Putnam Investments said it is opening an office in Beijing and will target large institutional customers as part of a long-term effort to build an investment business in China.
“You have to go in with the idea that this is a long-term play,’’ said Robert L. Reynolds, Putnam’s chief executive. “Our bet here is that we’re there for a very long time, and we think it’s going to be a market to be reckoned with.” Looking out over 10 years, he said, “I just think it’s a phenomenal opportunity for us.”
Boston-based Putnam has a foothold in Asia already, with investment offices in Tokyo, where it has a joint venture, and in Singapore. China, with its growing wealth and large population, is drawing many US companies looking for business, including investment firms. But it presents a number of challenges, too; its economy, for example, has been wavering of late.
In December, money market mutual funds attracted $8.8 billion in China, while equity funds took in $3.5 billion, according to Cerulli Associates, a Boston consulting firm to the investment business.
China is a difficult market for selling mutual funds, in part because people are not accustomed to investing in them, and also because of laws governing foreign firms handling investments. According to the Investment Company Institute, an industry trade group in Washington, US firms that want to run mutual funds in China must have a joint venture with a Chinese firm.
Fidelity Investments, the Boston-based mutual fund giant, does not have an investment operation in China. It does employ about 200 people in the city of Dalian, mostly in information technology.
Firms that want to target only large institutional customers do not appear to need a partner in China; Putnam already manages some money for China’s sovereign funds — money controlled by the government — and so its next step will be other institutional accounts, not mutual funds.
Putnam’s new office will be run by Michael Luo, a Chinese national who was educated in America and has worked on Wall Street; he most recently was at competitor Invesco Great Wall of Shenzhen. Luo will be in charge of building Putnam’s relationships with governmental and private entities across China.
Putnam, with $124 billion in managed assets, said its parent company, the Canadian financial conglomerate Power Corp., also has relationships in China.