The venture, Guotai Junan Allianz Fund Management Co., is being co-established by Shanghai-based Guotai Junan Securities, a leading securities house in China, and German financial group Allianz AG.

The application for the venture was submitted by the two companies to the China Securities Regulatory Commission (CSRC) in July.

CSRC formally notified its approval late on Wednesday, according to sources with Guotai.

The news was confirmed by a statement from Allianz, which said the new joint venture will be based in Shanghai and have a registered capital of 100 million yuan (US$12 million).

Guotai will hold 67 percent of the shares and Allianz gets the remainder.

It is in line with China's World Trade Organization (WTO) commitment, which has allowed foreign companies to set up fund management joint ventures, with a maximum foreign share ratio of 33 percent in the first three years and then 49 percent.

The joint venture will combine Guotai's fund distribution network and Allianz's international expertise in risk management, internal control, product design and portfolio management, said Joachim Fabere, Allianz AG board member and chief executive officer of Allianz Dresdner Asset Management GmbH, the group's asset management division.

It is expected to take another two months of preparation before the formal launch of the joint venture. Zhang Weihuan, vice-manager of the assets management department of Guotai, said they would try to launch the company within the year.

By then, the new company will already be offering fund products and other services approved by CSRC.

Several other companies have also submitted applications for fund management joint ventures, including Haitong Securities and Huabao Trust and Investment Co., both from Shanghai, and their foreign partners - Belgium's Fortis and French SG Asset Management Co..

Shenzhen-based Merchants Securities is also waiting for a license for its fund management ventures with ING from the Netherlands.

It is unlikely that CSRC will give permission to another fund management venture soon, said Zeng Fanqing, an official with Huabao Trust and Investment Co., which is expected to invest 67 million yuan (US$8 million) for its fund management joint venture with SG.

In the past, the commission has not usually given permission to several new fund management companies at the same time. "We only hope that we can get the license as early as possible," Zeng said.

Launching fund management joint ventures will bring healthy competition to the fund industry and upgrade its industrial structure, said Zhou Dao, an analyst with Southwestern Securities.

Now that the market has started opening up, foreign companies will gradually infuse fresh expertise to help build a more robust stock market in China, Zhou said.

To boost growth in the sector, China is also drafting detailed regulations for Sino-foreign fund management joint ventures, which might further broaden their business scale, said Xu Hongyuan, deputy director of the macro-economic monitoring department at the State Information Center.

(China Daily October 18, 2002)