. 20%. d. Advertising. 10%. ______________________________________________________________________________________ 18.

(23) 3. We expect our target individual client to invest a minimum of $75,000 USD ( RMB 500,000) with Parsec International by the end of 2010. The $75,000 minimum is as required by QDII regulations. 4. Our primary focus will be on the greater Xiamen, China area, and afterwards, other tier-2 cities. Currently, the Chinese foreign fund wealth management market is shared overall by 23 competitors: 23 Shanghai; 5 in Beijing; and 10 in Shenzhen. The major market segments for Parsec International can be separated geographically: . The first segment includes the tier-1 cities in China: Beijing, Guangzhou, Shanghai and Shenzhen.. . The second segment are the tier-2 cities in China where Parsec International will concentrate her services: Chongqing, Dalian, Kunming, Ningbo, Tianjim, Xiamen, Zhuhai, Hangzhou, Harbin, Nanjing, Qingdao, Wushan and Xian.. . 治政大 of tier-2 cities. Parsec International will be concentrating on the second segment 立 ‧ 國. 學. CHINESE INVESTING ABROAD. ‧. Chinese HNWIs are looking to diversify their wealth by allocating investments on a more international scale. Recent developments on the regulatory front has paved the way for wealthy individuals to be able to move funds abroad through QDII. Chinese investors will find that Parsec’s fee-only financial services, proven track record and wellresearched portfolios will meet their needs for investment diversification.. sit. y. Nat. n. al. er. io. Customers will also benefit because of Parsec International’s unique capability to align its interests with that of the customer’s. Other financial funds charge commission rates that are not necessarily tied to a fund’s performance. Parsec International’s innovative “fee-only financial planning,” couples together the financial goals of both Parsec International and the customer. This is to avoid the disastrous pitfalls of inundating investors with products that are only sold because of their high commissions for the salesperson. This is where Parsec International differentiates itself from other foreign fund managers in China. Parsec International acts as a fiduciary, always putting the client’s interests first.. Ch. engchi. i Un. v. LOYALTY & TRUST “Based on fund management performance over the past 18 months, the stability of this market segment has been volatile with the world financial crisis. However, conceptually, the QDII product is sound and will eventually be very successful in providing mainland China investors with profitable international markets exposure” (Grome, PWC, 2009). During the recent financial crisis, Parsec Financials AUM dropped to approximately half of 2007 levels, but then AUM increased gradually to its current level of USD $900 million (almost its original level before the crash). Parsec sustained its impressive ______________________________________________________________________________________ 19.

(24) attrition rate of 2-3%, despite the world financial crisis. Each year Parsec typically gains 8-10 % growth in clientele, for a net gain in 6%. This was no different during the crisis, which highlights Parsec Financial’s excellent customer communication, service and dedication. FEE SCHEDULE BASED ON AUM (Assests Under Management) Our proven equity investments generally appeal to the HNWI, Emerging-HNWI and Mass Affluent segments of the market. Our management fees are assigned based upon asset class. More fixed assets (i.e. US Treasury Bonds) will be charged a .6% rate. Management fees for equity accounts are: Billable Asset Level. Annual Rate. 0 – 500,000. QuaterlyMin Quarterly Max. 1.0%. 1,000. 1,125. 500,000 – 1,000,000. .90%. 2,000. 1,000,001 – 2,500,000. .80%. 1,125 政治 2,000 大. 2,500,000 – 4,000,000. .70%. 4,375. 6,000. 4,000,001 – 6,000,000. .60%. 6,000. 7,500. 6,000,001 – 8,000,000. .50%. 7,500. 8,000,001 – 50,000,000. .30%. 8,000. 50,000,000 and above. .30%. 37,500. 8,000 37,500. y. N/A. Best rate .70%. 1,000. N/A. er. 1,000. sit. N/A. Best rate .50%. io. .40%. al. 1,000. n. Charity. ‧. Friend. Nat. Biz Partner / Family. 學. ‧ 國. 立. 4,375. iv. N/A. n U i e h c The vast majority of new business will n beginitialized through our joint venture. Ch. with Xiamen International Bank and our own investment representatives. Additional new business will come through word of mouth and advertising. Over the past 10 years, similar investment firms have proven that there is a strong demand in the Chinese market for foreign investment options. These companies have primarily focused on equities, fixed income, money markets, cash and overseas assets with a strong focus specifically on equities. These products have been successfully distributed throughout the heavily regulated Chinese banking industry. Wealth management firms in tier-1 cities all offer products that appear similar to our own, but their fees are almost double and they do not offer services in tier-2 cities. Of the 364 thousand Chinese HWNI, as well as Emerging-HNWI and Mass Affluent Chinese, approximately half of these clients will allocate significant portions of their net worth amongst foreign fund managers to diversify their portfolios, raise their net worth and manage their assets abroad. ______________________________________________________________________________________ 20.

(25) Source: Industry analysts, PWC Foreign Fund Management Companies, April 2009. Based on industry analyst forecasts by Capgemini and PWC, and factoring in current trends and potential market position, estimates indicate that Parsec International should easily be able to attain AUM of USD $100 million within 5 years (2015). The market potential for wealth management services in these quantities—with an average fee of 0.750%—will yield approximately USD $750,000. This translates to a Parsec International market share of approximately .09% of the overall market.. Strengths, Weaknesses, Opportunities & Threats (SWOT Analysis) Strengths Parsec International brings a considerable pool of product and marketing strengths to the Chinese marketplace. In terms of product strength, Parsec International’s wealth management has several distinct advantages over the competition. First and foremost, over the past ten years Parsec has riveled the S&P 500 with a 14% return compared the the S&P’s mere return of 1%. Secondly, is Parsec’s marked advancement in how it manages a client’s money. Most firms try to “sell” products to their clients in order to earn commissions. Parsec’s vision is to be completely aligned with the clients’ interest, so Parsec never sells financial products. We are always in the clients interest by prudently managing thier funds. At Parsec, we do not receive commissions of any sort, to sell a product. Investments are solely based on raising a client’s net worth, and our fees are dependent upon their success.. 立. 政治大. ‧. ‧ 國. 學. n. al. er. io. sit. y. Nat. Parsec International’s greatest strength is the innovative approach it has taken to designing and building its unique business model. Being a smaller company, Parsec International has greater flexibility than its larger competitors to charge a fee contingent upon a customer’s success. This is because Parsec International does not have to consult with an entire panel of board members or obtain unanimous approval from multiple divisions to implement client-based solutions. This means that the latest market knowledge can be disseminated more quickly to our customers for immediate investment; larger firms cannot react quickly enough because they have to wait to sell the product first.. Ch. engchi. i Un. v. In marketing, our most powerful assets are: . Highly reputable publications listing our company as one of the top wealth management firms in America. 30 years of successful experience in wealth management. A large book of business. Word of mouth from existing customers. Location in Xiamen, China for first mover advantage Much lower fees than our competition in China. Weaknesses Because of its relatively small size, Parsec International is not yet a “household” name among prospective Chinese customers. However, with the necessary resources, Parsec International can substantially expand into the Chinese market and build brand awareness. ______________________________________________________________________________________ 21.

(26) It is possible to increase new business in the lucrative market that is made up of Chinese HNWIs, Emerging- HNWIs and the Mass Affluent, who are anxious to find a reputable company to manage and increase their wealth, but they may still prefer a bigger, “household” name. There are several minor handicaps inherent in the Chinese wealth management business; these are, Chinese QDII regulations; the inability to introduce innovative service offerings; and finding good personnel. The only notable marketplace disadvantages caused by these weaknesses are slowed introductions of new products and services and high employee turnover. These disadvantages both result from overwhelmingly strict Chinese QDII regulations. QDII highly regulates which investments a foreign fund can offer, as well as, limiting the number of foreign employees that can work in a firm (the limit is five foreigners). In addition to hiring limitations, there are additional regulations on outsourcing of certain financial activities.. 政治大. As far as outsourcing is concerned, since Parsec International is technically going to be a company branch of Parsec Financial, Parsec International will be able to “outsource” investment advice from Parsec Financial through purchased weekly research reports. These weekly reports are designed to guide Parsec International financial advisors to follow Parsec Financial’s portfolio movement. It will be one of many reports purchased by Parsec International to stay abreast of US financial trends. In this fashion, Parsec International will not have to qualify an international financial advisor under QDII regulations, instead, Parsec International will attain information through a written report. This is in order to circumvent strict QDII requirements on hiring an outside international financial advisor. In this way, both Parsecs can legally maintain their core competencies.. 立. ‧. ‧ 國. 學. sit. y. Nat. n. al. er. io. Another threat faced by Parsec is cause by the newness of the wealth management industry in China. Because of this many Chinese investors do not have sufficient knowledge about products and expect short-term results. Parsec International sees this as a natural challenge to any young industry. To meet this challenge, Parsec will educate investors about the long-term rewards of investing, and prevent customers from measuring their investments from a short-term perspective. Parsec International will set savings and investment goals together with clients so that reasonable expectations are clear from the start.. Ch. engchi. i Un. v. Company weaknesses, at this time, consist only of lack of experience in the Chinese market. However, we are taking steps to understand the complexities of both Chinese regulation, culture and investment behavior. Parsec will also assimilate a “local” team of consultants, accountants, lawyers and other advisors that will help us through this process. We feel these measures should eliminate or significantly reduce this problem. THE MARKET Research has shown that the China foreign fund market annually manages a total of RMB 1.9 trillion (USD $284 billion) Chinawide. Currently, domestic fund managers hold 54% of market share and foreign funds have 46% of market share in China. Parsec International has a substantial amount of work to do in order to secure a portion of ______________________________________________________________________________________ 22.

(27) the Chinese foreign fund management market. Parsec Financial is currently successfully competing with wealth managers on the U.S. front who have been managing assets for customers for over a hundred years and whose names are now synonymous with banking and wealth management. China will be no exception. In the U.S., Parsec Financial is able to offer its customers better returns for a smaller fee than its larger competitors. On the Chinese front, Parsec International plans to deliver the same excellent service and phenomenal wealth management capabilities as Parsec Financial does in the States. By 2015, we should be able to position ourselves to build up a reputation of excellence in the local market and thereby considerably reduce this weakness. Opportunities The enormous upside potential for wealth management services in China will support substantial revenue increases in the immediate future. Over the next two years, Parsec International’s assets under management are expected to grow at rapidly increasing levels in China, where there is an overwhelming, yet unmet, demand for wealth management services. With the fast-pace growth of many emerging financial markets, Parsec International has an immense opportunity for a first mover advantage in Chinese tier-2 cities.. 立. 政治大. ‧ 國. 學. ‧. Based on current and projected market conditions introduced in the Product Strategy section of this plan, it is apparent that Parsec International will be able to penetrate and acquire new Chinese business and take full advantage of the ever-growing wealth management sector. Allowing for any unexpected economic and/or politically driven drops in sales, Chinese market trends indicate that Parsec International stands to realize a substantial jump in revenues, due to the growing demand of Chinese consumers for QDII foreign fund wealth management.. n. er. io. sit. y. Nat. al. Ch. i Un. v. Unexploited Opportunities Parsec International could create a completely new approach to wealth management by entering the Chinese market and positioning our management services as a “fee-only” rather than the selling another financial product – as do our competitors. There are also unexplored opportunities beyond Xiamen in other Chinese tier-2 cities. This is a market that our competitors have yet to enter so we will be able to initiate a first mover advantage. There is also a buzz starting on tier-3 cities and what their future demand will be for wealth management services.. engchi. Further opportunities for our services exist in other Chinese tier-2 cities and surrounding Asian markets (i.e. Thailand, Vietnam, Cambodia, Indonesia). Still another possibility for development involves moving into other unexplored regions of South America and Africa where HNWI are also growing by leaps and bounds. These markets too are considerably untapped by the wealth management industry and would provide a “blue ocean strategy”. Threats The main threats to Parsec’s ability to succeed in China are the following: governmental ______________________________________________________________________________________ 23.

(28) regulations; an uncooperative joint venture; the recent global financial crisis; and the falling attractiveness of US investments (or the falling value of the US dollar). The main driver of change in the Chinese management fund business, according to PWC 2009, is regulatory changes in China. It has been noted that the China Securities Regulatory Commission (CSRC) “micromanages” the new product process. Fortunately, since Parsec’s investments mainly focus on individual stocks, mutual funds and some fixed income products, new product approval will not be so difficult as other more complex financial products such as derivatives or futures. A joint venture is required for a foreign fund management firm to operate in China. But just like China’s regulatory behavior, these regulations could change as well. A joint venture in China provides a positive side, in that market penetration will be facilitated and market knowledge of the customer can be shared. However, so much depends on this shared relationship and this guanxi should be approached carefully.. 政治大. According to PWC in 2009 one of the major complaints for a compulsory partnership with a joint venture firm is that the partner takes an inordinate amount of the profits. Although the majority of foreign partners did not complain about the fee structure, there were eight foreign firms in China that complained that “the banks were awarded a disproportionate portion. They noted that 50% to 70% of management fees went to the distributors”.. 立. ‧. ‧ 國. 學. n. al. er. io. sit. y. Nat. Parsec believes that clear negotiation is the best way to mitigate any problems that might arise from partnering with Xiamen International Bank. Xiamen International Bank will share in half of Parsec International’s revenues, but they will also share in half of our expenses. Parsec International will also be able to exercise considerable freedom when it comes to how money is spent. By detailing a budget each year with Xiamen International Bank, Parsec International will be given freedom on expenses less than USD $10,000 per month on any single expense.. Ch. engchi. i Un. v. Another threat is the global financial crisis and how this has impacted investor attitudes in China. One of the many listed frustrations, according to PWC, is that many Chinese investors are immature, impatient investors with a short-term focus. Combine these attitudes with the recent fall in the equity markets, and you have a population that might be wary of investing in equities once more. The positive side, is that the DOW rebounded from 6,000 to 10,000 and is remaining somewhat stable. Also, Chinese investors looking to diversify their investments might see now as the perfect time to invest in U.S. equity markets, because they are not at an all time high. Parsec also has 30 years of experience in beating the S&P each year, which will boost the confidence of our clients.. ______________________________________________________________________________________ 24.

(29) Customers A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is a part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so. - Mohandas Karamchand Gandhi (a.k.a. Mahatma Gandhi). The most typical client for Parsec Interational will be an HNWI, Emerging-HNWI or Mass Affluent client (basically an individual who has at least USD $100,000 of disposable income available for investment). They will most usually be an HWNI with at least one million dollars in net assets. They will probably have several residences, take vacations abroad and be looking for a smart, long-term way to grow their investments.. 政治大. It is likely that potential customers are going to be familiar with investing in equity markets, at least in China if not abroad. They will readily accept the idea of Parsec buying and selling stocks on their behalf through an approved custodian. They might, however, be confused why Parsec operates with a fee-only structure. But, after Parsec employees explain that this is to keep our interests in line with the customers interests, Parsec will look more attractive for investments than another company trying to just “sell” them financial products.. 立. ‧. ‧ 國. 學. y. Nat. Customer Profile. er. io. sit. Our primary target market is comprised of customers between the ages of 35 and 65, who invest for reaching long-term financial goals and increasing their wealth. Individual customers themselves typically have annual incomes of USD $100,000 and up; already own several homes, foresee educating their children abroad, take multiple vacations a year, and want protect their wealth after they pass away for following generations.. n. al. Ch. engchi. i Un. v. Parsec meets their specific needs for asset management with a proven investment solution for less than what our competitors in China are charging. More than 75% of our customers will fall into these parameters Corporate Executives and/or Business Owners . Title: Authority: Viewpoint: Emotional Influences: Practical Influences: Education:. President, VP Finance, VP Mfg, VP Sales, Office Manager etc. Permitter, Decision-Maker, Influencer, Technical Advisor, Initiator Bigger Picture, Financial, Value family Status, power, empire building, family wealth, Saving money, efficiency, investing for the future Ph.D., MBA, Bachelors, Masters degree. The other 25% will fall within roughly 80% of these ranges, so our market is relatively homogenous making it relatively easy to identify and reach these customers with our marketing efforts. ______________________________________________________________________________________ 25.

(30) Young Married Couples. . Age: Income: Sex:. 35-55 Medium to high Male or Female. Family: Geographic:. Married with or without children Xiamen, China. Occupation: Attitude:. White collar Early adapters or early majority. Young Professional Age: Income:. 25-35 Medium to high. Gender: Family: Geographic: Occupation:. Male or Female Single or married Xiamen, China White collar. 治政大majority Innovator, early adapter or early 立. Attitude:. Older Couple. y. 70+. or fixed aHigh iv lMaleCor Female n U or grandchildren h eornliving Empty nest h ichildren g cwith. ‧ 國. n. Income: Sex: Family: Geographic: Occupation: Attitude:. io. Age:. sit. Elderly . High or fixed Male or Female Empty nest or living with children and grandchildren Xiamen, China White collar, family business or none Innovator, early adapter or early majority. ‧. Income: Sex: Family: Geographic: Occupation: Attitude:. 55-70. 學. Age:. Nat. . er. . Xiamen, China Family business or none Innovator, early adapter or early majority. ______________________________________________________________________________________ 26.

(31) Competition Parsec International’s services include fee-only, foreign wealth management under QDII. Our main competitors that are the most successful in the Chinese wealth management market are China International, Harvest and Credit Suisse. Each of these competitors charge significantly more than Parsec International for wealth management.. Our top 3 competitors are: China International Fund Management; International Trust and Investment President. Morgan. 政治大. 立. Location. JP. and. Shanghai. Jamie Dimon Shanghai. Years in Business. 5 years. ‧ 國. 學. Market Share AUM. 2.53%. 49 billion RMB. ‧. Fee to manage equity. y. Nat. Foreign Equity. 49% 9. n. er. io. al. sit. Number of Products. 1.5%. Ch. engchi. i Un. v. Harvest Asset Management; Deutsche Asset Management President Location Years in Business Market Share AUM. Rong Ren Beijing 10 years 7.09%. 138 billion RMB. Fee on equity. 1.8%. Fee on mixed. 1.5%. Fee on Bonds. 0.6%. Fee on Money Market Foreign Equity Number of Products. 0.33% 30% 16. ______________________________________________________________________________________ 27.